While sifting through today's DecisionPoint scans, I found some very instructive and possibly lucrative On-Balance Volume (OBV) positive divergences. A positive divergence with the OBV is seeing rising OBV bottoms and declining price lows. This tells you there is interest going on under the surface that you can't necessarily surmise without looking at the OBV. Typically rallies are generated after these positive divergences so I'm glad to show you four out of five Diamonds with these bullish setups.
C.H. Robinson Worldwide Inc (CHRW) - Earnings: 4/28/2020 (AMC)
Here is our first OBV positive divergence. It isn't as pronounced given that price lows were basically flat, but the steep rising bottoms on the OBV makes this bullish. There is a short-term double-bottom in place and we can see that this is where the lows for the year are. The PMO is turning up in oversold territory. I've annotated a gap (I believe on earnings). If this rally gets going, my expectation is that this gap will be filled. Past that is overhead resistance. Currently price is up against overhead resistance at the November lows, but given the positive divergence and PMO turning up in oversold territory, this could be a nice bottom fishing opportunity. You can set a tight stop if you wish.
The weekly chart is interesting in that the PMO is now at oversold lows. It is still traveling lower unfortunately. I would give this one a short leash (tight stop). I wouldn't want it if it can't hold support at the 2015/2016 highs.
Welcome to DecisionPoint Daily Diamonds, wherein I highlight five "diamonds in the rough." 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!
Fair Isaac & Co Inc (FICO) - Earnings: 4/28/2020 (AMC)
I like the established rising trend that is not parabolic as we have seen in so many stocks. The PMO is rising and we just saw a nice breakout. Setting a stop on this one could be tricky given the percentage down to the next area of support. Notice there was a positive OBV divergence that resulted in higher prices. The OBV is currently confirming this rally.
The PMO is rising and isn't yet overbought.
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Globant SA (GLOB) - Earnings: 2/20/2020 (AMC)
This was a Diamond a few months back I believe. I'm trying to track past Diamonds a bit better so I can give you more detail on when it came up and why it came up this time. I believe I gave this Diamond out back in December. It hit the radar again today. The PMO is somewhat overbought, but it is getting ready to give us a BUY signal. I see a possible bull flag that executed when price broke the short-term declining trend. We have another OBV positive divergence that suggests higher prices. Overhead resistance is arriving soon, but given the positive indicators, I don't think it will have a problem breaking out.
The weekly PMO is very positive and not oversold.
Lands End Inc (LE ) - Earnings: 3/19/2020 (BMO)
I really like this OBV positive divergence. It is clear and we are seeing it before the rally really takes off. The PMO is oversold and turning up. The SCTR has made vast improvement over the past week. I wish that support weren't quite so far away percentage wise as that makes the stop rather loose.
The weekly chart isn't favorable except to show that current support is very important. If it fails, we could see prices fall all they way down to $7.50. Ouch. If it does rally here, the PMO will improve and this could be a great IT investment. Until then you'll need your hand on the wheel.
USA Compression Partners LP (USAC) - Earnings: 5/5/2020 (BMO)
Not only do we have a very nice OBV positive divergence, we are at the bottom of a trading range. The PMO is suggesting a price bottom and the OBV is confirming that. Intraday, price was at a high of $16.07 and it closed on the low for the day which isn't encouraging. It is also in the Oil Equipment & Services area. This could be affected by the coronavirus. Although I must admit to owning XES which is the ETF for that industry group. It is at all-time lows. If we get a turnaround, this could be good. I love riding trading ranges to the top on short-term investments.
$15 is an important area of support in my estimation. The stop would only be about 3.5% if you use that as your stop area. If $15 doesn't hold, be ready to ride it down to $14. That would be an 8% stop.
Current Market Outlook:
Market Environment: It is important to consider the odds for success. The Silver Cross Index measures the percentage of stocks on IT Trend Model BUY signals (20-EMA > 50-EMA), while the Golden Cross Index measures the percentage of stocks on LT Trend Model BUY signals (50-EMA > 200-EMA). Don't forget that as a "Diamonds" member, you have access to our GCI/SCI curated ChartList on DecisionPoint.com. You'll find it under "Members Only" links on the left side on the Blogs and Links Page. Here are the current percentages on the Silver and Golden Cross Indexes:
- Diamond Scan Results: 12
- Diamond Dog Scan Results: 8
- Diamond Bull/Bear Ratio: 1.50
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Full Disclosure: I do not own any of the stocks above. I'm currently 20% in cash.
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Technical Analysis is a windsock, not a crystal ball.
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."
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DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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