It is ETF Day! Here I bring you ETFs that are either scan results or have caught my eye. Today I'm bringing back an ETF we've dabbled in previously and I think it is ready for another try. One name you'll recognize, particularly if you are a DP Alert subscriber. Finally the last name is probably one you've never heard of. I hadn't heard of it until it appeared in my scan results today.
I found plenty of inverse Bond ETFs appearing in my scans, but I'm opting to play the inverse with the Interest Rate Hedge ETF (PFIX). It isn't "juiced" or leveraged and I've had good luck with it in the past. Full disclosure, I do own it.
Commodity ETFs are also making a comeback in the scans and are on my radar. I opted to include a Tactical Commodity Strategy Fund (FTGC). I also like the Commodity ETF (GSG) as well as the Agriculture ETF (DBA) which I've presented before.
The US Oil Fund (USO) is looking ready to reverse. I've dropped my inverse Energy ETF (ERY) and am now looking for possible reversal candidates in that sector. I imagine I'll see some Energy stocks for Reader Request Day.
Speaking of Reader Request Day, it's time for you to send in your symbol requests for inclusion in tomorrow's report or a review in the Diamond Mine trading room on Friday. You'll find the recording and registration links below the Diamonds logo in every Diamond report.
Good Luck & Good Trading!
Today's "Diamonds in the Rough": FTGC, PFIX and USO.
Runner-Ups: EWZ, IGE, TBX, DBA, GSG and WEAT.
RECORDING LINK (12/16/2022):
Topic: DecisionPoint Diamond Mine (12/16/2022) LIVE Trading Room
Start Time: Dec 16, 2022 09:00 AM
Recording Link HERE
REGISTRATION for 12/23/2022:
When: Dec 23, 2022 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (12/23/2022) 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.
First Trust Global Tactical Commodity Strategy Fund (FTGC)
FTGC is an actively managed fund that, through a subsidiary, provides broad exposure to commodities through futures contracts. The fund is structured as a 1940 Act open-ended fund. Click HERE for more information.
Predefined Scans Triggered: None.
FTGC is up +0.50% in after hours trading. The declining tops trendline has not yet been broken, but the indicators make us fairly confident that it will. The RSI just moved into positive territory and the PMO triggered a new crossover BUY signal today. The OBV is confirming the move and Stochastics have reversed and are headed higher in positive territory. One thing I definitely liked was the ability to set a thin near-term stop. You could certainly stretch it below the July and September lows, but I know if it hit the level I've annotated, I wouldn't want it anymore. The stop is set at 4.5% around $23.11.
The weekly chart isn't particularly exciting, but it does look to be improving. The weekly RSI just hit positive territory and the weekly PMO has decelerated in preparation for an upside crossover. The StockCharts Technical Rank (SCTR) could be better, but this does tell us based on how it is rising that the ETF should continue higher.
Simplify Interest Rate Hedge ETF (PFIX)
PFIX is actively managed to provide a hedge against a sharp increase in long-term interest rates. The fund holds OTC interest rate options, US Treasurys, and US Treasury Inflation-Protected Securities (TIPS). Click HERE for more information.
Predefined Scans Triggered: Hollow Red Candles
PFIX is up +1.34% in after hours trading. I was pleasantly surprised to see that I presented this one to you on August 17th. The timing couldn't have been much better. I think our timing is right here again. The correction in interest rates was really overdone and it is time for a reversal. I've been watching closely. It broke from its declining trend yesterday and remains above it. Today it formed a bullish hollow red candlestick. The RSI is about to move into positive territory. The PMO triggered a crossover BUY signal today. Stochastics are rising vertically in positive territory and relative strength is picking up. This is on the early side, but I trust my PMO. It hasn't been too twitchy on crossovers and movement so a crossover BUY signal has more weight. The stop is set below early December lows at 7.2% around $60.98.
The weekly PMO is the only problem on the weekly chart. Notice that price is above the early 2022 tops. The weekly RSI just returned to positive territory and the SCTR is excellent at 96.5%. After the steep correction, it isn't surprising to see the PMO slow to reverse. A break from the declining trend would be nice confirmation. I think it is entirely possible for rates to return to the 2022 high and that would be upside potential of over 34%.
United States Oil Fund, LP (USO)
USO holds predominantly short-term NYMEX futures contracts on WTI crude oil. Click HERE for more information.
Predefined Scans Triggered: Parabolic SAR Buy Signals and P&F Low Pole.
USO is down -0.05% in after hours trading. Honestly I can't believe I'm presenting USO as I've been bearish on it and the Energy sector for some time. However a reversal appears to be occurring and I think money is rotating back here. Today saw excellent follow-through on the previous two days of rally. The RSI just moved into positive territory and the PMO triggered a crossover BUY signal today. Stochastics have reversed upward. This is the chart we use in the DP Alert so I have the volatility index for Crude Oil ($OVX). It is currently oscillating above its moving average on the inverted scale which implies internal strength. The only issue here is that we don't have a confirming breakout from the declining trend. The stop is set below last Friday's intraday low at 6.8% or $63.43.
The weekly chart adjusts the resistance line based on the 2019 tops. Currently price has broken above that level. The weekly RSI is rising and back in positive territory. The weekly PMO doesn't look great, but we sense this is it for the Bonds rally. The upside target of this ETF is over 43%.
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 15% exposed. I own PFIX.
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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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