I only have one Biotech to present today, but I wanted to share a chart. The relative strength line on Biotechs is really ugly right now, but I continue to see prospective trades coming through on this industry group. We are fortunate that we were able to expand our Golden Cross Index and Silver Cross Index to Biotechs. I was quite amazed by what I saw and honestly wish I had these indicators for every industry group. Maybe one day. These charts are available to you on our website on the Blogs and Links page at the top of the left column. It is in the Golden Cross/Silver Cross Index ChartList along with other indexes, sectors and groups.
Before I talk about the chart, here are the definitions you should know:
- The Golden Cross Index (GCI) shows the percentage of stocks on LT Trend Model "Golden Cross" BUY signals (50-EMA > 200-EMA). The opposite of a Golden Cross is the "Death Cross" -- those stocks are in a bear market.
- The Silver Cross Index (SCI) shows the percentage of stocks on IT Trend Model "Silver Cross" BUY signals (20-EMA > 50-EMA). The opposite of the Silver Cross is a "Dark Cross" -- those stocks are, at the very least, in a correction.
Note that the relative strength line has been tanking. On its own, IBB is not performing well against the SPY. However, note that the participation indicators have all been angling upward since its bottom last December. Participation tells me 2/3rds of the group have price above their 20-day EMA and that almost that many have a 20-day EMA above the 50-day EMA (silver cross). There are plenty of strong stocks beneath the surface and the rising Golden/Silver Cross Indexes tell us avoiding this group isn't necessary. There is internal strength.
Before I sign off, I just wanted to let you know that Natural Gas (UNG) is beginning to get interesting. There is a good chance I'll cover it tomorrow. There is still plenty of downside risk, so I personally am not quite ready to jump in.
Good Luck & Good Trading,
Today's "Diamonds in the Rough": AVTE, CEIX and LPLA.
Runner-ups: OLK, ZBH, DLB, TXRH, SCHW and SRDX.
RECORDING LINK (2/3/2023):
Topic: DecisionPoint Diamond Mine (2/3/2023) LIVE Trading Room
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When: Feb 10, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (2/10/2023) LIVE Trading Room
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Here is the last recording (2/6):
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.
Aerovate Therapeutics Inc. (AVTE)
EARNINGS: 03/29/2023 (BMO)
Aerovate Therapeutics, Inc. is a biotechnology company which engages in the development of drugs for rare cardiopulmonary disease. It focuses on advancing AV-101, a dry powder inhaled formulation of imatinib for the treatment of pulmonary arterial hypertension. The company was founded by Benjamin T. Dake on July 27, 2018 and is headquartered in Waltham, MA.
Predefined Scans Triggered: New CCI Buy Signals.
AVTE is down -1.99% in after hours trading. Price is bouncing off strong support. The 5-day EMA has crossed above the 20-day EMA for a Short-Term Trend Model BUY signal. The RSI is now positive and the PMO has started to rise in oversold territory above the zero line. Volume has started to come in. As noted in the opening, Biotechs aren't performing well against the SPY, but we know participation is improving. The stop is set below the 50-day EMA at 7.7% around $23.60.
The weekly PMO is turning up above the signal line which is especially bullish. The SCTR is in the "hot zone" above 70. We call it the "hot zone" because it implies that the stock/ETF is in the top 30% of its "universe" (large-, mid-, small-caps and ETFs) as far as trend and condition, particularly in the intermediate and long terms. The weekly RSI is in positive territory. I see upside potential of about 20%+.
CONSOL Energy Inc. (CEIX)
EARNINGS: 02/07/2023 (BMO) (Today)
CONSOL Energy Inc. engages in the production of bituminous coal. It focuses on the extraction and preparation of coal in the Appalachian basin. The firm operates through the following segments: PAMC and CONSOL Marine Terminal. The PAMC segment includes mining, preparation and marketing of thermal coal. The CONSOL Marine Terminal segment provides coal export terminal services. The company was founded in 1864 and is headquartered in Canonsburg, PA.
Predefined Scans Triggered: Elder Bar Turned Green, P&F Spread Triple Top Breakout and P&F Double Top Breakout.
CEIX is up +0.64% in after hours trading. It's strange bringing an Energy stock to the table as I'm definitely bearish on Energy. As far as Coal, relative strength has been holding up so I opted to include it. The RSI is positive and not overbought. The PMO just triggered a crossover BUY signal. There is a positive OBV divergence with price lows. Stochastics just moved above 50 and relative strength for CEIX is improving against the group and consequently the SPY. The stop is set below the 200-day EMA at 8.2% around $57.32. The stop is deeper than usual due to today's 7%+ move.
The weekly chart could definitely be better given the weekly PMO is declining and the SCTR is not as good as I like. The weekly RSI did move into positive territory. I don't mind the weekly chart because it shows me a range bound stock that is bouncing off the bottom of the range. Upside potential is over 28%.
LPL Financial Holdings Inc. (LPLA)
EARNINGS: 04/27/2023 (AMC)
LPL Financial Holdings, Inc. serves independent financial advisors and financial institutions, providing them with the technology, research, clearing and compliance services, and practice management programs they need to create and grow their practices. It provides objective financial guidance to millions of American families seeking wealth management, retirement planning, financial planning and asset management solutions. The company was founded in 1989 and is headquartered in San Diego, CA.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, Moved Above Ichimoku Cloud and P&F High Pole.
LPLA is up +0.11% in after hours trading. It's been on a nice rally with only a few hiccups along the way. The RSI is positive and Stochastics are rising toward 80. The PMO has bottomed above the signal line which is especially bullish. Price is hitting overhead resistance, but given the positive indicators, I expect a breakout. The stop is set below support at the mid-December high around 5.9% around $231.47.
The weekly PMO has turned up and the weekly RSI has been oscillating mostly in positive territory since it came out of the 2020 bear market. Lots of internal strength. The SCTR has moved back into the "hot zone" above 70. Upside potential is likely at all-time highs. Consider a 15% upside target around $282.89.
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. Want to expand to 30%.
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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DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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