So much for Santa Claus keeping the market elevated. We could be in for more bloodbath before Christmas given the deep decline we experienced today on hawkish guidance for next year by the Fed. The plunge took out one of our "Diamonds in the Rough" from yesterday and the others were down quite a bit. I know my portfolio felt the pinch and I will likely shed some positions before year end.
It was nearly impossible to find good candidates for ETF Day. I am not presenting it, but the small-cap hedge ETF (TZA) would likely be a good hedge and/or SDOW the inverse of the Dow 30. Bitcoin also felt the pain today, but I do think you could take a look at those ETFs as I do think Bitcoin isn't done rising.
I selected an ETF that I'm not very familiar with so you may want to read more about it if you decide to get involved with it. It appears to have a good showing during market downturns. The other two are related to metals. DUST, the Gold Miner inverse, should do well with the decline in Gold and the inverse Silver ETF looks pretty good right now too. That was really it. UNG has some possibilities, but not enough to present.
I wish you luck out there. It just got pretty ugly and given the already weak internals, this isn't likely the end of it. We'll see if we get a snapback tomorrow, but I wouldn't count on it.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": BTAL, DUST and ZSL.
Runner-ups: TZA and SDOW.
Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (12/13/2024):
Topic: DecisionPoint Diamond Mine (12/13/2024) LIVE Trading Room
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Passcode: December#13
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When: December 20, 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 12/16. 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.
QuantShares U.S. Market Neutral Anti-Beta Fund (BTAL)
EARNINGS: N/A
BTAL is an actively managed fund that takes long positions in low beta US stocks, offset by short positions in high beta US stocks. Click HERE for more information.
Predefined Scans Triggered: Parabolic SAR Buy Signals.
BTAL is down -0.53% in after hours trading. This one is a slow mover so we are able to set a low stop. Today's breakout on a terrible market day was encouraging to me. This could be due to the short positions they hold. The RSI just moved into positive territory. There is a new PMO Crossover BUY Signal, albeit it is well below the zero line, so this could just be diminishing weakness not necessarily new strength. Stochastics just moved into positive territory. We can see that of late, particularly today, it is outperforming the SPY. The stop is set beneath support at 4.5% or $18.16.
Not the greatest looking weekly chart as price has been moving sideways for some time. However, it does look like it is reversing before having to test support and that is very bullish. The weekly RSI still needs to improve and the weekly PMO is falling given the previous price decline. The StockCharts Technical Rank (SCTR) is rising, but is not in the hot zone. If it can reach its prior high that would be an over 12% gain which isn't bad considering you can have such a thin stop.
*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.
Direxion Daily Gold Miners Index Bear 2x Shares (DUST)
EARNINGS: N/A
DUST provides 2x inverse exposure to a market-cap-weighted index of global gold and silver mining firms. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, P&F double Top Breakout, Moved Above Upper Keltner Channel and Ichimoku Cloud Turned Green.
DUST is up +0.49% in after hours trading. Gold is struggling and that has wreaked havoc on Gold Miners. Today saw a great looking breakout on the inverse of GDX (DUST). The RSI is positive and not overbought. There is a new PMO Crossover BUY Signal that occurred above the zero line. Stochastics are holding above 80. The Dollar is still showing strength and that will also help this ETF. I've set the stop as deeply as possible given it is a leveraged fund at 8% or $62.53.
We see a nice reversal occurring right now that has the earmarks of a reverse head and shoulders bottom. The weekly RSI just hit positive territory and the weekly PMO is on the rise. If it can reach the January 2024 low that would be an exceptional return.
ProShares UltraShort Silver (ZSL)
EARNINGS: N/A
ZSL provides -2x the daily performance of silver, as measured by the price of COMEX silver futures contracts. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, Moved Above Ichimoku Cloud, Moved Above Upper Price Channel, New CCI Buy Signals, P&F Double Top Breakout and Moved Above Upper Keltner Channel.
ZSL is up +0.91% in after hours trading. Here we have a breakout that is confirming the reverse head and shoulders pattern. That pattern's minimum upside target would take price close to the August top. The RSI is positive and not overbought despite today's rally. The PMO has triggered a Crossover BUY Signal and Stochastics are almost above 80. Relative strength is improving. I've set the stop near the 50-day EMA at 7.9% or $37.51.
The weekly chart shows that this fund is establishing a new rising trend as it reverses. The weekly RSI is still negative, but the weekly PMO is rising on a Crossover BUY Signal. Volume does appear to be coming in on the rally based on the rising OBV. If it can reach that prior top, it would be a very nice return.
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 35% 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