I noted yesterday that I had 25 Banks hit my scan results. Today I had 29! So today's "diamonds in the rough" will be all about Banks. I not only reviewed the Banks in my scan results, I reviewed others as well. I found that these five banks are clear outperformers against the SPX, though maybe not outperforming the Banks industry group. The outperformers in this area are highly overbought so I wanted to find better choices. These stocks are overbought as well, but momentum continues to accelerate. Given most of these stocks are overbought, I would recommend setting a hard stop.
There is a high likelihood that these stocks will pull back tomorrow, so you should be able to time a good entry.
The best part is these stocks are beginning to see big time breakouts on the weekly charts. Strong areas of overhead resistance are beginning to crumble making these five Banks favorable in the intermediate term.
Today's "Diamonds in the Rough" are: C, DB, PFS, SFNC and USB.
I'd very much appreciate it if you would register for the two events below that I'm doing next week. I actually will be doing a third one on March 3rd, but I don't have the link to register yet. I'll add it to the list below when I get it.
FREE WEBINAR APPEARANCES NEXT WEEK!
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MARCH 2nd, 2021 at 4:00p ET:
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Diamond Mine Registration Information:
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Topic: DecisionPoint Diamond Mine (2/19/2021) LIVE Trading Room
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David Keller, CMT is Chief Market Strategist at StockCharts.com, where he helps investors minimize behavioral biases through technical analysis. He is a frequent host on StockCharts TV, and he relates mindfulness techniques to investor decision making in his blog, The Mindful Investor. David is also President and Chief Strategist at Sierra Alpha Research LLC, a boutique investment research firm focused on managing risk through market awareness. He combines the strengths of technical analysis, behavioral finance, and data visualization to identify investment opportunities and enrich relationships between advisors and clients.
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Here is the information for the Monday 2/22/2021 recording:
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Start Time : Feb 22, 2021 08:57 AM
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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!
Citigroup, Inc. (C)
EARNINGS: 4/15/2021 (BMO)
Citigroup, Inc. is a holding company, which engages in the provision of financial products and services. It operates through the following segments: Global Consumer Banking; Institutional Clients Group; and Corporate and Other. The Global Consumer Banking segment provides traditional banking services to retail customers through retail banking, including commercial banking, and Citi-branded cards and Citi retail services. The Institutional Clients Group segment provides corporate, institutional, public sector and high-net-worth clients around the world with a full range of wholesale banking products and services. This segment includes fixed income and equity sales and trading, foreign exchange, prime brokerage, derivative services, equity and fixed income research, corporate lending, investment banking and advisory services, private banking, cash management, trade finance and securities services. The Corporate and Other segment includes certain unallocated costs of global staff functions, other corporate expenses and unallocated global operations and technology expenses, Corporate Treasury, certain North America and international legacy consumer loan portfolios, other legacy assets and discontinued operations. The company was founded in 1812 and is headquartered in New York, NY.
C is down -0.26% in after hours trading. We don't quite have a breakout on C yet, but it did close higher than the close on the January top. The PMO has recently moved to a BUY signal and is not overbought. The RSI is positive and not quite overbought yet. Obviously the Banks industry group is outperforming the SPX. Although C isn't outperforming within the group, it is clearly outperforming the SPX. Part of the reason this stock isn't overbought is that it has been underperforming within the group. That's okay with me. The is set at the gap support area from January.
C hasn't quite broken out from overhead resistance, but given the positive and not overbought RSI as well as PMO, it likely will. If it can return to the bull market high it would be a 16%+ gain.
Deutsche Bank AG (DB)
Deutsche Bank AG engages in the provision of corporate banking and investment services. It operates through the following segments: Corporate Bank, Investment Bank, Private Bank, Asset Management, Capital Release Unit, and Corporate and Other. The Corporate Bank segment includes the global transaction bank as well as the German commercial clients division. The Investment Bank segment consists of origination and advisory businesses as well as fixed income currency sales and trading. The Private Bank segment comprises the Private Bank Germany, private and commercial business international, and wealth management business units. The Asset Management segment provides investment solutions to individual investors and institutions through the DWS brand. The Capital Release Unit segment covers the equities sales and trading business. The Corporate and Other segment includes revenues, costs, and resources that are held centrally. The company was founded by Adelbert Delbrück on March 10, 1870 and is headquartered in Frankfurt, Germany.
DB is up +2.09% in after hours trading. Today it had a beautiful upside breakout. The PMO is rising on a crossover BUY signal and not overbought. The RSI is getting overbought, but isn't as overbought as we've seen it before. And, again, this whole industry group is full of overbought stocks as far as price range (RSI). We can see with strong bull market moves overbought conditions can persist. Just take a look at last November and December. DB is outperforming the SPX and its industry group. The stop level is set just below support at the late December tops.
I love the saucer shaped bottom on the weekly chart. Add the breakout this week and it looks very enticing especially with such strong upside potential. The RSI is positive and the weekly PMO is triggering a possible crossover BUY signal (as with all weekly signals, it won't go 'final' until after trading concludes on Friday). The OBV is confirming the rally out of the October low.
Provident Financial Services Inc. (PFS)
EARNINGS: 4/30/2021 (BMO)
Provident Financial Services, Inc. is a holding company, which engages in the provision of banking services to individual and corporate customers in Northern and Central New Jersey and Eastern Pennsylvania. The company was founded on January 15, 2003 and is headquartered in Jersey City, NJ.
PFS is unchanged in after hours trading. PFS actually broke out yesterday. Today we saw a nice continuation of that breakout. It is outperforming the SPX and is about even on its performance against its industry group. The PMO just gave us a positive crossover BUY signal. The OBV is confirming the rally out of the September low. The RSI just hit overbought territory. This one doesn't seem to like overbought territory much so I set up a stop around $19.
Love the breakout on the weekly chart! It does have the RSI in overbought territory, but given the strong PMO, I would look for a move to challenge the 2018/2019 tops.
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!
Simmons First National Corp. (SFNC)
EARNINGS: 4/20/2021 (BMO)
Simmons First National Corp. is a financial holding company, which engages in the provision of banking and other financial products and services to individual and corporate customers. It conducts banking operations in communities throughout Arkansas, Colorado, Illinois, Kansas, Missouri, Oklahoma, Tennessee and Texas. The firm offers consumer, real estate and commercial loans; checking, savings and time deposits; and specialized products and services, such as credit cards, trust and fiduciary services, investments, agricultural finance lending, equipment lending, insurance and small business administration. The company was founded on March 23, 1903 and is headquartered in Pine Bluff, AR.
SFNC is unchanged in after hours trading. SFNC has been enjoying a strong rally all month long. This has unfortunately moved the RSI into very overbought territory. However, with a brand new PMO crossover BUY signal it should continue higher. The OBV is confirming the rally and the SCTR just hit the "hot zone" above 75. It's outperforming both the SPX and its industry group. The stop is rather deep but it does land right below support at the January high.
Here is another nice intermediate-term price breakout. Granted it didn't overcome the high in 2018, but it did outpace its closing high in 2018. The PMO is on a BUY signal and rising strongly. It is very overbought right now as far as price level, but the rest of the chart looks very positive.
US Bancorp (USB)
EARNINGS: 4/15/2021 (BMO)
U.S. Bancorp operates as a bank holding company. It offers financial services, including lending and depository services, cash management, foreign exchange and trust and investment management. The firm also offers mortgage, refinance, auto, boat & RV loans, credit lines, credit card services, merchant, bank, checking & savings accounts, debit cards, online & mobile banking, ATM processing, mortgage banking, insurance, brokerage and leasing services. The company was founded in 1929 and is headquartered in Minneapolis, MN.
USB is unchanged in after hours trading. Like most of the Banks, USB has an overbought RSI. The outperformance against the SPX is impressive even if it is an average performer in this industry group. The PMO is on a BUY signal and really isn't overbought yet as it appears a PMO reading of +5 is the top of the its range. The SCTR is rising and is close to the hot zone above 75. We are a little late on this "V" bottom pattern, but I would look for more outperformance. The stop is set below the 20-EMA
Here is another intermediate-term breakout. The weekly PMO bottomed above its signal line which is especially bullish. The RSI is positive and not overbought.
Full Disclosure: I'm about 80% invested and 10% is in 'cash', meaning in money markets and readily available to trade with. Just maintaining what I have. No new additions.
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)
- The Bullish Percent Index (BPI) shows the percentage of SPX stocks on Point & Figure BUY signals.
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 is the current chart:
The Diamond Index chart looks at the number of scan results from my bullish Diamond PMO Scan and the number of scan results from the inverse Diamond Dog Scan. The Diamond Ratio divides the bullish results by the bearish results.
I only have data going back to October 2019 so I won't make any sweeping conclusions about the Diamond Index chart. I have marked cardinal tops with red dotted vertical lines and cardinal price bottoms with green dotted vertical lines. I believe that when the Diamond Dog results spike, it usually comes at a price bottom, or marks a strong continuation of the rising trend.
Unfortunately, the Diamond PMO Scan result numbers aren't providing much insight. The Diamond Ratio has promise, but again I don't see a clear correlation to the market tops/bottoms right now. I need to study and manipulate the data some more. Keep you posted!
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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