The market reversed today with Technology and Consumer Discretionary (as well as Communication Services) leading the way. The broad market lost some participation and we did notice that Net A-D was quite negative today. I'm not comfortable going all in on Technology.
I did include a Consumer Discretionary stock on the rally in that sector. A Financial stock will take advantage of the healthy Financial sector. I have an Industrial as well as a Real Estate choice given the nice reversal we've started to see with that sector.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": AIZ, AKR, PAYC and SCI.
Runner-ups: UNFI, BRZE, LULU, WMT, MAC, OMCL and EGBN.
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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.
Assurant Inc. (AIZ)
EARNINGS: 2025-02-11 (AMC)
Assurant, Inc. engages in the provision of lifestyle and housing solutions for consumer purchases. It operates through the following segments: Global Lifestyle, Global Housing, and Corporate and Other. The Global Lifestyle segment offers mobile device solutions and extended service products and related services for mobile devices, consumer electronics and appliances, vehicle protection, and related services. The Global Housing segment includes lender-placed homeowners' insurance, lender-placed manufactured housing insurance, lender-placed flood insurance, renters' insurance, and related products, voluntary manufactured housing insurance, voluntary homeowners' insurance and other specialty products. The Corporate and Other segment refers to the corporate employee-related expenses and activities of the holding company. The company was founded in 1892 and is headquartered in Atlanta, GA.
Predefined Scans Triggered: New CCI Buy Signals.
AIZ is unchanged in after hours trading. This one caught my eye due to the bullish reverse head and shoulders pattern. We also have price breaking away from a declining trend. The RSI is positive and not overbought and the PMO is on a new Crossover BUY Signal. Relative strength for Life Insurance is on the rise. We're now seeing AIZ outperforming the group and now is outperforming the SPY. I've set the stop at 7.7% or $199.10.
I like the strong rising trend on the weekly chart. We had a pullback toward support and we got a reversal before price had to test that level. That is bullish. The weekly RSI positive and the weekly PMO is turning back up. The StockCharts Technical Rank (SCTR) is in the hot zone*. Consider a 17% upside target to about $252.38.
*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.
Acadia Realty Trust (AKR)
EARNINGS: 2025-02-11 (AMC)
Acadia Realty Trust is a real estate investment trust, which engages in delivering operating platforms and investment strategy. It operates through the following business segments: Core Portfolio, Funds, and Structured Financing. The Core Portfolio segment consists of retail properties. The Funds segment handles retail real estate. The Structured Financing segment involves earnings and expenses related to notes and mortgages receivable which are held within the Core Portfolio or the Funds. The company was founded by Kenneth F. Bernstein in 1964 and is headquartered in Rye, NY.
Predefined Scans Triggered: None.
AKR is unchanged in after hours trading. I saw the double bottom on the chart and the breakout from the declining trend as positive. The RSI is not overbought and the PMO is on a new Crossover BUY Signal. Stochastics are rising vertically toward 80. I like that the group is finally seeing some outperformance. AKR is already outperforming the group and the SPY. The stop is set beneath support at 7.8% or $21.73.
This looks very much like a bull flag formation and price is now trying to break out from the flag. The weekly RSI is positive, but the weekly PMO is still technically in decline. The SCTR isn't in the hot zone, but it is rising and is very close to 70. Consider a 17% upside target to $27.57.
Paycom Software, Inc. (PAYC)
EARNINGS: 2025-02-12 (AMC)
Paycom Software, Inc. engages in the provision of cloud-based human capital management software solutions delivered as software-as-a-service. It offers functionality and data analytics that businesses need to manage the complete employment life cycle from recruitment to retirement. The company was founded by Chad R. Richison in 1998 and is headquartered in Oklahoma City, OK.
Predefined Scans Triggered: P&F Double Top Breakout.
PAYC is down -0.59% in after hours trading. On this one I liked the rounded bottom base that has formed on top of the 200-day EMA. It looks ready to break out. It did manage a slight breakout intraday. The RSI is positive and not overbought. The PMO is on a new Crossover BUY Signal. Stochastics are rising toward 80 in positive territory. Relative strength for the group is improving. PAYC is performing in line with the group which is fine given the group is outperforming. PAYC is starting to outperform the SPY slightly. The stop is set beneath support at 7.9% or $196.86.
This is range bound on the weekly chart so we are playing the trading range, looking for a test of the top of the range given the reversal well above support at the 2024 low. The weekly RSI is positive and the SCTR is in the hot zone. This reversal hasn't quite registered on the weekly PMO which is technically still in decline. This is one for a short-term horizon. It reports 2/12, so you have some time to work toward the 18% gain before earnings are announced.
Service Corp. (SCI)
EARNINGS: 2025-02-12 (AMC)
Service Corp. International engages in the provision of funeral goods and services. It operates through the Funeral and Cemetery segments. The Funeral segment offers services related to cremations, including the use of home facilities and motor vehicles, arranging and directing services, removal, preparation, embalming, memorialization, and catering. The Cemetery segment provides property interment rights, including lawn crypts, mausoleum spaces, niches, and interment options. The company was founded by Robert L. Waltrip in July 1962 and is headquartered in Houston, TX.
Predefined Scans Triggered: New CCI Buy Signals.
SCI is unchanged in after hours trading. This is another rounded bottom reversal. I like that it occurred well above support and on the 200-day EMA which is providing strong support. Price broke out briefly today, but looks good for followthrough. The RSI is positive and not overbought. The PMO is on a new Crossover BUY Signal. Stochastics are above 80 and relative strength studies show rising trends across the board. The stop is set beneath support at 7.2% or $75.01.
Price is in a rising trend channel and is current bouncing after peeking just below the channel. It looks ready to go back up to the top of the channel. The weekly RSI is now positive. The weekly PMO is decelerating, but is in decline currently. The SCTR needs some help. Keep this one in the short-term timeframe for now. Consider a 17% upside target to about $94.57.
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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)
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Here is the current chart:
Full Disclosure: I am 50% 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.
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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.
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