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DP DIAMONDS: Market Wakes for ETF Day

Published on November 30, 2022 at 06:56 PM by Erin Swenlin

DecisionPoint Diamonds

Chairman Powell delivered for the market, suggesting the Fed could begin paring back the size of rate hikes as soon as December. There will still be hikes, but likely not as spartan. The market was loved the news, seeing gains well above 5% for many stocks and ETFs.

While I didn't get any ETFs specifically from my scans, I sorted through the strongest on my lists and narrowed it down to three: an international ETF (India EPI), Rare Earth Metals (REMX) and Retail (XRT). If I included one more it would've been something from Healthcare as many of the charts stood out. Be sure to look at today's runner-ups. It was a hard decision to narrow my picks today.

As noted in yesterday's report:

We have a schedule change this week. There will be no Diamond Mine Trading Room on Friday this week. I'm back in Las Vegas to see the PAC-12 Championship game with USC playing Utah. USC is my alma mater and this is the first time we've been eligible to enter the college football playoffs. We must win on Friday for that to happen so I'm going to be there to cheer them on!

The DP Diamonds Recap will be published on Sunday instead of Friday.

Reader Request Day is tomorrow! Send in your picks and yours may be selected for review!

Good Luck & Good Trading!

Erin

Today's "Diamonds in the Rough": EPI, REMX and XRT.

Runner-ups: GBTC, IHF, XLY, MJ, TAN, PALL, URA and EWZ.

** SCHEDULE CHANGE **

Next week there will be no Diamond Mine on December 2nd and the Recap will go out by Sunday December 4th.


TODAY'S RECORDING LINK (11/25/2022):

Topic: DecisionPoint Diamond Mine (11/25/2022) LIVE Trading Room

Start Time: Nov 25, 2022 09:00 AM

Recording Link

Passcode: Nov#25th

** NO DIAMOND MINE on December 2nd **

The Diamonds Recap will be published on December 3rd.


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.



WisdomTree India Earnings Fund (EPI)


EARNINGS: N/A

EPI tracks a total market index of Indian companies selected and weighted by earnings. Click HERE for more information.

Predefined Scans Triggered: New CCI Buy Signals, Moved Above Upper Keltner Channel, Stocks in a New Uptrend (ADX), Moved Above Upper Price Channel and Hanging Man.

EPI is down -0.06% in after hours trading. It was honestly a toss up between Brazil (EWZ) and India. I liked the strong breakout on EPI. The RSI is positive and the PMO has bottomed above its signal line and the zero line. This is especially bullish momentum. Volume is kicking up and Stochastics are about to move above 80. Relative strength is rising. The stop can be set thinly at 5.3% or $32.17.

I didn't annotate it, but there is a bullish double-bottom formation that has been confirmed. That would mean a move the magnitude of the pattern. That would imply a breakout move to about $39. The weekly PMO is rising and just pushed above the zero line. The weekly RSI is rising, positive and not overbought. Cherry on top is the excellent SCTR of 92.8% which implies EPI is in the top 8% of all ETFs as far as trend and condition. Consider a 15% upside target (which is the minimum upside target of the double-bottom pattern) around $39.06.



VanEck Vectors Rare Earth/Strategic Metals ETF(REMX)


EARNINGS: N/A

REMX tracks an index of global companies that mine, refine, or recycle rare earth and strategic metals. For more information, click HERE.

Predefined Scans Triggered: Elder Bar Turned Green, Moved Above Ichimoku Cloud and P&F Double Top Breakout.

REMX is unchanged in after hours trading. I went with REMX because I was undecided between Palladium (PALL) and Uranium (URA). Also when I saw the big cup with handle on REMX it was an obvious choice. The handle is a bullish falling wedge and the breakout today brought price above the 200-day EMA again. The RSI is now in positive territory and the PMO is about to trigger a crossover BUY signal. Stochastics are rising, but admittedly it is early and could reverse quickly. Relative strength is beginning to come back. The stop is set deeply because of today 6.62% gain. You can thin it if you get a better entry. It is set around 8.9% or $86.15.

We have a weekly PMO bottom above the signal line which is especially bullish and the weekly RSI just hit positive territory. The SCTR isn't great, but at least it is improving.



SPDR S&P Retail ETF (XRT)


EARNINGS: N/A

XRT tracks a broad-based, equal-weighted index of stocks in the US retail industry. Click HERE for more information.

Predefined Scans Triggered: Elder Bar Turned Green.

XRT is up +0.51% in after hours trading. With holiday shopping exceeding expectations overall, it isn't surprising to see this ETF also exceeding expectations. If I had one wish it would be that price would've broken out above the September top. It did close above the 200-day EMA so that's something. The RSI is positive and has been almost all of November. The PMO is beginning to accelerate higher and the OBV is rising alongside price. Stochastics are above 80 and rising again. Relative strength is very good. I've set the stop around the 50-day EMA at 5.9% or $63.31.

The double-bottom on the weekly chart looks fantastic. While I don't want to expand my exposure, this one is tempting simply based on the weekly chart. The weekly RSI is positive and rising. The weekly PMO is rising out of oversold territory on a crossover BUY signal. The SCTR isn't quite in the hot zone above 70%, but it is close enough. Upside potential if it reaches the minimum upside target of the chart pattern would be over 40%.



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 10% 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:

Erin's PMO Scan

DecisionPoint Shared ChartList and DecisionPoint Chart Gallery

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking

Relative Strength Index (RSI)

Stochastics

Bear Market Rules

For more links, go to DecisionPoint.com

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