I expected today would be easy to pick out ETFs on pullbacks, but surprisingly I didn't see much out there. It appeared most were hitting resistance and topping out rather than pulling back. There were no runners-up today.
I did find three that look pretty good, but given the toppy look of the most ETFs I'm afraid we are in for rough finish to the end of the week. Yesterday's "Diamonds in the Rough" did not do well on today's pullback as Tech and Comm Services struggled in particular. This now offers some great entry points, but be careful about expanding exposure. I'll probably be paring back a bit this week. I'm looking to move from 55% to 40% exposed. I can't put my finger on it, but I'm feeling uneasy. I think falling Swenlin Trading Oscillators have me spooked.
Good Luck & Good Trading!
Today's "Diamonds in the Rough": FBCG, IHI and XME.
TODAY'S RECORDING LINK (11/11/2022):
Topic: DecisionPoint Diamond Mine (11/11/2022) LIVE Trading Room
Start Time: Nov 11, 2022 09:00 AM
NEXT DIAMOND MINE Trading Room on November 18th 2022:
When: Nov 18, 2022 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (11/18/2022) LIVE Trading Room
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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.
Fidelity Blue Chip Growth ETF (FBCG)
FBCG is an actively-managed, non-transparent fund of fundamentally-selected global growth stocks. The fund utilizes the Fidelity non-transparent model. For more information click HERE.
Predefined Scans Triggered: P&F Descending Triple Bottom Breakdown, Elder Bar Turned Blue and P&F Double Bottom Breakout.
FBCG is up +4.64% in after hours trading. I hesitated to add this one because as you can see in the description, it is a non-transparent fund, meaning we don't get to know what they hold. Definitely click on the link above for more information if you are unsure about it. I'm going strictly by the technicals. Price broke out and then pulled back as expected toward the breakout point. The RSI is positive and the PMO is about to cross above the zero line while on an oversold crossover BUY signal. The OBV is confirming the rise. Stochastics are above 80, but did tick lower on today's decline. This ETF is now outperforming the SPY. The stop is set at 8% around $21.03.
I'm looking for a double-bottom to develop. I don't like the negative weekly RSI, but it is tamed by a strong weekly PMO configuration. The weekly PMO just had a crossover BUY signal. The SCTR is very low given the rough bear market FBCG is still in. I've marked upside potential to the confirmation line of the possible double-bottom. If the double-bottom is confirmed with a breakout there, the minimum upside target would shift to the first quarter 2022 tops.
iShares U.S. Medical Devices ETF (IHI)
IHI tracks a market-cap-weighted index of manufacturers and distributors of medical devices in the US. Click HERE for more information.
Predefined Scans Triggered: Gap Ups, Parabolic SAR Buy Signals, Runaway Gap Ups and P&F Low Pole.
IHI is up +0.89% in after hours trading. Currently, IHI is digesting last week's breakout. In the meantime, we got an IT Trend Model "Silver Cross" BUY signal as the 20-day EMA crossed above the 50-day EMA. The RSI is comfortably in positive territory and not overbought. The PMO is rising and not yet overbought. Stochastics are above 80. I've set the stop at 7.2% below the November low around $47.77.
I checked to see if the intermediate-term declining trend was broken on last week's breakout, but unfortunately it hadn't. However, the chart is still healthy enough with a weekly RSI that is nearing positive territory and a new weekly PMO crossover BUY signal. There is a positive OBV divergence that suggests the rally will continue. I'd like a higher SCTR, but the IT declining trend seems to be preventing that. I've marked upside potential at around $61.00, but I believe if it gets that far, it will continue up to new all-time highs.
SPDR S&P Metals and Mining ETF (XME)
XME tracks an equal-weighted index of US metals and mining companies. Click HERE for more information.
Predefined Scans Triggered: Elder Bar turned Blue, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
XME is up +0.06% in after hours trading. I still like Gold Miners (GDX) so it should be no surprise that I'm adding XME, the general mining ETF to the list today. It struggled at overhead resistance yesterday, but the short-term rising trend is easily intact. Today we have a new LT Trend Model "Golden Cross" BUY signal as the 50-day EMA just crossed above the 200-day EMA. The RSI is positive and the PMO is still rising despite an over 2% decline. Stochastics are above 80 and XME has shown excellent relative strength these past few months. The stop is set at 7.8% around $47.22.
We have another weekly chart double-bottom developing. A break above the confirmation line at the August top, the minimum upside expectation is past all-time highs.
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 55% 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
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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.
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