Alright, I still think that the market is going to continue to weaken in January and that has left me with selecting shorts for "Diamonds in the Rough". The unfortunate problem was that the Diamond Dog Scan which picks up shorting candidates, was rather slim. I only had three results and so I opted to present all three. The charts are very weak and should see downside followthrough particularly if the market fails soon.
The one long I have for you was a chart that came up in this morning's trading room. Antero Resources (AR) has a very bullish chart and with Energy being the one possible place for rally based on sector charts, I felt that it would be a good addition. It came up on the scans today so readers were onto something here. I have a runner-up in Energy that also looks good (CTRA).
I'll be presenting three ETFs tomorrow and three Reader Requests on Thursday (send them in!). There will be a Diamond Mine trading room on Friday.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": AR, COLL (Short), CRI (Short) and STAA (Short).
Runner-up: CTRA.
Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (12/20/2024):
Topic: DecisionPoint Diamond Mine (12/20/2024) LIVE Trading Room
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Passcode: December#20
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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.
Antero Resources Corp. (AR)
EARNINGS: 2025-02-19 (AMC)
Antero Resources Corp. engages in the development, production, exploration, and acquisition of natural gas. It operates through the following segments: Exploration and Production, Marketing, and Equity Method Investment in Antero Midstream. The Exploration and Production segment deals with the development and production of natural gas, NGLs, and oil. The Marketing segment refers to marketing and utilization of excess firm transportation capacity. The Equity Method Investment in Antero Midstream segment represents midstream services. The company was founded by Paul M. Rady and Glen C. Warren, Jr. in June 2002 and is headquartered in Denver, CO.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, Moved Above Upper Price Channel, P&F Ascending Triple Top Breakout, P&F Double Top Breakout, Moved Above Upper Keltner Channel and Stocks in a New Uptrend (ADX).
AR is down -0.08% in after hours trading. Today saw a huge breakout that has taken price to overhead resistance. The indicators are very favorable suggesting we should see a breakout above this next level of resistance. The RSI is getting overbought, but currently is not. The PMO is on a new Crossover BUY Signal. Stochastics are above 80 and we can see that the industry group is beginning to see some outperformance. AR is a clear leader as far as relative strength against the group. It is also doing well against the SPY. I've set the stop below gap support at 7.8% or $32.74.
Price is up against some very strong overhead resistance right now, but it looks ready for a breakout given the positive indicators. The weekly RSI is in positive territory and is not overbought. The weekly PMO is rising above the zero line on a Crossover BUY Signal. The StockCharts Technical Rank (SCTR) has pushed into the hot zone* above 70, also indicating that we should see a breakout. I don't know that it will get to all-time highs again, but there is certainly plenty of upside potential.
*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.
Collegium Pharmaceutical, Inc. (COLL) - SHORT
EARNINGS: 2025-02-27 (AMC)
Collegium Pharmaceutical, Inc. is a pharmaceutical company, which engages in development and planning to commercialize next generation, abuse-deterrent products for the treatment of patients suffering from chronic pain and other diseases. Its products include Xtampza ER, Nucynta ER and Nucynta IR, Belbuca, and Symproic. The company was founded by Michael Thomas Heffernan in April 2002 and is headquartered in Stoughton, MA.
Predefined Scans Triggered: P&F Double Bottom Breakdown, Moved Below Lower Bollinger Band, Moved Below Lower Price Channel, P&F Triple Bottom Breakdown and New 52-week Lows.
COLL is unchanged in after hours trading. Today's break down below support made this short enticing. We also see a negative RSI that is not oversold. Worse is the PMO Crossover SELL Signal arriving well below the zero line. Stochastics have topped below 20. Relative strength is fading for the industry group and COLL is already struggling against the group. It is looking terrible against the SPY. The upside stop is set as close to resistance as possible at 7.7% or $30.81.
The weekly chart looks terrible so it is good for a short. We have a very large bearish double top that has been confirmed with the breakdown below the prior 2024 low. The weekly RSI is in negative territory. The weekly PMO is on a Crossover SELL Signal and is now below the zero line. The SCTR is not in the hot zone. A downside target to the 2023 lows could be lucrative.
Carter Holdings Inc. (CRI) - SHORT
EARNINGS: 2025-02-25 (BMO)
Carter's, Inc. engages in the business of brand marketing of young children's apparel. It operates through the following segments: the United States (US) Retail, US Wholesale, and International. The US Retail segment includes selling products through retail stores and ecommerce websites. The US Wholesale segment focuses on wholesale partners. The International segment is involved in selling in retail stores and ecommerce websites in Canada and Mexico, and to international wholesale customers and licensees. The company was founded by William Carter in 1865 and is headquartered in Atlanta, GA.
Predefined Scans Triggered: P&F Double Bottom Breakdown, Moved Below Lower Bollinger Band, Moved Below Lower Price Channel and New CCI Sell Signals.
CRI is unchanged in after hours trading. We have a loss of support coming out of a bearish rounded top. The RSI is negative and not oversold. The PMO has topped below the zero line and is about to trigger a Crossover SELL Signal. Stochastics are falling in negative territory. Relative strength is technically rising for the industry group, but just barely. CRI is underperforming both the group and the SPY. The upside stop is set above the previous top at 7.5% or $48.82.
Price attempted to rally and recapture prior support, but it failed and is headed lower. The weekly RSI is falling in negative territory and the weekly PMO has topped below the signal line while below the zero line which is particularly weak. The SCTR is not in the hot zone. Consider a 17% downside target to about $43.81.
STAAR Surgical Co. (STAA) - SHORT
EARNINGS: 2025-02-25 (AMC)
STAAR Surgical Co. engages in the design, development, manufacture, and sale of ophthalmic surgical products. The firm offers implantable lenses for the eye and accessory delivery systems. Its products include refractive and cataract solutions through the Collamer brand. The company was founded in 1982 and is headquartered in Lake Forest, CA.
Predefined Scans Triggered: P&F Double Bottom Breakdown, P&F Descending Triple Bottom Breakdown, Stocks in a New Downtrend (Aroon), New CCI Sell Signals, Parabolic SAR Sell Signals, Hollow Red Candles and New 52-week Lows.
STAA is unchanged in after hours trading. We have a solid declining trend on this short candidate. Price hit a new 52-week low today. The RSI is negative and not oversold. The PMO is nearing a Crossover SELL Signal. Mainly the PMO is flat below the zero line signifying pure weakness. Stochastics are declining below 20. Relative strength is building a bit for the group, but it is part of the very weak Healthcare sector so I don't expect much here. It isn't underperforming the group or SPY, but it isn't outperforming them either. The upside stop level is set at the previous top and above the 20-day EMA at 7.5% or $22.27.
We see a breakdown from the last trading range. Certainly this is generally the time to look for upside reversals, but with such negative indicators on the daily chart and this breakdown, I'm expecting price to continue to dip lower. The weekly RSI is negative and not oversold. The weekly PMO is headed lower below the zero line on a Crossover SELL Signal. The SCTR is in the basement at a mere 13.5%. Consider a 17% downside target to about $19.98.
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. Am contemplating adding some shorts.
I'm required to disclose if I currently own a stock I mention and/or may buy/short it within the next 72 hours.
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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)
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