We're sitting at an interesting place in the market right now as bears and bulls fight it out. I suspect trading will continue to be choppy moving forward with stutter steps leading us ultimately downward in my opinion. This means that expanding our portfolios will be tricky business. I think I've found three ETFs that will weather these choppy conditions primarily because new strength is beginning to enter them.
I am taking a leap of faith on Gold Miners (GDX) as I believe that Gold is going to make its way higher from here. That will benefit GDX, but I am giving you this ETF very early so it could still run into some problems particularly if Gold doesn't perform as I believe it will.
I still like Biotechs (IBB) and I'm seeing new strength coming in with participation beginning to expand again. This could be a problem spot if the market declines quickly, but if we see chop, I think this ETF will do fairly well. I'm not a huge fan of Healthcare in general, but this group does look ready to continue its current rally higher.
The final pick is in Energy. This area is continuing to show strength and this Energy Infrastructure ETF (MLPX) should continue to outperform.
In general I am not a fan of expanding exposure right now so be careful and set those stops for protection!
Tomorrow is Reader Request Day, a day earlier due to Thursday's day of mourning. Please send in requests as soon as you are able. Scans are producing right now so you should be able to find something of interest.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": GDX, IBB and MLPX.
Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (1/3/2025):
Topic: DecisionPoint Diamond Mine (1/3/2025) LIVE Trading Room
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Passcode: January#3
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When: January 10, 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 1/6. 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.
VanEck Vectors Gold Miners ETF (GDX)
EARNINGS: N/A
GDX tracks a market-cap-weighted index of global gold-mining firms. Click HERE for more information.
Predefined Scans Triggered: P&F Double Bottom Breakdown, Filled Black Candles, Elder Bar Turned Green and Parabolic SAR Buy Signals.
GDX is down -0.18% in after hours trading. As I mentioned in the open, this chart has not fully matured as we still have a declining trend. Good news is that this recent reversal is occurring above strong support at 32. A reversal above support is bullish. The RSI is not yet positive, but the PMO is on a new Crossover BUY Signal. The Silver Cross Index is nearing a Bull Shift across the signal line. Participation is moving higher again. Stochastics are rising and have just made it into positive territory. The stop is set below near-term support at 7.5% or $32.42.
As noted above GDX is still in a declining trend. The weekly chart is negative given the declining trend it has been in. There is work to do here so keep this one in the short-term timeframe. The weekly RSI is still negative and the weekly PMO is falling. The StockCharts Technical Rank (SCTR) is terrible right now, in the basement instead of in the hot zone* above 70.
*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.
iShares Nasdaq Biotechnology ETF (IBB)
EARNINGS: N/A
IBB tracks the performance of a modified market-cap-weighted index of US biotechnology companies listed on US exchanges. Click HERE for more information.
Predefined Scans Triggered: Parabolic SAR Buy Signals.
IBB is up +0.39% in after hours trading. It has been on a nice rally and has now formed what could be a large bullish double bottom. There is a short-term double bottom which has already been confirmed with today's breakout. The RSI isn't quite positive yet, but more rally will fix that. The PMO is on a new Crossover BUY Signal. The Silver Cross Index is rising again and participation is expanding overall. We can even see a little outperformance against the SPY. The stop is set well below support (you could tighten it) at 6.9% or $126.12.
The weekly chart is far from bullish so keep this in the short-term timeframe for now. Price is essentially in a trading range and it is sitting in the middle with not so great indicators around it. The weekly RSI is still negative and the weekly PMO is in decline. The SCTR is very low. The declining trend is still intact so we do have to be nimble.
Global X MLP & Energy Infrastructure ETF (MLPX)
EARNINGS: N/A
MLPX tracks an index of MLPs and companies engaged in energy infrastructure. The ETF is structured as an open-ended fund. Click HERE for more information.
Predefined Scans Triggered: Filled Black Candles.
MLPX is down -0.16% in after hours trading. I primarily picked this because it is Energy related. We have a nice upside reversal and new rising trend. Today did see a filled black candlestick so we could see a decline tomorrow. The chart is very favorable with a positive RSI and nearing PMO Crossover BUY Signal. Stochastics have topped but they are comfortably above 80. The ETF is definitely outperforming right now. The stop is set beneath support at 7.4% or $57.20.
The weekly chart looks good on this reversal. The weekly RSI is positive and not overbought. The weekly PMO is turning up above the signal line and the SCTR is at the top of the hot zone. We should see more upside so consider a 17% upside target to about $72.28.
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 30% 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