It was another ETF Day where we didn't get many results on the scans. I wasn't happy with most of them so I did what I often have to do on ETF Day, I explored the charts in our ETF Tracker. The ETF Tracker ChartList is available on the left hand side of the Blogs and Links page. If you would like a copy of the ChartList to use on on your own, just send me an email.
I can't believe I'm doing it again, but Natural Gas (UNG) looks good again and made the list today. It is poised to make another run higher in the short term.
I opted to present an ETF that is basically an ultra bull on Consumer Staples. I am expecting this sector to reverse as the market softens after the election as it is in the defensive category. If it doesn't turn around quickly though I would take it out of your portfolio.
The final pick is Lithium (LIT). I found this chart to be very bullish when I reviewed it in the ETF Tracker.
Tomorrow is Reader Request Day! Send in your symbols as soon as you can so they have a chance to be included!
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": LIT, UGE and UNG.
Runner-ups: DBA, TBT, CGMU and KIE.
Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (11/8/2024):
Topic: DecisionPoint Diamond Mine (11/8/2024) LIVE Trading Room
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Passcode: November#8
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When: November 15, 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 11/11. 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.
Global X Lithium ETF (LIT)
EARNINGS: N/A
LIT tracks a market-cap-weighted index of global lithium miners and battery producers. Click HERE for more information.
Predefined Scans Triggered: Stocks in a New Uptrend (Aroon) and Filled Black Candles.
LIT is up +0.91% in after hours trading. LIT has been on a nice rally and has now broken out above overhead resistance. The 50-day EMA is coming up to the 200-day EMA for a nearing Golden Cross. We do have a filled black candlestick so we could see a small decline tomorrow, although after hours trading has it up right now. The RSI is positive and not overbought. There is a new PMO Crossover BUY Signal and Stochastics are above 80. It's actually been outperforming the SPY for some time. I set the stop below the 200-day EMA at 7.3% or $42.99.
Price rallied out of a bullish falling wedge and then pulled back to the top of the pattern. It bounced from there and appears headed to test overhead resistance. The weekly RSI is positive and the weekly PMO is about to vault the zero line while on a Crossover BUY Signal. The StockCharts Technical Rank (SCTR) is not in the hot zone* yet, but it is making its way there quickly. It would be a nice gain if it can reach overhead resistance.
*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.
ProShares Ultra Consumer Goods (UGE)
EARNINGS: N/A
UGE provides 2x exposure to a market cap-weighted index of consumer staples stocks drawn from the S&P 500. Click HERE for more information.
Predefined Scans Triggered: None.
UGE is unchanged in after hours trading. This is early as price is still holding within a declining trend channel. We're looking at this as a reversal candidate. As noted earlier, if it doesn't break out of the channel, you probably won't want it. The RSI isn't in positive territory yet, again it's early on this one. The PMO has turned up, but it is below the zero line so we have diminishing weakness, not necessarily new strength. The OBV spiked today suggesting there is some interest in this ETF. Stochastics are rising, but haven't quite reached positive territory. I do see slight outperformance on the ETF just starting up. The stop is set at 6% or $17.94, but basically you would want to get out if it dropped out of the channel to the downside.
The declining trend channel on the daily chart forms a flag on a flagpole on the weekly chart. This suggests an upside breakout. This is a very strong support level so I'm looking for it to hold. We do see that the weekly PMO is in decline on a SELL Signal so keep this in the short-term timeframe for now.
United States Natural Gas Fund (UNG)
EARNINGS: N/A
UNG holds near-month futures contracts in natural gas, as well as swap contracts. Click HERE for more information.
Predefined Scans Triggered: P&F Bear Trap.
UNG is down -0.57% in after hours trading. I like the double bottom pattern and this bounce off support. It is coming off all-time lows right now. We have a bullish engulfing candlestick that suggests we'll see a rally tomorrow despite negative trading after hours. The RSI is positive. The PMO is on a new Crossover BUY Signal. Stochastics are rising strongly and we can see a little bit of outperformance against the SPY. The stop is set on gap support at 7.8% or $13.00.
Price is rising within a bullish falling wedge. It is especially bullish that price did not have to come down and test the bottom of the pattern before it reversed. The weekly RSI is in negative territory, but it is rising. The weekly PMO has turned back up and is on a Crossover BUY Signal. The SCTR is terrible, but given the decline out of the 2023 high, it isn't surprising. If it can reach the last top it would be an over 23% gain, but if it breaks out as the pattern suggests, it could rise much higher.
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 70% 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