Welcome to a new week of DP Diamonds! I was pleasantly surprised by the quality of stocks that my Diamond PMO Scan produced today. While it was only a group of 29 stocks, I didn't feel I needed to run any of my other scans once I found today's "Diamonds in the Rough"!
The theme in the scan results was clearly Steel. We are seeing some great moves on steel stocks so I included one today. Another theme was Integrated Oil & Gas as well as Exploration & Production industry groups. You know that Energy is still one of my favorite sectors.
Today I recorded a special for StockChartsTV called the "StockCharts Draft". It is similar to fantasy football (my specialty!) where the eight participants pick two S&P100 stocks and after a six month timeframe we see who wins! I thought I should share my two picks: Exxon-Mobil (XOM) and Target (TGT). I surprised them (and myself) with a Consumer Discretionary pick. However, I put it on par with Costco (COST) and Walmart (WMT) which both are in Consumer Staples. Both were picked by other 'teams' in today's draft. Here is a link to the promo page that explains it even more!
Today's "Diamonds in the Rough": DAR, DNOW, TMST and WLK.
Stocks to Review: ATSG, ATI, CRS, STLD AND NMM.
Diamond Mine RECORDING LINK (4/14/2022):
Topic: DecisionPoint Diamond Mine (4/14/2022) LIVE Trading Room
Start Time: Apr 14, 2022 09:00 AM
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Access Passcode: April@14
REGISTRATION FOR 4/22 Diamond Mine:
When: Apr 22, 2022 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (4/22/2022) LIVE Trading Room
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Free DP Trading Room (4/18) RECORDING LINK:
Topic: DecisionPoint Trading Room
Start Time: Apr 18, 2022 08:59 AM
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Access Passcode: April#18th
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Welcome to DecisionPoint Daily 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.
Darling Ingredients Inc. (DAR)
EARNINGS: 5/10/2022 (AMC)
Darling Ingredients, Inc. engages in the development and production of natural ingredients from edible and inedible bio-nutrients. It operates through the following segments: Feed Ingredients, Food Ingredients, and Fuel Ingredients. The Feed Ingredients segment includes ingredients business such as fats and proteins used cooking oil, trap grease and food residuals collection, the Rothsay ingredients, and the ingredients and specialty products. The Food Ingredients segment comprises gelatin, natural casings and meat by-products, and specialty products activities. The Fuel Ingredients segment consists of biofuel and bioenergy services. The company was founded in 1882 and is headquartered in Irving, TX.
Predefined Scans Triggered: P&F Low Pole.
DAR is up +0.19% in after hours trading. I covered Reader Requested DAR on March 11th 2021. The position was stopped out early unfortunately. This time around I believe the conditions are more ripe. First and foremost, it is part of a sector that is showing amazing relative strength and bullish participation. I didn't annotate it, but I'm looking at the price pattern and I think you can make a case for a bullish cup and handle pattern. It is now being punctuated by a very bullish "V" bottom pattern. The RSI is positive and the PMO is rising toward a crossover BUY signal. Stochastics are rising strongly. The group has been outperforming and so is DAR in the shorter term. I've set the stop below the 20-day EMA.
My one concern when I saw the daily chart is that it is near all-time highs and it has been bounded by this trading range for over a year. The rest of the chart looks great with the weekly RSI positive and rising and the weekly PMO on a relatively new crossover BUY signal. Since it is at all-time highs, consider a 14% upside target around $94.25.
NOW Inc. (DNOW)
EARNINGS: 5/5/2022 (BMO)
NOW Inc. is a holding company, which engages in the distribution of energy products for industrial applications. It operates through the following segments: United States, Canada, and International. The United States segment serves the upstream, midstream and downstream energy, and industrial markets. The Canada segment covers energy exploration, production, drilling, and midstream business. The International segment represents the energy exploration, production, and drilling business. The company was founded on November 22, 2013 and is headquartered in Houston, TX.
Predefined Scans Triggered: New CCI Buy Signals, Moved Above Upper Keltner Channel, Moved Above Upper Bollinger Band, Stocks in a New Uptrend (Aroon), Moved Above Upper Price Channel, Parabolic SAR Buy Signals, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
DNOW is up +2.08% in after hours trading so this one is climbing fast. The RSI is positive and rising. The PMO is about to give us a crossover BUY signal. Stochastics are positive and rising fast. Relative strength is excellent for the group and DNOW v. the SPY. It is performing in line with the group which is why it is doing so well against the SPY. Nice breakout today as well. I've set the stop around the 20-day EMA.
I like the upside potential on this Energy stock. The weekly RSI has been in positive territory this year so far and the weekly PMO is rising on a BUY signal. It is not overbought. I'd like to see the OBV closer to its previous top in early 2021, but this one may finally be discovered.
Timken Steel Corp. (TMST)
EARNINGS: 5/5/2022 (AMC)
TimkenSteel Corp. engages in the manufacture of alloy, carbon and micro-alloy steel products. The firm's products includes special bar quality steel, seamless mechanical tubing, gears, grades of steel, jumbo bloom vertical caster, TimkenSteel ultrapremium technology, and TimkenSteel endurance steels. Its services include thermal treatment, value added components, technical support and testing, supply chain, and TimkenSteel portal. The company was founded on October 24, 2013 and is headquartered in Canton, OH.
Predefined Scans Triggered: New 52-week Highs, New CCI Buy Signals, Moved Above Upper Keltner Channel and Moved Above Upper Price Channel.
TMST is down -0.95% in after hours trading. I wasn't happy to see given I picked this one primarily for its breakout today. However, I still think this one has potential if Steel is going to continue to outperform. I like this group and there are plenty of choices within so you can go with this one or find one you like. The RSI is positive and the PMO is going in for a crossover BUY signal. Stochastics have now moved above 80 suggesting internal strength. The OBV made a new high as price did so it is confirming the breakout. Relative performance of the group is strong. TMST has begun to outperform the group and has been a winner against the SPY since February. The stop is set at around 8% somewhat arbitrarily given I don't see a support level.
The weekly RSI is rising and is not overbought. The weekly PMO is rising on a BUY signal. To determine the upside target, I included the monthly chart below the weekly. I thought the stock was moving at all-time highs, but was pleasantly surprised it had plenty of upside potential.
Westlake Chemical Corp. (WLK)
EARNINGS: 5/3/2022 (BMO)
Westlake Corp. manufactures and markets petrochemicals, polymers and fabricated building products. It operates through the following segments: Olefins and Vinyls. The Olefins segment manufactures ethylene, polyethylene and styrene and associated co-products at the manufacturing facility in Lake Charles and polyethylene at the Longview facility. The Vinyls segment manufactures and sells building products fabricated from polyvinyl chloride, including pipe, fittings, profiles, foundation, building products, fence and deck components, window and door components, and film and sheet products. The company was founded by Ting Tsung Chao in 1986 and is headquartered in Houston, TX.
Predefined Scans Triggered: New CCI Buy Signals, New 52-week Highs, Moved Above Upper Price Channel and P&F Double Top Breakout.
WLK is up +0.26% in after hours trading. This breakout looks like it will hold up. The RSI is positive and not overbought. The PMO is going in for a crossover BUY signal. The OBV set a new high along with price, confirming the breakout. Stochastics are rising above 80. Relative strength is bullish across the board with WLK now starting to outperform the group as a whole. I've set the stop below the 20-day EMA.
The weekly RSI is positive and rising. The weekly PMO is accelerating higher on a BUY signal and is not overbought. It is at all-time highs so consider a 15% upside target at $148.06.
Don't forget, on Thursdays I look at reader-requested symbols, click HERE to shoot 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 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:
Full Disclosure: I'm 15% invested and 85% is in 'cash', meaning in money markets and readily available to trade with. I'll be wading in soon!
I'm required to disclose if I currently own a stock and/or may buy it within the next 72 hours.
Good Luck and Good Trading!
"Technical Analysis is a windsock, not a crystal ball." - Carl Swenlin
(c) Copyright 2022 DecisionPoint.com
Watch the latest episode of DecisionPoint with Carl & Erin Swenlin on Mondays 7:00p EST or on the DecisionPoint playlist on the StockCharts TV YouTube channel here!
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."
Helpful DecisionPoint Links:
DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
For more links, go to DecisionPoint.com