After a positive CPI print, the market rallied big time despite slim participation leading into it. Volatility is likely to continue as more economic reports are released. The market seems hyper focused on the Fed again.
The rally certainly opened up the scans. I had some interesting ones cross my screen. For example on the runner-ups list you'll find XLB and DIA, both of which have nice bullish reversals happening. Both have been extremely beat down and now they seem to be finding favor once again.
I'm including XLF given more earnings will be released in this area. So far, the results have been excellent so I expect to see more expansion in this sector.
I opted for the Metals & Mining ETF (XME), but I do believe that Gold Miners are a good place to consider right now.
I found a Mid-Cap Growth Fund (VOT) that has some nice upside potential. Small and Mid-Caps have struggled alongside the SPY, but now I'm looking for them to catch up if the rally is for real.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": VOT, XLF and XME.
Runner-ups: JMOM, VFLO, IGF, SHLD, DIA, ITA, FTA and XLB.
Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (1/3/2025, no recording 1/10):
Topic: DecisionPoint Diamond Mine (1/3/2025) LIVE Trading Room
Recording & Download Link
Passcode: January#3
REGISTRATION for 1/17/2025:
When: January 17, 2025 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine LIVE Trading Room
Register in advance for this webinar HERE
After registering, you will receive a confirmation email containing information about joining the webinar.
Below is the latest free DecisionPoint Trading Room recording from 1/6 (No recording 1/13 or 1/27). 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.
Vanguard Mid-Cap Growth ETF (VOT)
EARNINGS: N/A
The fund tracks an index of mid-cap stocks in the US. Holdings are selected and weighed based on growth factors. Click HERE for more information.
Predefined Scans Triggered: Filled Black Candles, Bullish MACD Crossovers and Parabolic SAR Buy Signals.
VOT is up +0.69% in after hours trading. You'll find filled black candlesticks on plenty of charts today. They are bearish as the close was beneath the open. It could mean a pullback tomorrow. I like the bullish triple bottom chart pattern. The RSI just moved into positive territory and the PMO is now turning up. Stochastics are rising fast in positive territory. This ETF has managed to outperform the SPY. Today's breakout confirms the triple bottom. The stop doesn't have to be set deeply, it could be thinner than what I've chosen if you're more comfortable. I've opted to set it at 6% or $245.98.
Price is back above support. We have a solid rising trend that does imply more upside to go. The weekly RSI is positive and the StockCharts Technical Rank (SCTR) is in the hot zone* above 70. The weekly PMO is a problem as it has just given us a Crossover SELL Signal so consider this short-term. Consider a 17% upside target to $306.18.
*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.
Financial Select Sector SPDR Fund (XLF)
EARNINGS: N/A
XLF tracks an index of S&P 500 financial stocks, weighted by market cap. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green, Parabolic SAR Buy Signals, New CCI Buy Signals and Bullish MACD Crossovers.
XLF is up +0.14% in after hours trading. Today's gap up move put price out of the trading range. We have a double bottom pattern and today's breakout confirms it. The RSI is now in positive territory and the PMO has turned back up. The Silver Cross Index has also turned up with more stocks moving above key moving averages. Participation has really kicked into gear. Stochastics are rising in positive territory. I believe this sector will be driven by upcoming earnings. The stop is set at support just below $46.00 at 7.7% or $45.67.
We have a breakout from a long-term trading range and a solid rising trend that suggests we could see more upside. The only problem with the chart is the weekly PMO triggering a Crossover SELL Signal. However, the weekly RSI is positive and the SCTR is in the hot zone. Consider a 17% upside target to $57.89.
SPDR S&P Metals and Mining ETF (XME)
EARNINGS: N/A
XME tracks an equal-weighted index of US metals and mining companies. Click HERE for more information.
Predefined Scans Triggered: Filled Black Candles and New CCI Buy Signals.
XME is up +1.84% in after hours trading. I like this rounded bottom reversal. It hasn't overcome resistance yet, but it is looking good. The RSI just hit positive territory and the PMO is on a new Crossover BUY Signal. We do have to be careful given how far below the zero line the PMO is. Stochastics look great above 80. Materials are starting to look bullish and I already liked Gold Miners. I like this ETF's chances. It is outperforming the SPY. The stop is set below support at 7.5% or $55.30.
Price retreated after its last breakout, but it is now bouncing off a long-term rising bottoms trendline. The indicators are not bullish yet. They took a turn for the worse during that vertical decline. The weekly RSI is rising, but still in negative territory. The weekly PMO is in decline on a Crossover SELL Signal. The SCTR is in the basement, but is at least rising again.
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
(c) Copyright 2025 DecisionPoint.com
Watch the latest episode of DecisionPoint Trading Room with Carl & Erin Swenlin Mondays on the DecisionPoint YouTube channel here!
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