Thank you to the readers who sent in requests for today. I was pretty impressed by the symbols I was given, but I will say that one reader gets a gold star as I'm presenting two of his requests.
I'll be writing about it in the DP Alert, but today Utilities (XLU) and Real Estate (XLRE) led the way today. They are defensive sectors and many times we'll see them do well before a decline. I think we could see more upside from here, but today's lackluster performance by the SPY after yesterday's upside initiation climax has us wondering how much more is left in the tank.
I included a Utility today as they do seem ready to continue moving higher. We also have a Financial and an Industrial to round it out.
Tomorrow is the Diamond Mine trading room so be sure to register! This is shaping up to be a good week, but we'll see what tomorrow morning brings.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": ARES, NI and SAIA.
Other requests: MPLX, FLS, AEE, AFG, ESAB, HOMB and RBC.
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.
Ares Management, LP (ARES)
EARNINGS: 2025-02-05 (BMO)
Ares Management Corp. engages in the provision of investment and consultancy services. It operates through the following segments: Credit Group, Private Equity Group, Real Assets Group, Secondaries Group, and Other. The Credit Group segment includes the management of strategies across the liquid and illiquid spectrum, direct lending, and Asia-Pacific. The Private Equity Group segment involves the categorization of investment strategies as corporate, special opportunities, and Asia-Pacific. The Real Assets Group segment focuses on equity and debt strategies across infrastructure investments. The Secondaries Group segment consists of investment in secondary markets, alternative asset class strategies, private equity, real estate, infrastructure, and credit. The company was founded by Michael J. Arougheti, David B. Kaplan, John H. Kissick, Antony P. Ressler, and Bennett Rosenthal in 1997 and is headquartered in Los Angeles, CA.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, Moved Above Upper Price Channel, P&F Double Top Breakout and New 52-week Highs.
ARES is unchanged in after hours trading. I liked today's breakout from a bullish ascending triangle. It has been on a nice rising trend since the August low. The RSI is positive and not overbought. The PMO is on a new Crossover BUY Signal and Stochastics are nearly above 80. Relative strength for ARES is incredible. It has shown leadership for some time against the group and the SPY. The group is beginning to see some outperformance so we should see good things from ARES. The stop is set beneath the 50-day EMA at 7.6% or $173.61.
We have a solid rising trend on the weekly chart and a breakout to new all-time highs. The weekly RSI is not quite overbought yet, but even if it does get overbought, we've seen it hold the conditions for weeks at a time. The weekly PMO has turned back up whipsawing into a Crossover BUY Signal. The StockCharts Technical Rank (SCTR) is well within the hot zone* above 70. Consider a 17% upside target to about $219.84.
*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.
Nisource, Inc. (NI)
EARNINGS: 2025-02-26 (BMO)
NiSource, Inc. is a holding company, which engages in the provision of energy solutions. It operates under the Gas Distribution Operations and Electric Operations segments. The Gas Distribution Operations segment provides natural gas service and transportation for residential, commercial, and industrial customers. The Electric Operations segment includes generation, transmission, and distribution of electricity through NIPSCO, and wholesaling electric and transmission transactions. The company was founded in 1987 and is headquartered in Merrillville, IN.
Predefined Scans Triggered: Moved Above Upper Keltner Channel, Moved Above Upper Bollinger Band, Stocks in a New Uptrend (Aroon), Moved Above Ichimoku Cloud, Moved Above Upper Price Channel, P&F Double Top Breakout and P&F Triple Top Breakout.
NI is unchanged in after hours trading. I liked the bullish double bottom pattern that was confirmed today with a close above the confirmation line. We also have a bullish engulfing candlestick that appeared after a bearish filled black candlestick. The RSI is positive and not yet overbought. The PMO is on a Crossover BUY Signal and Stochastics are now above 80. It has been outperforming the SPY and is essentially outperforming the industry group. The industry group is really kicking into gear with its outperformance. The stop is set beneath support at 7.6% or $35.13.
I really liked the bull flag that I picked out on the weekly chart. This week's rally is confirming the pattern. The weekly RSI is slightly overbought, but we can see that condition doesn't necessarily bother it. The weekly PMO has reversed upward and the SCTR is in the hot zone above 70. The flag implies we will get a ton of upside here, but I'll be happy with a 17% gain to about $44.49. If it continues to look good at that point, enjoy the ride.
SAIA Inc. (SAIA)
EARNINGS: 2025-02-03 (BMO)
Saia, Inc. operates as a transportation holding company. The firm through its wholly-owned subsidiaries provides regional and interregional less-than-truckload (LTL) services through a single integrated organization. The firm also offers other value-added services, including non-asset truckload, expedited and logistics services across North America. The company was founded by Louis Saia, Sr. in 1924 and is headquartered in Johns Creek, GA.
Predefined Scans Triggered: P&F Triple Top Breakout and P&F Double Top Breakout.
SAIA is down -0.55% in after hours trading. This was another double bottom formation that I spotted. We also have a breakout from a bullish falling wedge. There was a bullish engulfing candlestick today after a bearish candlestick yesterday. The RSI just moved into positive territory and the PMO is nearing a Crossover BUY Signal. Stochastics are above 80. We can see that all three relative strength lines are rising. The stop is set beneath the 200-day EMA at 7.6% or $455.56.
I very much liked upside potential here. It was one of the primary reasons I chose this stock. The weekly RSI just hit positive territory and the weekly PMO has tipped upward and is crossing the signal line for a likely Crossover BUY Signal. The SCTR is not yet in the hot zone, but at least it is rising.
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)
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