Scans were light across the but one theme came through quite clearly and that was Bond funds. I do think that yields are ready to take a pause so I did include a Bond fund for your review.
Past that it was really difficult. I almost included the inverse SPY ETF (SDS) as a possible hedge, but I decided I would just tell you about it now and you could make up your mind as to whether you want a hedge. The market has hit an equilibrium of sorts and I wish it were more clear as to which way it were headed. I see merit with arguments that it will move higher from here as well as that it will move lower.
I found a few others to look at. The best chart is clearly the Utilities chart (UTES) which I have been heavy on this week. I almost included Consumer Staples (XLP) as a similar ETF did make the scans, but ultimately I picked an ETF for the Pacific excluding Japan (EPP). It has a bullish chart that was worth presenting.
There are no runner ups today.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": EPP, TLH and UTES.
Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (11/15/2024):
Topic: DecisionPoint Diamond Mine (11/15/2024) LIVE Trading Room
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Passcode: November#15
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When: November 22, 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 11/18. 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 MSCI Pacific ex Japan ETF (EPP)
EARNINGS: N/A
EPP tracks a market-cap-weighted index of companies in the Asia-Pacific region, excluding Japan. Click HERE for more information.
Predefined Scans Triggered: None.
EPP is down -1.55% in after hours trading so a better entry may be available. The double bottom caught my eye immediately. The pattern hasn't been confirmed yet as we need a breakout above the confirmation line at the last top. It may be early in this move based on the barely positive RSI and newly rising PMO. Stochastics are rising strongly so there does seem to be some upside potential on this chart pattern. Relative strength is on the rise minus today. The stop is set below the 200-day EMA at 5.6% or $44.37.
The weekly chart is mixed. We do have a breakout out of the trading range, but it is struggling with that support/resistance line. The weekly RSI is positive and we have a nice rising trend channel. Price may be reversing before it had to test the bottom of the channel which is bullish. The weekly PMO is unfortunately falling and is close to a Crossover SELL Signal. The StockCharts Technical Rank (SCTR) is not in the hot zone*. Keep this in the short-term timeframe for now. Consider a 17% upside target to about $55.00.
*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 10-20 Year Treasury Bond ETF (TLH)
EARNINGS: N/A
TLH tracks a market-weighted index of debt issued by the U.S. Treasury. Remaining maturity must be between 10 and 20 years. Click HERE for more information.
Predefined Scans Triggered: None.
TLH is down -2.02% in after hours trading. This is really early as we don't have an established uptrend yet. I'm including this one primarily because so many Bond funds came to the forefront in scans today and I have an inkling that yields are ready to pause or digest. How much upside this will afford TLH is uncertain. The RSI is still negative as this is early. The PMO has given us a Crossover BUY Signal so we do have new momentum. It is well below the zero line so it could just be diminishing weakness not new strength. Basically if this one doesn't begin rallying soon, it won't be worth holding. I have a thin stop, but it could be even thinner. This isn't my typical "Diamond in the Rough" as it is tapping into only new positive momentum and the now rising Stochastics. Price isn't yet behaving as I'd like. The stop is set below the second level of support at 4.7% or $97.27.
The weekly chart looks pretty terrible with the exception of a bullish reverse head and shoulders. The pattern is close to busting on this current decline so again, we're early here. The weekly RSI is still negative and the weekly PMO is on a Crossover SELL Signal. The SCTR is far from the hot zone. I think upside potential is somewhat limited. I think we could get the breakout (if we don't it would still be an 8% gain to the next level of resistance).
ETFIS Series Trust I Reaves Utilities ETF (UTES)
EARNINGS: N/A
UTES is an actively managed ETF that holds US utility stocks. UTES' managers aim to outperform the sector by selecting and weighting stocks based on fundamental, growth and risk metrics. Click HERE for more information.
Predefined Scans Triggered: None.
UTES is down -1.50% in after hours trading so we are possibly going to see more pullback to the breakout point. The breakout was what caught me here as there are so few stocks and ETFs breaking out right now. I thought that looking at an actively managed version of Utilities would be interesting as well. I already like the sector. The RSI is not overbought and we have a new PMO Crossover BUY Signal. The OBV shows rising bottoms which confirms the current rally. Stochastics are holding above 80 and we can that the ETF is outperforming the SPY currently. I've set the stop between the 50-day EMA and support at 7.3% or $62.50.
The breakout looks very nice on the weekly chart along with the favorable rising trend that pulled price out of a long-term trading range. The weekly RSI did just enter overbought territory, but it has managed to hold those conditions of late. The weekly PMO is accelerating above the signal line well above the zero line. The SCTR is at the top of the hot zone. We should see some followthrough and best part is it is in a defensive sector and that could do well even if the market takes a turn for the worse. Consider a 17% upside target to about $78.89.
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: PLEASE NOTE, DUE TO ERRORS AT STOCKCHARTS.COM, THE SCI AND GCI ARE READING AT ZERO.
Full Disclosure: I am 60% 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