The FOMC and Chairman Powell did no favors for the market today. Powell had not hinted previously that the Fed would soften yield hikes, but rumor abounded that maybe they would at least slow down next time around. No such luck, he is determined. The question is whether this is a bump or a warning. I'm still bullish, although certainly less so with today's breakdown.
I am covering Natural Gas (UNG) today, but it is definitely on the risky side as not everything is going well on the chart and I would list it as short-term out of the gate.
I've already gotten a few Reader Requests, but definitely would like to see more. Be sure and get your requests in by Noon PT tomorrow.
Good Luck & Good Trading!
Erin
Today's "Diamonds in the Rough": UGA, UMI and UNG.
Runner-ups: MOO, IBB, BJK, INFL, IYZ, KIE and CMF.
RECORDING LINK (10/28/2022):
Topic: DecisionPoint Diamond Mine (10/28/2022) LIVE Trading Room
Recording Link HERE
Passcode: Oct-28th
REGISTRATION LINK (11/4/2022):
When: Nov 4, 2022 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (11/4/2022) LIVE Trading Room
Register in advance for this webinar HERE
After registering, you will receive a confirmation email containing information about joining the webinar.
Here is the last recording:
Welcome to DecisionPoint 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.
United States Gasoline Fund, LP (UGA)
EARNINGS: N/A
UGA holds near-month NYMEX futures contracts on reformulated gasoline blendstock for oxygen blending (RBOB) gasoline. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Keltner Channel, Stocks in a New Uptrend (ADX), Moved Above Upper bollinger Band, Moved Above Upper Price Channel, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
UGA formed a bullish engulfing candlestick today on a strong rally. The RSI is positive and the PMO has formed a bottom above the signal line which is especially bullish. Stochastics turned back up in positive territory above net neutral (50). It's been a strong performer against the SPY. You can set a reasonable 7.5% stop right around $58.83.
The weekly chart is very bullish. We have a nice bounce off support. The weekly RSI is positive, rising and not overbought. The weekly PMO is turning up and it has a strong SCTR of 98% suggesting it is in the top 2% of ETFs for strength of trend and condition in all timeframes. Upside potential should it reach overhead resistance is nearly 28%.
USCF Midstream Energy Income Fund ETF (UMI)
EARNINGS: N/A
UMI holds an actively-managed portfolio of midstream energy infrastructure companies. The fund is income-focused and uses a fundamental approach that integrates ESG research. Click HERE for more information.
Predefined Scans Triggered: None
UMI is up +0.23% in after hours trading. Price pulled back to the 5-day EMA after yesterday's bearish filled black candlestick. The PMO is still rising nicely and the RSI is in positive territory. Stochastics are oscillating above 80 suggesting internal strength. UMI has been outperforming the SPY since late September. The stop is thin at 5.9% or $32.45 and set just below support at the 200-day EMA. You could expand it below the May and August lows.
The weekly RSI is positive and the weekly PMO is rising toward its signal line. The SCTR is a healthy 96.5%. Since overhead resistance at all-time highs is near, consider an upside target of about 15% or $39.66.
United States Natural Gas Fund (UNG)
EARNINGS: N/A
UNG holds near-month futures contracts in natural gas, as well as swap contracts. Click HERE for more information.
Predefined Scans Triggered: Moved Above Ichimoku Cloud and P&F Low Pole.
UNG is up +0.80% in after hours trading. The chart isn't completely ripe, but it sure looks like it is ready to make a move higher finally based on the PMO and the consolidation along support at the June/July low. The PMO just triggered a crossover BUY signal today. The RSI is negative but beginning to rise. Stochastics are rising, but haven't quite moved into positive territory above net neutral (50). It's been performing inline with the SPY, but I believe it has potential to certainly outperform if we see more decline or consolidation by the market as a whole. I've set the stop rather deep and honestly I could see setting it even lower at 9.5%; instead I opted to set it at 8.5% around $18.21.
The weekly chart screams that this is a short-term investment. The overall outlook here tells me that there are still problems in the intermediate term. There is a large double-top, but it hasn't been confirmed with a major break below the confirmation line. The weekly PMO is declining rapidly and the weekly RSI is negative (although rising). The SCTR is terrible, but given the decline since the second top formed, it isn't at all surprising. I've limited the upside target to 22.4% which is about halfway within the next support/resistance zone.
Don't forget, on Thursdays I look at reader-requested symbols, click HERE to send 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 am 50% exposed.
I'm required to disclose if I currently own a stock I mention and/or may buy/short it within the next 72 hours.
"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."
Regarding BUY/SELL Signals: The signal status reported herein is based upon mechanical trading model signals and crossovers. They define the implied bias of the price index/stock based upon moving average relationships and momentum, but they do not necessarily call for a specific action. They are information flags that should prompt chart review. Further, they do not call for continuous buying or selling during the life of the signal. For example, a BUY signal will probably (but not necessarily) return the best results if action is taken soon after the signal is generated. Additional opportunities for buying may be found as price zigzags higher, but the trader must look for optimum entry points. Conversely, exit points to preserve gains (or minimize losses) may be evident before the model mechanically closes the signal.
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