This was a relatively successful week for "Diamonds in the Rough". We did end up averaging down -0.03% overall, but that was better than the SPY which was down -0.43% on the week.
We would've done better this week, but I went with Bonds on Wednesday due to my Surge Scan turning up so many Bond funds, but I was still bullish on yields so I wasn't excited about presenting them. I should've gone elsewhere as yields do appear ready to move higher from here. I think their upside potential is limited so these funds shouldn't be major losers, I just don't see much upside available at this time.
The Darling this week was picked yesterday, Entertainment Properties (EPR). It had a great day and overtook the Tuesday winner of Palomar Holdings (PLMR). Not much has changed on the chart, but we'll look at it below.
The Dud was not a Bond fund. It was ONE Gas (OGS). I think the main problem with it was that it was in a depressed Utilities sector.
The Sector to Watch is again Industrials (XLI). I wanted to go elsewhere but ultimately it has the best setup and internals so I went with it again this week. Close seconds were Consumer Discretionary (XLY) and Technology (XLK), Financials (XLF) also looked interesting. I opted to stay away from aggressive growth groups as I think the market will struggle next week barring any new trade deals.
The Industry Group to Watch was Building Materials. I'll explain why I liked the chart later. The symbols I found in this group that you might want to look at were: BBCP, AZEK, THR, TTAM, CARR and AAON.
I did finish the trading room by running some scans. They weren't particularly productive but we did find some interesting setups that you may want to review: AXON, CLSK, MARA, CNXC and HTLD.
Trading rooms have now ended on Mondays, but Friday trading rooms will continue.
Have a great weekend!
Good Luck & Good Trading,
Erin
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Carl has decided to retire, and Erin will be joining him in retirement. We will continue publication until June 27th, and we will be contacting you soon via email as to how this will affect your subscriptions.
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Diamond Mine Trading Room:
RECORDING & DOWNLOAD LINK (5/2/2025):
Topic: DecisionPoint Diamond Mine (5/2/2025) LIVE Trading Room
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When: May 9, 2025 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine LIVE Trading Room
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Below is the last free DecisionPoint Trading Room recording from 4/28/2025.
A few items about the spreadsheet: I've put on the spreadsheet whether the RSI is positive (green) or negative (red). The PMO column tells you if it is rising (green) or falling (red). Finally I've added my own "Sparkle Factor" that gives you my assessment going forward, bullish (green), bearish (red) or neutral (gray). The Sparkle Factor is basically my thoughts on whether I expect it to rise or fall. A neutral means it could really go either way so it could be added to a watch list. If you're in a stock I consider "neutral" going forward, the ball is in your court.
Darling:
Entertainment Prop Trust (EPR)
EARNINGS: 2025-07-30 (AMC)
EPR Properties operates as a real estate investment trust. The firm engages in the development, finance and leasing of theaters, entertainment retail and family entertainment centers. It operates through the following segments: Experiential and Education. The Experiential segment includes investments in megaplex theaters, entertainment retail centers, family entertainment centers and other retail parcels. The Education segment consists of investments in public charter schools. The company was founded by Peter C. Brown on August 22, 1997 and is headquartered in Kansas City, MO.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, Stock in a New Uptrend (Aroon), Moved Above Ichimoku Cloud, Elder Bar Turned Green and Moved Above Upper Price Channel.
Below are the commentary and chart from Thursday, 5/8:
"EPR is up +1.49% in after hours trading. It reported yesterday evening and earnings were definitely well received given today's rally. It appears it will continue given after hours trading is up so far. Price has broken out and is on an excellent rally. Given this rally it is good to see that the RSI is not overbought right now. It can accommodate even more upside. The PMO is rising above the zero line on a Crossover BUY Signal. The OBV is confirming the rally. Stochastics are hovering above 80. Relative strength for the group is a problem, but EPR is doing just fine against the SPY as it is outperforming the industry group right now. The stop is set beneath the prior congestion zone at 7.7% or $47.69. It pays a good dividend."
Here is today's chart:
This really comes down to good follow-through on earnings. They were received well and saw a nice rally in sympathy. The RSI is already overbought, but this looks like a very positive thrust higher. The PMO has picked up speed and Stochastics are very strong above 80. We could see a pause due to it being overbought, but it isn't likely to be too painful. The group and the sector aren't performing very well right now, but this one is likely to continue to buck the trend.
Don't forget, on Thursdays I look at reader-requested symbols, so shoot me an email at erin@decisionpoint.com. I read every email I receive and try to answer them all!
Dud:
ONE Gas Inc. (OGS)
EARNINGS: 2025-08-05 (AMC)
ONE Gas, Inc. engages in the provision of natural gas distribution services. It offers natural gas to residential, commercial, industrial, and transportation customers. The company was founded in 1906 and is headquartered in Tulsa, OK.
Predefined Scans Triggered: Stocks in a New Uptrend (Aroon), Elder Bar Turned Green, Moved Above Upper Price Channel, New CCI Buy Signals, P&F Double Top Breakout and New 52-week Highs.
Below are the commentary and chart from Tuesday, 5/6:
"OGS is unchanged in after hours trading. They reported yesterday afternoon and today saw an excellent rally that promises more upside. This was a strong breakout from a longer-term trading range. The RSI is admittedly overbought right now, but I wouldn't expect too much of a stumble here given the great configuration of the EMAs and PMO. The PMO has surged above the signal line while above the zero line. Stochastics have turned up and are above 80. This looks like a breakout from a bull flag formation. Relative strength is rising and has been for some time. The stop is set at the 50-day EMA at 6.6% or $75.53."
Here is today's chart:
I have no idea what caused this big decline. It is a price shock that I don't believe could've been avoided as the chart was set up very well. We even saw a rally the day after it was picked. What could've been the problem is that the RSI got overbought. This was a more powerful pullback than I would've expected out of overbought conditions. Definitely a "Dud".
THIS WEEK's Performance:
DecisionPoint Market Scoreboard (Mechanical Trend Model Signals):
Friday signal changes are outlined in purple.
Click Here to view Carl's annotated "Under the Hood" ChartList!
Sector to Watch: Industrials (XLI)
This was a great pick last week and if participation is correct, we should see more upside follow-through for this sector. The RSI is positive and not overbought despite the rally. We have a recent Golden Cross and Silver Cross of the 20/50/200-day EMAs. The PMO is rising strongly and the OBV is confirming the rally. The Silver Cross Index is rising and is near our bullish 50% threshold. The Golden Cross Index has just crossed above its signal line for a new LT BULLISH Bias. Participation readings are all above our 50% threshold. Stochastics are hovering above 80. I'm looking for more upside.
Industry Group to Watch: Building Materials & Fixtures ($DJUSBD)
What attracted me to this chart was the bull flag on the chart. You could encompass all of the last week's price movement into the flag, but I've opted to show the final two days of trading as a breakout from a tiny flag. In any case, it is a flag and implies much higher prices. The RSI is not overbought and the PMO is rising strongly above the zero line. Stochastics are rising above 80. Relative strength is clearly visible. We found the following stocks from this group that you might find interesting: BBCP, AZEK, THR, TTAM, CARR and AAON.
Go to our Under the Hood ChartList on DecisionPoint.com to get an in-depth view of all the sectors. On StockCharts.com you can find the Industry Summary.
Good Luck & Good Trading!
- Erin
erin@decisionpoint.com
Full Disclosure: I'm 10% long, 0% short. Time for expansion if the market opens higher on Monday.
Watch the latest episode of the DecisionPoint Trading Room with Carl & Erin Swenlin HERE!
Technical Analysis is a windsock, not a crystal ball. --Carl Swenlin
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 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 selection of "diamonds in the rough."
Helpful DecisionPoint Links:
DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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