As always, thank you very much to the readers who sent in requests this week. It was a pretty good list, although not all would pass as "Diamonds in the Rough". You'll want to review the other symbols and you can likely see why they weren't picked. That's a good learning experience.
I was able to make two of the stops today pretty thin in comparison to what I normally present. It just worked out based on support levels. This sets up slightly less risk on those setups.
I hope you all have a very nice Thanksgiving holiday! Remember there is no Diamond Mine trading room this week. I think we'll all have a turkey hangover!
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": ARCC, HSTM and MELI.
Other requests: IMP.TO, AAT, ARES, DMRC, FSV, RCEL, AMZN, PYPL and CIEN.
SCHEDULE FOR THIS WEEK: There will be no Diamond Mine this week due to Thanksgiving. I will do four "Diamonds in the Rough" on Monday and three ETF picks on Tuesday with three Reader Requests falling on Wednesday this week. The DP Diamonds Recap will be published on Friday.
Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (11/22/2024):
Topic: DecisionPoint Diamond Mine (11/22/2024) LIVE Trading Room
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Passcode: November#22
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When: December 6, 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 11/25. 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.
Ares Capital Corp. (ARCC)
EARNINGS: 2025-02-11
Ares Management Corporation (NYSE: ARES) is a leading global alternative investment manager offering clients complementary primary and secondary investment solutions across the credit, real estate, private equity and infrastructure asset classes. We seek to provide flexible capital to support businesses and create value for our stakeholders and within our communities. By collaborating across our investment groups, we aim to deliver consistent and attractive investment returns throughout market cycles.
Predefined Scans Triggered: P&F Double Top Breakout and P&F Triple Top Breakout.
ARCC is up +0.07% in after hours trading. This one caught my eye due to the recent breakout above resistance. It is a recipe for followthrough given the indicators. The RSI is not yet overbought. The PMO is rising above the zero line on a Crossover BUY Signal that occurred above the zero line. Stochastics are unfortunately slipping, but so far they do remain above 80 indicating internal strength. It is performing in line with its group and therefore it is outperforming the SPY given the strong relative strength of the group. The stop is set beneath support at 6% or $20.68.
The weekly chart is very favorable with a long-term rising trend that has been intact since the middle of 2023. The weekly RSI is not overbought yet. The weekly PMO is rising on a Crossover BUY Signal above the zero line. The StockCharts Technical Rank (SCTR) is not yet in the hot zone* and is running a bit flat. Could be better. Consider a 17% upside target to about $25.75.
*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.
HealthStream, Inc. (HSTM)
EARNINGS: 2025-02-20 (AMC)
HealthStream, Inc. engages in the provision of services to healthcare organizations. It develops healthcare technology platforms for workforce solutions. The firm's workforce solutions include learning management, nurse & staff scheduling, clinical education, credentialing, privileging, provider enrollment, performance assessment, and managing simulation-based education programs. The company was founded by Robert A. Frist, Jr. and Jeffery L. McLaren in 1990 and is headquartered in Nashville, TN.
Predefined Scans Triggered: P&F Ascending Triple Top Breakout, New CCI Buy Signals, P&F Double Top Breakout and New 52-week Highs.
HSTM is unchanged in after hours trading. I liked the breakout above the prior top after a rebound off strong support. The RSI is not overbought yet. The PMO is rising after surging (bottoming) above the signal line. The OBV made a new high, confirming the breakout. Stochastics are positive and trending toward 80. The group is beginning to show some outperformance so while it is in the depressed Healthcare sector, it is showing strength. HSTM is clearly outperforming both the group and the SPY. The stop is set at 6.8% or $30.78.
I really like the breakout on the weekly chart that took price out of a wide trading range. The weekly RSI is not yet overbought, but it is getting close. The weekly PMO is rising on a Crossover BUY Signal. The weekly PMO is also flat above the zero line, implying pure strength. The SCTR is in the hot zone. Consider a 17% upside target to about $38.65.
MercadoLibre Inc. (MELI)
EARNINGS: 2025-02-20 (AMC)
MercadoLibre, Inc. engages in the development of an online commerce platform with a focus on e-commerce and related services. It operates through the following geographical segments: Brazil, Argentina, Mexico, and Other Countries. The Other Countries segment refers to Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Panama, Peru, Bolivia, Honduras, Nicaragua, El Salvador, Guatemala, Paraguay, Uruguay, and the United States of America. Its products provide a mechanism for buying, selling, and paying as well as collecting, generating leads, and comparing lists through e-commerce transactions. The company was founded by Marcos Eduardo Galperin on October 15, 1999 and is headquartered in Montevideo, Uruguay.
Predefined Scans Triggered: Elder Bar Turned Blue and Entered Ichimoku Cloud.
MELI is down -0.04% in after hours trading. We did see a pullback at resistance which is a bit bothersome, but this pullback could be offering a good entry. The indicators are positive and do suggest we could see a breakout. Today's big decline was bad, but it didn't change the PMO or Stochastics to negative. The RSI is positive and not overbought. The PMO is rising on a Crossover BUY Signal. Stochastics are above 80 still. Relative strength studies are very positive. This could have a little more pullback in its future, but I do think we will get that breakout eventually. It's not my favorite chart, but it is still a good one. The stop is set at 7% or $1901.62.
Price has broken out again above strong overhead resistance. I don't care for the long wick on the OHLC bar, but as I said above, this one may have more pullback in its future. The weekly RSI is positive and we have a nice rising trend. The weekly PMO has flattened but unfortunately is still in decline. The SCTR is not yet in the hot zone. While the indicators aren't great here, that rising trend is and it does suggest more upside price movement. Consider a 17% upside target to about $2392.37.
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 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