There were two key themes that ran through the scans today with a few others of interest. First were Dividend ETFs, quite a few different choices here, but I went with the one that had the best gain today. The second theme was Small-Cap ETFs which I included today as well.
While they weren't themes, I did find them interesting. Gold and Metals and Mining ETFs made an appearance. While I like them, I'm still looking for a decline in Gold soon and consequently opted not to present them, but short-term, they do look pretty good. The other area of interest was Biotechs. There is a bit more risk involved with this one as we don't have a breakout, but it is lined up pretty well under the hood so I included it.
I need to expand my portfolio right now, so I am on the lookout for trades. Would love to hear some of your ideas for Reader Request Day tomorrow. I'm contemplating adding DVY and IBB as far as ETFs go.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": DVY, IBB and RWJ.
Runner-ups: GLD, XME, LABU and XHB.
Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (10/11/2024):
Topic: DecisionPoint Diamond Mine (10/11/2024) LIVE Trading Room
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Passcode: October#11
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When: October 18, 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 10/14. 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.
iShares Select Dividend ETF (DVY)
EARNINGS: N/A
DVY tracks a dividend-weighted index of US companies. The index selects roughly 100 stocks based on dividend yield from a broad market-cap universe. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Keltner Channel, New 52-week Highs and P&F Double Top Breakout.
DVY is up +1.99% in after hours trading so clearly we are onto something with this ETF. It had a beautiful breakout today to what I believe is all-time highs. The RSI is getting a bit overbought, but we've seen it handle overbought conditions for quite a few trading days before pulling back. The PMO turned up well above the zero line and is going in for a Crossover BUY Signal. Stochastics are now above 80 and we can see relatively speaking this is a better ETF than the SPY right now. I've set the stop below support at the September low at 7.2% or $127.25.
There is a solid breakout from the prior trading range and the rising trend is intact. The weekly RSI is overbought right now, but we can see that back in 2021 it held that for some time. The weekly PMO is rising nicely on a Crossover BUY Signal. The StockCharts Technical Rank (SCTR) is in the hot zone* above 70. Consider a 17% upside target to $160.44.
*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.
iShares Nasdaq Biotechnology ETF (IBB)
EARNINGS: N/A
IBB tracks the performance of a modified market-cap-weighted index of US biotechnology companies listed on US exchanges. Click HERE for more information.
Predefined Scans Triggered: P&F Bull Trap.
IBB is up +0.01% in after hours trading. IBB has been range bound but it looks ready to at least test the top of that range if not breakout. Participation under the hood is improving with the Silver Cross Index turning up. The RSI is far from being overbought. Stochastics have moved above 80. The PMO has just given us a Crossover BUY Signal. We can even see a tiny bit of outperformance coming in on the relative strength line. This group looks very interesting. I've set the stop below the August low at 7.2% or $135.85, but you could tighten that up to the 200-day EMA if you want a little less risk.
I really like upside potential here. The big problem on the chart is the recent weekly PMO top, but the weekly RSI is positive and not overbought. The SCTR, while not in the hot zone, is making a sharp move higher. Like I said earlier, this one does carry risk because it is early in the prospective rally.
Invesco S&P SmallCap 600 Revenue ETF (RWJ)
EARNINGS: N/A
RWJ tracks an index of S&P SmallCap 600 Index stocks that are weighted by revenue. Click HERE for more information.
Predefined Scans Triggered: New CCI Buy Signals, New 52-week Highs, Moved Above Upper Bollinger Band, Stocks in a New Uptrend (Aroon), Moved Above Upper Price Channel, P&F Double Top Breakout and P&F Bullish Triangle.
RWJ is down -1.55% in after hours trading which could offer a better entry. I really liked today's breakout move from the wide trading range. The RSI is positive and not overbought. The PMO is triggering a Crossover BUY Signal above the zero line. Volume is coming in based on the rising OBV. Stochastics are rising strongly and should get above 80 soon. Relative strength shows some outperformance against the SPY right now. The stop doesn't need to be that deep, you could make it less than what I have. I chose 6% or $43.59.
We have a nice breakout on the weekly chart accompanied by a nice rising trend that suggests we will get more upside. The weekly RSI is positive and not overbought. The weekly PMO is rising on a Crossover BUY Signal. The SCTR is in the hot zone. Consider a 17% upside target to about $54.26.
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 55% long, 0% short. I'm considering DVY and IBB.
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)
For more links, go to DecisionPoint.com