The ETF scans came up very light. Bonds seemed to be prevalent but I don't think there is much upside potential there. I am bearish on the market so that left very few options open.
Energy is seeing a nice reversal so it was no surprise that the Crude ETFs started to peek through. I found a leveraged ETF (GUSH) that will take advantage of new strength in that area, but admittedly Crude is at overhead resistance so we could see a pullback first.
The other ETF is in the same theme, Commodities ETF (GSG) which will also benefit should Crude prices begin to move higher.
The final ETF is the ultrashort of the QQQ (SQQQ) which I think would be an excellent hedge going into January. The QQQ chart looks very bearish so consequently the SQQQ chart is looking bullish. Remember, this is a hedge so position size wisely with a very short timeframe.
I'll be presenting three Reader Requests Thursday so please send them in. There will be a Diamond Mine trading room on Friday.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": GUSH, GSG and SQQQ.
Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (12/20/2024):
Topic: DecisionPoint Diamond Mine (12/20/2024) LIVE Trading Room
Recording & Download Link
Passcode: December#20
REGISTRATION for 1/3/2025:
When: January 3, 2025 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 12/30. 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 S&P GSCI Commodity-Indexed Trust (GSG)
EARNINGS: N/A
GSG uses index futures contracts to gain exposure to a production-weighted index of front-month commodities futures contracts. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Bollinger Band.
GSG is down -2.30% in after hours trading so a better entry may be available. I liked the big rounded bottom base from which price has now broken from. The RSI is positive and not overbought. The PMO is on the rise on a Crossover BUY Signal above the zero line. Stochastics are just about to cross above 80. We can see that this ETF has been outperforming the SPY all December. The stop doesn't need to be set too deeply. I've set it below support at 5.7% or $20.52. After hours decline if it translates to Thursday could mean a break of the rising trend, but would offer a good entry if Crude is indeed going to rally further.
As with Crude Oil price has been in a long-term trading range. We are playing the trading range right now as we look for a breakout. The weekly RSI is positive, but the weekly PMO while rising is sitting on the zero line which is indicative of sideways trading. The StockCharts Technical Rank (SCTR) is not in the hot zone* presently but it is moving very quickly toward it. If we can get the breakout we'll have some nice upside potential. The question remains whether Crude will be able to push that high.
*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 S&P Oil & Gas Exp. & Prod. Bull 2x Shares (GUSH)
EARNINGS: N/A
GUSH provides 2x daily exposure to an equal-weighted index of the largest oil and gas exploration and production companies in the US. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green and Bullish MACD Crossovers.
GUSH is down -1.29% in after hours trading. Energy has been reversing and this chart looks very similar to the sector chart. The bounce is coming off strong support and has reentered the prior trading range. The RSI is not positive yet, but it is rising. The PMO is rising toward a Crossover BUY Signal. Stochastics aren't in positive territory but they are quickly headed upward toward 80. We can see that the ETF is outperforming the SPY currently. The stop is set deeply and could be set deeper given this is a leveraged ETF. I've set it at 8% or $25.58.
As with Crude and GSG, we have a long-term trading range that we are trying to play as price is coming off the bottom of it. The weekly RSI is still negative so it is early in this move. The weekly PMO is turning back up. If it can get to the prior high, that would be a very generous return.
ProShares UltraPro Short QQQ (SQQQ)
EARNINGS: N/A
SQQQ provides (-3x) inverse exposure to a modified market-cap-weighted index of 100 of the largest non-financial firms listed on the NASDAQ. Click HERE for more information.
Predefined Scans Triggered: New CCI Sell Signals.
SQQQ is down -0.22% in after hours trading. I like this as a hedge because we have a double top on QQQ that suggests we will see prices fall further. This translates to a bullish double bottom on the inverse chart. The RSI just moved into positive territory. The PMO is rising on a Crossover BUY Signal. Stochastics are shooting higher toward 80. Given the market is declining, this ETF is outperforming. The stop is set deeply as this is leveraged 3x. It definitely could be set lower. I've set it as close to support as possible at 8% or $28.64.
We have a strong declining trend on the weekly chart that is a characteristic of the bull market we are currently in. I wouldn't expect this chart to look particularly bullish right now. I do see that the weekly PMO is trying to turn up. The weekly RSI is negative of course given the steady decline.
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. May add SQQQ as a hedge soon.
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