I found some very interesting stocks today in my scans. A few of the names you will certainly recognize. I am for the first time in a long time including an Energy sector chart. I don't deny that has been a hot group of late, but I hadn't found the right stock within my DecisionPoint scans. Two of the names I've presented as Diamonds before. I have a bottom fishing opportunity that I think many of my short-term traders will find tempting.
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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!
CNX Resources Corp (CNX) - Earnings: 7/28/2020 (BMO)
CNX Resources Corp. is an oil and gas company. The firm engages in the exploration, development, production, gathering, processing and acquisition of natural gas properties in the Appalachian Basin. It operates through the following segments: Marcellus Shale, Coalbed Methane, Utica and Other Gas.
Here is my energy stock. This one came to my attention mainly due to the really nice PMO set-up. The OBV is rising to confirm the breakout rally. The RSI remains above net neutral. If you look at the SCTR it tells us that CNX is in the top 5% of all small-cap stocks.
Notice that this breakout took price back above some strong overhead resistance. The strength of the resistance can be determined by how many "touches" are on that resistance level. What's particularly exciting is the upside potential. If it can get up to test the next area of overhead resistance that would be an over 50% gain. Even if it could just get to the near-term 2020 high that would be a gain of about 17.5%.
DHT Holdings (DHT) - Earnings: 8/4/2020 (AMC)
DHT Holdings, Inc. engages in the operation of a fleet of crude oil tankers. It operates through its integrated management companies in Monaco, Singapore, and Oslo, Norway.
I found a few double-bottom formations. These are bullish patterns. If the confirmation line (middle part of "W") is broken, the upside target is determined by the height of the pattern added to the top of the pattern. This would give us an upside target around $7.25. The PMO is nearing a crossover BUY signal. The RSI has finally reached above net neutral (50). I'm not thrilled with the OBV as it isn't confirming and given rising price bottoms match to declining OBV bottoms, it is actually a negative divergence. It isn't severe which is why I included it today. I prefer SCTRs above 75, but it has been in decline so I'll forgive that. This one is low priced so consider your position size carefully.
The weekly chart shows us that upside targets are considerable. The weekly PMO is decelerating. Until it actually turns up, I would consider this one a short-term trade.
Don't forget, on Thursdays I look at reader-requested symbols, so shoot me an email at firstname.lastname@example.org. I read every email I receive and try to answer them all!
Gilead Sciences Inc (GILD) - Earnings: 7/30/2020 (AMC)
Gilead Sciences, Inc. is a biopharmaceutical company, which engages in the research, development, and commercialization of medicines in areas of unmet medical need. The firms primary areas of focus include human immunodeficiency virus, acquired immunodeficiency syndrome, liver diseases, hematology, oncology, and inflammation and respiratory diseases. It offers antiviral products under Harvoni, Genvoya, Epclusa, Truvada, Atripla, Descovy, Stribild, Viread, Odefsey, Complera/Eviplera, Sovaldi, and Vosevi brands.
I owned this one, having purchased it after I presented it as a "Diamond in the Rough" in April. After it gapped up and got to my target at the March high, I waited to see what might happen given its position in the news cycle regarding a new vaccine. When it began to tumble, I sold it and made a profit I was good with. Well, this one could be ready to make another move. We have a double-bottom pattern. It failed to execute on yesterday's breakout when it closed back within the pattern. Today it wasn't able to breakout but it stayed comfortably above the 5-EMA. The RSI has now moved back above 50. The PMO triggered a crossover BUY signal. The OBV is confirming the rally and the SCTR is rising.
Most difficult overhead resistance is near-term, but I believe it will pass that up if we see the weekly PMO turn up like it seems ready to do.
Gamestop Corp (GME) - Earnings: 6/9/2020 (Reported Today)
GameStop Corp. engages in the retail of multichannel video game, consumer electronics, and wireless services. It operates through the following segments: United States, Canada, Australia, and Europe. The United States segment includes the retail operations and electronic commerce websites www.gamestop.com and www.thinkgeek.com, Game Informer magazine, and Kongregate. The Canada segment comprises of retail and e-commerce business. The Australia segment refers to the retail and e-commerce operations in Australia and New Zealand. The Europe segment pertains to the retail and e-commerce operations in the European countries.
This is a bottom fishing opportunity. They reported earnings today and they weren't that well received given that it is down 3.43% in after hours trading. I think that could give us a nice entry. I would want it to remain above the support along the top of the previous trading range. The PMO has triggered a crossover BUY signal and the RSI just moved back above 50. We have rising bottoms on the OBV. The SCTR isn't great but it is beginning to rise.
This is a low priced stock so again, watch your position size. The trading range is wide here and price is right in the middle. If it were to decide to test the bottom of that range, that could end up being a 50% loss, so put this one on a short leash. The weekly PMO looks very favorable as it is rising and now above zero.
Microsoft Corp (MSFT) - Earnings: 7/16/2020 (AMC)
Microsoft Corp. engages in the development and support of software, services, devices, and solutions. It operates through the following business segments: Productivity and Business Processes; Intelligent Cloud; and More Personal Computing. The Productivity and Business Processes segment comprises products and services in the portfolio of productivity, communication, and information services of the company spanning a variety of devices and platform. The Intelligent Cloud segment refers to the public, private, and hybrid serve products and cloud services of the company which can power modern business. The More Personal Computing segment encompasses products and services geared towards the interests of end users, developers, and IT professionals across all devices. The firm also offers operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; video games; personal computers, tablets; gaming and entertainment consoles; other intelligent devices; and related accessories.
This is another repeat Diamond. I had it on the list in late April so it's been a great performer. Today it broke out to new all-time highs. The PMO has turned up in positive territory and isn't too overbought. The OBV confirmed today's breakout to new all-time highs by making a new high itself. The RSI remains strong above net neutral (50). The SCTR has been in the "hot zone" above 75 all year long.
I was pleased to see a healthy PMO that continues to rise and isn't overbought yet.
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: 5
- Diamond Dog Scan Results: 0
- Diamond Bull/Bear Ratio: 5.00
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Full Disclosure: I did add AMKR and MU to my personal portfolio today. Those two stocks were the only ones that fell today so they offered pretty good entry points. While I am seeing the markets topping in the near term, I like my stops and believe that the stocks I'm in will do just fine if the market turns down or chops. I am currently about 35% 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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