As Scan Alert System subscribers know, today it was slim pickings in the scans. This is a sign of market weakness when we can't find stocks that fit our "Diamond in the Rough" mold. I ran a few other scans for some help, but it didn't turn up much.
I did have enough symbols to give you some runner-ups but I will say my confidence level on today's picks is rather low. They are setup well enough, but the market is showing some signs of deterioration. Be careful with expansion of your portfolio now as there aren't that many good setups out there.
One of the best charts today was Microsoft (MSFT) of all things. I like to bring you new names, but when a stand by like MSFT comes up looking good, it is time to present it.
I bet Reader Request Day will be light so if you could send some symbols my way for Thursday I'd appreciate it!
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": HCA, MSFT, SBRA and VICR.
Runner-ups: CYBR, MDT, OHI and PRGO.
Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (10/18/2024):
Topic: DecisionPoint Diamond Mine (10/18/2024) LIVE Trading Room
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Passcode: October#18
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When: October 25, 2024 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine LIVE Trading Room
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Below is the latest free DecisionPoint Trading Room recording from 10/21. You'll find these recordings posted on Mondays to our DP YouTube Channel. Be sure and subscribe HERE.
Welcome to DecisionPoint Diamonds, wherein I highlight ten "Diamonds in the Rough" per week. These are selected from the results of my DecisionPoint Scans which search for stocks that could benefit from the trend and condition of the market. Remember, these are not recommendations to buy or sell, but are the most interesting of the stocks that surfaced in my scans. My objective is to save you the work of the initial, tedious culling process, but you need to apply your own analysis to see if these stocks pique your interest as well. There are no guaranteed winners here!
"Predefined Scans Triggered" are taken from StockCharts.com using the "Symbol Summary" option instead of a "SharpChart" on the workbench.
Stop levels are all rounded down.
HCA Healthcare, Inc. (HCA)
EARNINGS: 2024-10-25 (BMO)
HCA Healthcare, Inc. is a health care services company engaged in operating hospitals, freestanding surgery centers and emergency care facilities, urgent care facilities, walk-in clinics, diagnostic and imaging centers, radiation and oncology therapy centers, comprehensive rehabilitation and physical therapy centers, physician practices, home health, hospice, outpatient physical therapy home and community-based services providers, and various other facilities. The firm operates general and acute care hospitals that offer medical and surgical services, including inpatient care, intensive care, cardiac care, diagnostic, and emergency services, and outpatient services, such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology, and physical therapy. The company was founded by Dr. Thomas F. Frist, Jr in 1968 and is headquartered in Nashville, TN.
Predefined Scans Triggered: Elder Bar Turned Blue and P&F Double Top Breakout.
HCA is unchanged in after hours trading. One of the things I liked about this chart was the breakout and then mechanical pullback to the breakout point. That usually leads into more upside. The small pullback hasn't damaged the indicators. The RSI is positive and not overbought and the PMO is still rising after a recent Crossover BUY Signal above the zero line. Stochastics are holding above 80 and haven't topped yet. I'm not thrilled with the Healthcare sector and I do not like that the group isn't performing right now. Normally I would've skipped this chart, but pickings were slim. I think that given it is outperforming the SPY and the group, we should see more upside here. I set the stop at support at 7.7% or $376.74.
The weekly chart is excellent and also tells me we could see more upside here despite the sputtering sector and industry group. We have a strong rising trend on a breakout from a consolidation range. The weekly RSI is overbought, but that doesn't bother it too much. The weekly PMO is surging above the signal line and the StockCharts Technical Rank (SCTR) is in the hot zone above 70. Consider a 17% upside target to about $477.56.
*If a stock is in the "hot zone" above 70, it implies that it is stronger than 70% of its universe (large-, mid-, small-caps and ETFs) primarily in the intermediate to long terms.
Microsoft Corp. (MSFT)
EARNINGS: 2024-10-30 (AMC)
Microsoft Corp. engages in the development and support of software, services, devices, and solutions. It operates through the following segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The Productivity and Business Processes segment is composed of products and services relating to productivity, communication, and information services such as Office Commercial, Office Consumer, LinkedIn, and Dynamics business solutions. The Intelligent Cloud segment consists of public, private, and hybrid server products and cloud services for businesses and developers, as well as enterprise and partner services. The More Personal Computing segment refers to products and services including Windows operating system, Windows cloud services, Surface, HoloLens, personal computer accessories, Xbox hardware, Xbox Cloud Gaming, Microsoft News, and Microsoft Edge. The company was founded by Paul Gardner Allen and William Henry Gates, III in 1975 and is headquartered in Redmond, WA.
Predefined Scans Triggered: Moved Above Ichimoku Cloud, Bullish MACD Crossovers and P&F Double Top Breakout.
MSFT is down -0.12% in after hours trading. The market was mostly unchanged, but MSFT had a terrific day. It pushed price above overhead resistance at the August top. It looks like it will see follow through to the upside. The RSI is positive and not overbought. There is a new PMO Crossover BUY Signal. Stochastics are rising strongly toward 80. We can see that we are just now starting to get some outperformance by the group. MSFT is a leader in the group given its rising relative strength to the group. I would warn that earnings are 10/30 and it's hard to say what that will bring so keep this very short-term. The stop is set beneath the September low at 7% or $397.58.
Definitely think short-term on this one. We have a large head and shoulders top building. The pattern won't technically be busted until we see a breakout to new all-time highs. This rising trend does look good though. The weekly RSI is in positive territory and the weekly PMO is turning back up. The SCTR is not in the hot zone however, so another reason to keep this as a short-term trade for now.
Sabra Healthcare REIT Inc. (SBRA)
EARNINGS: 2024-10-31 (AMC)
Sabra Health Care REIT, Inc. engages in the business of acquiring, financing, and owning real estate property. The company was founded on May 10, 2010 and is headquartered in Tustin, CA.
Predefined Scans Triggered: P&F Double Top Breakout.
SBRA is down -0.11% in after hours trading. I like this rally coming off the 50-day EMA. We could make a case for a bull flag on the chart and this would be a breakout confirmation of the pattern. Note also that the flag is a bullish falling wedge which executed as expected with an upside breakout. The RSI is positive and not at all overbought. The PMO is a little flatter than I'd like, but it is rising above the zero line toward a Crossover BUY Signal. Stochastics are now above 80. The industry group is performing relatively well, not great. SBRA is performing very well against the group and the SPY. It is a true leader in this group. The stop is set beneath support at 7.1% or 17.34.
The weekly chart is strong with the exception of the overbought weekly RSI. However, I don't see that as a big problem given it has been overbought for weeks. The weekly PMO is accelerating above the signal line while well above the zero line. The SCTR is well within the hot zone above 70. Consider a 17% upside target to about $21.84.
Vicor Corp. (VICR)
EARNINGS: 2024-10-22 (AMC)
Vicor Corp. engages in the design, development, manufacture, and marketing of modular power components. The firm provides complete power systems based upon a portfolio of patented technologies. Its products include AC-DC converters, power systems, and accessories. The company was founded by Patrizio Vinciarelli in 1981 and is headquartered in Andover, MA.
Predefined Scans Triggered: None.
VICR is up +10.5% in after hours trading. We don't have to worry about earnings as they just reported today. Entry might be tough given it is up so much in after hours trading. I liked the strong breakout and mechanical pullback that often precedes lengthy rallies. The RSI is positive and not at all overbought due to today's decline. The PMO is rising after a whipsaw Crossover BUY Signal well above the zero line. Notice the OBV bottoms are rising while the prior price bottoms were falling. That is a positive divergence. Stochastics are rising strongly in positive territory. The group has been outperforming although it has cooled of late. I like the rising relative strength for VICR against the group and the SPY.
I like the rounded bottom and rising trend we have on price here. The weekly RSI is positive and the weekly PMO is on the rise above the zero line. The SCTR has entered the hot zone above 70. I think we could see price get back to the 2024 high.
Don't forget, on Thursdays I look at reader-requested symbols, click HERE to send me an email. I read every email I receive and try to answer them all!
Current Market Outlook:
Market Environment: It is important to consider the odds for success by assessing the market tides. The following chart uses different methodologies for objectively showing the depth and trend of participation for intermediate- and long-term time frames.
- The Silver Cross Index (SCI) shows the percentage of SPX stocks on IT Trend Model BUY signals (20-EMA > 50-EMA)
- The Golden Cross Index (GCI) shows the percentage of SPX stocks on LT Trend Model BUY signals (50-EMA > 200-EMA)
Don't forget that as a "Diamonds" member, you have access to our "Under the Hood" curated ChartList on DecisionPoint.com. You'll find it under "Members Only" links on the left side on the Blogs and Links Page.
Here is the current chart:
Full Disclosure: I am 65% long, 0% short. I own SBRA.
I'm required to disclose if I currently own a stock I mention and/or may buy/short it within the next 72 hours.
"Technical Analysis is a windsock, not a crystal ball." - Carl Swenlin
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NOTE: The stocks reported herein are from mechanical trading model scans that are based upon moving average relationships, momentum and volume. DecisionPoint analysis is then applied to get five selections from the scans. The selections given should prompt readers to do a chart review using their own analysis process. This letter is not a call for a specific action to buy, sell or short any of the stocks provided. There are NO sure things or guaranteed returns on the daily selection of "Diamonds in the Rough."
Regarding BUY/SELL Signals: The signal status reported herein is based upon mechanical trading model signals and crossovers. They define the implied bias of the price index/stock based upon moving average relationships and momentum, but they do not necessarily call for a specific action. They are information flags that should prompt chart review. Further, they do not call for continuous buying or selling during the life of the signal. For example, a BUY signal will probably (but not necessarily) return the best results if action is taken soon after the signal is generated. Additional opportunities for buying may be found as price zigzags higher, but the trader must look for optimum entry points. Conversely, exit points to preserve gains (or minimize losses) may be evident before the model mechanically closes the signal.
Helpful DecisionPoint Links:
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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