Today's incredible rally was seen across nearly all areas of the market. The gap ups I saw on the many charts I reviewed for ETF Day were extraordinary. The biggest problem was it brought nearly every ETF into overbought conditions. However, as we often say, overbought conditions can persist in a strong bull market. That is likely what we're going to see.
I didn't list any runner-ups today as there were so many options. I think you can safely go to your favorite ETFs for investment right now. Nearly every area of the market was represented in today's scan results for ETFs.
I decided to go with areas of the market I like right now. Small-caps are looking especially bullish right now and I found a micro-cap ETF that could prove interesting. Bitcoin is going crazy and I foresee even higher prices ahead so I included a Bitcoin ETF. Finally, with Industrials doing so well, Dow Theory suggests that Transports should stay in line with its rally. It looks very promising under the hood.
Tomorrow is Reader Request Day! You must have some stocks of interest right now. Email me!
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": HODL, IWC and IYT.
Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (11/1/2024):
Topic: DecisionPoint Diamond Mine (11/1/2024) LIVE Trading Room
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Passcode: November#1
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When: November 8, 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 11/4. 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.
VanEck Bitcoin Trust Beneficial Interest (HODL)
EARNINGS: N/A
The Trust's investment objective is to reflect the performance of the price of Bitcoin less the expenses of the Trust's operations. The Trust is a passive investment vehicle that does not seek to generate returns beyond tracking the price of bitcoin. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals, Gap Ups, Moved Above Upper Keltner Channel, Moved Above Upper Bollinger Band, Moved Above Upper Price Channel, Parabolic SAR Buy Signals, Runaway Gap Ups, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
HODL is down -0.30% in after hours trading. We saw an incredible breakout to new all-time highs for Bitcoin as Bitcoin-friendly Trump won. I think this will continue on now that the ceiling has been punched through. The RSI is not yet overbought. The PMO has surged (bottomed) above the signal line and Stochastics have reversed upward out of negative territory. Bitcoin is outperforming the SPY. I've set the stop below support at the June top at 7.9% or $79.53.
We don't have a weekly PMO yet on HODL, but we can see the strong breakout from a wide trading range. Volume is confirming the rally and the StockCharts Technical Rank (SCTR) is in the hot zone*. Consider a 25% upside target to about $107.95.
*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 Micro-Cap ETF (IWC)
EARNINGS: N/A
IWC tracks a market-cap-weighted index of U.S. micro-cap stocks. The index selects the smallest 1000 stocks in the Russell 2000 Index. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Bollinger Band.
IWC is up +0.77% in after hours trading. Today saw a huge gap up out of a bullish ascending triangle (flat top, rising bottoms). Small-caps are on the rise and this ETF is made up of the smallest. It carries some risk with that, but if we are going to see continued outperformance by small-caps this ETF should benefit. The one issue is that it is already overbought. I think these conditions will persist with a likely rally continuation ahead. The PMO is on a new Crossover BUY Signal and Stochastics are rising strongly. This ETF is easily outperforming the SPY right now. The stop is set beneath the 20-day EMA at 7.1% or $125.36.
The weekly chart shows a strong rising trend with a breakout. The weekly RSI is unfortunately overbought, but it can hold those conditions for a few weeks or more. The weekly PMO has surged above the signal line and the SCTR is at the top of the hot zone. Consider a 17% upside target to about $107.62.
iShares Transportation Average ETF (IYT)
EARNINGS: N/A
IYT tracks a broad-based, modified market-cap-weighted index of US stocks in the transportation industry. Click HERE for more information.
Predefined Scans Triggered: New CCI Buy Signals, Moved Above Upper Keltner Channel, New 52-week Highs, Moved Above Upper Bollinger Band, Stocks in a New Uptrend (Aroon), Moved Above Upper Price Channel, Parabolic SAR Buy Signals and P&F Double Top Breakout.
IYT is up +0.88% in after hours trading. Today saw a huge breakout gap up move that took price out of a declining trend and congestion area. The RSI is not yet overbought and the PMO is on a new Crossover BUY Signal. The Silver Cross Index is at a robust 80% and rising and the Golden Cross Index is at a healthy 85% and rising. Participation is strong with 85% plus holding above key moving averages. We can also see that this group has been outperforming the SPY for some time. The stop is set beneath support around the 50-day EMA at 7.6% or $68.39.
We have an excellent breakout from a long-term trading range. The weekly RSI is positive and not overbought. The weekly PMO is accelerating above the signal line and above the zero line. The SCTR is well within the hot zone. We should see follow through. Consider a 17% upside target to about $86.60.
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 75% long, 0% short.
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