I was actually thinking I wanted to go short today and I did pick out a few of interest. Bullish scans aren't producing as much as I would like. At the same time, the shorting scan, the Diamond Dog Scan, while producing some symbols, I wasn't liking the downside potential. It wasn't enough. I do have three shorts listed if you want to take a look. Tomorrow I may look at a hedge or two.
The market could certainly inch its way higher as it did today on the back of NVDA, but ultimately the internals are weak enough to think about a market top here. Although I was pleased to see the Swenlin Trading Oscillators turning back up today.
Ultimately, I wasn't ready to go short today, but I did decide to go defensive with picks all coming from defensive sectors. If we're going to expand our portfolio, it may be best to go toward defensive areas of the market. We'll see if I'm on the right track.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": AWK, DLR, DUK and USFD.
Runner-ups: AA, CSWI, EXC, IBM, NEE... Shorts: EPC, CC and VAL.
Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (11/15/2024):
Topic: DecisionPoint Diamond Mine (11/15/2024) LIVE Trading Room
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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.
American Water Works Co. Inc. (AWK)
EARNINGS: 2025-02-12 (AMC)
American Water Works Co., Inc. is a holding company, which engages in the provision of water and wastewater services. It operates under the Regulated Businesses and Other segments. The Regulated Businesses segment offers water and wastewater services to customers. The Other segment focuses on corporate costs that are not allocated to the operating segments, eliminations of inter-segment transactions, fair value adjustments, and associated income and deductions related to the acquisitions for evaluation of performance and allocation of resource purposes. The company was founded in 1886 and is headquartered in Camden, NJ.
Predefined Scans Triggered: None.
AWK is unchanged in after hours trading. I liked that it was in Utilities and I particularly liked the bullish falling wedge that was confirmed with today's breakout. The RSI has only just gotten above 50 so it is far from overbought. The PMO is on a new Crossover BUY Signal and Stochastics are rising strongly. Relative strength is picking up for the industry group and AWK is already outperforming the group and the SPY. The stop is set below the chart pattern at 7.6% or $127.69.
It isn't the most exciting weekly chart as price is essentially moving in a sideways trading range, but given the rally, it does appear ready to go back to the top of the channel. The weekly RSI just entered positive territory. The weekly PMO needs work as it is declining due to the recent pullback. The StockCharts Technical Rank (SCTR) also needs some help, but I'm getting involved in Utilities rather early on the move so I wouldn't expect it to be in the hot zone* just yet.
*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.
Digital Realty Trust, Inc. (DLR)
EARNINGS: 2025-02-13 (AMC)
Digital Realty Trust, Inc. operates as a real estate investment trust, which engages in the provision of data center, colocation and interconnection solutions. It serves the following industries: artificial intelligence (AI), networks, cloud, digital media, mobile, financial services, healthcare, and gaming. The company was founded on March 9, 2004, and is headquartered in Austin, TX.
Predefined Scans Triggered: Parabolic SAR Buy Signals, New CCI Buy Signals, P&F Double Top Breakout, P&F Bullish Triangle and Moved Above Upper Keltner Channel.
DLR is up +0.92% in after hours trading. We have a nice rounded bottom base on a gap up. Price just broke out above the previous top. It clearly reported good earnings as that was the gap up. The RSI is not overbought yet. The PMO has whipsawed back into a Crossover BUY Signal well above the zero line. Stochastics just moved above 80. Relative strength is finally improving for the group. DLR has been outperforming the group and SPY for some time. The stop is set close to support at 7.1% or $173.97.
The weekly chart looks great with the exception of an overbought weekly RSI. I don't mind it as it has managed to hold this condition for quite a few weeks. The rising trend is excellent on the breakout from 2021 highs. The weekly PMO is rising strongly well above the zero line and the SCTR is in the hot zone. Consider a 17% upside target to about $219.11.
Duke Energy Corp. (DUK)
EARNINGS: 2025-02-13 (BMO)
Duke Energy Corp. engages in the distribution of natural gas and energy related services. It operates through the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure, and Other. The Electric Utilities and Infrastructure segment conducts operations in regulated electric utilities in the Carolinas, Florida and the Midwest. The Gas Utilities and Infrastructure segment focuses on Piedmont, natural gas local distribution companies in Ohio and Kentucky, and natural gas storage and midstream pipeline investments. The Other segment includes interest expense on holding company debt, unallocated corporate costs, and Bison which is a wholly owned captive insurance company. The company was founded on April 30, 1904 and is headquartered in Charlotte, NC.
Predefined Scans Triggered: Bullish MACD Crossovers.
DUK is up +0.06% in after hours trading. I like the double bottom coming off support. This is also a stock in this week's Industry Group to Watch. The RSI is just now getting positive so it is not at all overbought. The PMO is rising toward a Crossover BUY Signal. Stochastics are rising strongly toward 80. The group as you can see has begun to outperform the SPY. DUK is just now starting to see some outperformance. The stop is set beneath the 200-day EMA at 7.7% or $104.83.
The weekly chart shows a nice rising trend with a breakout above resistance at the 2022 highs. The currently pullback did push the weekly PMO downward, but it is still in very positive territory. The SCTR is rising, but not yet in the hot zone. I like the location of the weekly RSI. Consider a 17% upside target to about $132.89.
US Foods Holding Corp. (USFD)
EARNINGS: 2025-02-13 (BMO)
US Foods Holding Corp. is a foodservice distributor, which engages in the frozen and dry food and non-food products to foodservice customers throughout the U.S. The company offers services under brands Chef's Line, del Pasado, Glenview Farms, Cattleman's Selection, Cross Valley Farms, Harbor Banks, Hilltop Hearth, Devonshire, and Metro Deli. The company was founded on May 23, 2007, and is headquartered in Rosemont, IL.
Predefined Scans Triggered: None.
USFD is up +0.06% in after hours trading. I'm going out on a limb here given Consumer Staples aren't performing that well, but the rising trend on this one and the PMO Surge above the signal line got me interested. Price is bouncing upward without having to touch the support line and that is bullish. The RSI is positive and rising. The PMO as noted above has bottomed above the signal line. Stochastics have reversed higher. While the sector isn't performing well, Food Retailers are outperforming the SPY. USFD is showing strength against both the group and the SPY. I've set the stop beneath the 50-day EMA at 6.8% or $61.98.
This is an excellent weekly chart. We have a solid rising trend out of a breakout from a multi-year trading range. The weekly RSI is positive and not overbought. The weekly PMO is rising steadily and the SCTR is in the hot zone above 70. Consider a 17% upside target to about $77.82.
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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'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