It was a good day for the scans which produced many choices. With so many to select from, I decided to make the runner-up list plentiful.
The market seems to be clicking after inauguration day. I am still seeing some weakness among the Magnificent Seven that has me somewhat concerned, but so far the broad market has been swooping in and keeping the market elevated.
One of today's picks had the highest PMO value of all that I looked at today. It has a good chance for followthrough given its clear relative strength based on the PMO.
Another pick today is higher risk. It's a stock that I've heard talked about on the business channels. It has excellent upside potential but as such carries extra risk on the front end.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": HIMS, LITE, MSTR and NPO.
Runner-ups: AOSL, SYF, BL, TTD, MANH, SXI, PANW, ORCL and FFIV.
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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.
Hims & Hers Health, Inc. (HIMS)
EARNINGS: 2025-02-24 (AMC)
Hims & Hers Health, Inc. operates a telehealth consultation platform. It connects consumers to healthcare professionals, enabling them to access medical care for mental health, sexual health, dermatology and primary care. The company was founded in 2017 and is headquartered in San Francisco, CA.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, Moved Above Ichimoku Cloud, New CCI buy Signals and P&F Double Top Breakout.
HIMS is up +0.40% in after hours trading. There is a bullish triple bottom that has essentially been confirmed with this breakout. The PMO is a little bit flat right now, but it is going in for a Crossover BUY Signal above the zero line. Price bottoms are angling lower while the OBV shows rising bottoms for a positive divergence. Stochastics are almost above 80. Relative strength for the group is kicking up again and overall it is on a rising trend. HIMS is outperforming both the SPY and the group. The stop is set near the 20-day EMA at 7.8% or $27.48.
There is a long-term rising trend on price and we are in the midst of a rebound off strong support. The weekly PMO has surged above the signal line (bottomed above the signal line) and the StockCharts Technical Rank (SCTR) is at the top of the hot zone*. We have nice 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.
Lumentum Holdings Inc. (LITE)
EARNINGS: 2025-02-06 (AMC)
Lumentum Holdings, Inc. engages in the provision of optical and photonic products. It operates through the Cloud and Networking, and Industrial Tech segments. The Cloud and Networking segment refers to a portfolio of optical and photonic components, modules, and subsystems. The Industrial Tech segment includes solid-state lasers, kilowatt-class fiber lasers, ultrafast lasers, diode lasers, and gas lasers. The company was founded on February 10, 2015 and is headquartered in San Jose, CA.
Predefined Scans Triggered: Moved Above Upper Keltner Channel, New 52-week Highs and P&F Double Top Breakout.
LITE is up +0.56% in after hours trading. I liked the breakout from a trading range and I found relative strength for the group to be outstanding. The RSI is positive and not overbought yet. The PMO is on a new Crossover BUY Signal. Stochastics look strong above 80. As noted earlier, the group is performing very well. LITE is performing well against the group and the SPY. The stop is set below the prior top at 7.9% or $89.75.
We have a strong breakout from a trading range and price is now on its way to the top of the long-term range. The weekly RSI is positive and not overbought. The weekly PMO has surged above the signal line. The SCTR is at the top of the hot zone. I'm looking for a breakout from the long-term trading range, but even if it stalls at overhead resistance, it would still be an over 12% gain.
MicroStrategy Inc. (MSTR)
EARNINGS: 2025-02-06 (AMC)
MicroStrategy, Inc. engages in the provision of enterprise analytics and mobility software. The firm designs, develops, markets, and sells software platforms through licensing arrangements and cloud-based subscriptions and related services. Its product packages include Hyper. The company was founded by Michael J. Saylor and Sanjeev K. Bansal on November 17, 1989, and is headquartered in Vienna, VA.
Predefined Scans Triggered: Entered Ichimoku Cloud and P&F Double Top Breakout.
MSTR is down -0.09% in after hours trading. This is your high risk play on a stock that isn't a meme, but is certainly seeing some buzz. We can see a parabolic breakdown in November. It corrected and is now working its way back up. This one had the highest PMO value of all the stocks I looked at today. I was disappointed it didn't rally today, but that offers a better entry. The RSI is positive and not overbought. The PMO is on a new Crossover BUY Signal. Stochastics are rising above 80. It does have a big negative P/E so consider it very short-term. Relative strength looks like it is improving for Software. MSTR is outperforming the group and most importantly it is outperforming the SPY. The stop is set at the 20-day EMA at 7.8% or $358.75.
We saw a bounce off gap support and now what looks like a move headed to all-time highs. The weekly RSI is positive and not overbought. The weekly PMO is turning up. The SCTR is at the top of the hot zone. There are a lot of things going right here, but it is still high risk in my opinion.
EnPro Industries, Inc. (NPO)
EARNINGS: 2025-02-25 (BMO)
Enpro, Inc. engages in the design, development, manufacturing, and marketing of proprietary engineered industrial products. It operates through the Sealing Technologies and Advanced Surface Technologies segments. The Sealing Technologies segment designs, manufactures, and sells sealing products including metallic, non-metallic, and composite material gaskets. The Advanced Surface Technologies segment applies proprietary technologies, processes, and capabilities. The company was founded on January 11, 2002, and is headquartered in Charlotte, NC.
Predefined Scans Triggered: New CCI Buy Signals.
NPO is unchanged in after hours trading. I like this "V" Bottom bounce. We have the 1/3rd retracement on the right side of the pattern so the pattern has been confirmed in my opinion. That calls for a move that would overcome resistance at the left side of the "V". The RSI just moved into positive territory. The PMO is turning up toward a Crossover BUY signal. Stochastics just moved above 80. Relative strength is rising for the group and the stock. I've set the stop as close to support as I could at 7.8% or $162.59.
Price has bounced back above resistance at prior 2024 highs. It appears it is ready to test and likely overcome the next level of resistance. The weekly RSI is positive and rising. The weekly PMO has turned back up. We have a steady rising trend, not a parabolic one. The SCTR isn't in the hot zone yet, but it is very close. I'm looking for a breakout.
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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)
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 45% 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.
Helpful DecisionPoint Links:
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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