Yesterday Financials took front and center. Today Friday's runner-up "Sector to Watch" is turning up the volume. I presented two Financials yesterday and today I'm including two selections that will take advantage of today's theme.
Sorry to keep you on the edge of your seats, but the first few sentences are visible to non-subscribers of DP Diamonds so I don't want to give anything away. So, drum roll, the theme today is Communication Services (XLC). I could've presented XLC itself as a "Diamond in the Rough" but I like to bring new ETF symbols to the table for you on ETF Wednesday. So in place of XLC is VOX, the Vanguard version of XLC.
I didn't leave Financials out though. I found a Fintech ETF that looks good.
Tomorrow is Reader Request Day! I have a handful of requests already, but I like to have plenty to look at! If I don't pick yours, email me letting me know that you still want clarity on the chart and I'll cover it in Friday's Diamond Mine trading room.
Good Luck & Good Trading,
Today's "Diamonds in the Rough": FINX, IYZ and VOX.
Runner-ups: BBCA, EES, FXO, IJS, IPAY, IYZ, MDIV, PFFA, PFXF, SLYV and XLC.
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RECORDING LINK (12/30/2022):
Topic: DecisionPoint Diamond Mine (12/30/2022) LIVE Trading Room
Start Time: Dec 30, 2022 09:00 AM PT
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When: Jan 6, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine 1/6/2023) LIVE Trading Room
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Here is the last recording (no recording on 12/26 or 1/2):
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.
Stop levels are all rounded down.
Global X FinTech Thematic ETF (FINX)
FINX tracks a market-cap-weighted index of companies in developed markets that derive significant revenues from providing financial technology products and services. Click HERE for more information.
Predefined Scans Triggered: P&F Descending Triple Bottom Breakdown, Parabolic SAR Buy Signals and P&F double Bottom Breakout.
FINX is up +4.52% in after hours trading, so we must be onto something here. The declining trend hasn't been broken, but the indicators are improving quickly, suggesting it will break the trend. The RSI just hit positive territory and the PMO has generated a crossover BUY signal. There is a positive OBV divergence leading into the rally which means we could see a more extended rally. Stochastics are in negative territory but rising. This ETF is beginning to outperform the market. The stop is set at 6.8% around $18.36.
There is a giant bullish falling wedge on the weekly chart. The PMO has turned up above its signal line which is especially bullish. The OBV positive divergence carries from the daily chart to the weekly chart. The weekly RSI isn't good. We don't like the StockCharts Technical Rank (SCTR) flatlining. That tells us this ETF has been seriously beaten down. Upside potential looks great at over 40%, but I wouldn't get too greedy in a market like this.
iShares U.S. Telecommunications ETF (IYZ)
IYZ tracks a market-cap-weighted index of large-cap US companies involved in the telecommunications industry. Click HERE for more information.
Predefined Scans Triggered: None.
IYZ is up +0.48% in after hours trading. The RSI is in positive territory and not yet overbought. The rally has pushed price above 5/20/50-day EMAs and the PMO has now had a crossover BUY signal. Stochastics are rising strongly and the ETF is outperforming the market. It's a bit range bound and there is no denying the strength of overhead resistance given it lines up with so many price bottoms/tops. The stop can at least be set thinly at 6.4% around $21.49 or even thinner at about half that to be just below the first December low.
If that price resistance level can be overcome we should see a move of 16.5%. The weekly RSI is negative and the SCTR is horrible, but both are slowly rising. The PMO looks very bullish as it rises out of extremely oversold territory on a crossover BUY signal.
Vanguard Communication Services ETF (VOX)
VOX tracks a market-cap-weighted index of US communication services companies. Click HERE for more information.
Predefined Scans Triggered: P&F Low Pole.
VOX is down -1.85% in after hours trading. Maybe it's time for XLC/VOX to pullback a bit after four days of rally. It wouldn't be surprising. That would get you a slightly better entry. Price broke out today and could simply be ready to fall back to the breakout point. The RSI is positive and the PMO just triggered a crossover BUY signal today. Stochastics are rising strongly and it is beginning to outperform the market. You can set a rather thin stop at 6.5% around $79.21.
The weekly chart is beginning to perk up. While the RSI is still in negative territory and the SCTR is in the basement, the weekly PMO has bottomed above its signal line which is especially bullish. There is a large bullish falling wedge pattern that hasn't yet been confirmed. If the breakout occurs, I see a 24% gain possible.
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 12% exposed with a 2% hedge.
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 Trading Room 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