I had only one ETF come through on my scans and I was impressed with the chart so it will be included today. However, there was another story that was told when I reviewed my ETF ChartLists. Nearly every ETF had PMO SELL signals arriving in overbought territory. There were only a few on the bull side. It appears that going bearish on the market in general is the story of the day. I've listed under "Runner-ups" a plethora of various vehicles to play this bearish momentum on the overall market.
I opted to present ETFs on the bull side rather than present inverses of the market. I decided that you will be able to determine your risk appetite and trading horizon. Just remember when you play inverse ETFs, particularly "juiced" (2x and 3x ETFs) or leveraged ETFs, they are hedges in the short term, not longer-term investments.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": BDRY, CPER and FTXG.
Runner-ups: PFIX, BTAL, BERZ, SPXS, DOG, DWSH, HDGE, HIBS, PSQ, RWM, SH and SOXS.
RECORDING LINK (2/17/2023):
Topic: DecisionPoint Diamond Mine (2/17/2023) LIVE Trading Room
Recording Link HERE
Passcode: Feb$17th
REGISTRATION for 2/24/2023:
When: Feb 24, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (2/24/2023) 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 (2/13 - No recording on 2/20):
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.
Breakwave Dry Bulk Shipping ETF (BDRY)
EARNINGS: N/A
BDRY tracks an index of long-only exposure to the nearest calendar quarter of dry bulk freight futures contracts on specified indexes. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green, Bullish MACD Crossovers, P&F Triple Bottom Breakdown and P&F Double Bottom Breakout.
BDRY is up +0.14% in after hours trading. Price has broken out of a bullish falling wedge. Yesterday was a breakaway gap and today looks like a continuation gap that suggests price will continue higher. The indicators aren't completely ripe right now, but they are headed in the right direction. The RSI is rising and nearing territory above 50. The PMO has turned up and is nearing a crossover BUY signal. Stochastics are rising strongly, but not yet above 80. Given today's over 3% move, the stop has to be deep at 8.1% around $6.69.
BDRY has been confined to a trading range since late last year. Currently price is at the bottom of the range. Should it reach the top of the range it would be a big 44%+ gain. The weekly RSI is very negative, but at least rising. I like that the weekly PMO is turning up above its signal as that is very bullish. We even have a slight positive divergence.
United States Copper Fund (CPER)
EARNINGS: N/A
CPER tracks a rules-based index of copper futures contracts selected based on the shape of the copper futures curve. Click HERE for more information.
Predefined Scans Triggered: P&F Low Pole.
CPER is up +0.28% in after hours trading. CPER pulled back quite a bit, but has now formed a small bullish double-bottom that was confirmed yesterday with the gap up. Today was a mechanical pullback toward the breakout point. The RSI is positive and Stochastics are rising in positive territory. The PMO is a little iffy as it does want to turn down below its signal line. I like it on this pullback. The stop is thin at 5% around $24.05.
The weekly chart is very bullish. Price bounced off strong support last week. The weekly RSI is positive and the weekly PMO is rising and not overbought. The SCTR is in the "hot zone" above 70 at a high 97.9% reading. 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. Upside potential is excellent at over 18%.
First Trust Nasdaq Food & Beverage ETF (FTXG)
EARNINGS: N/A
FTXG follows a liquidity-selected, multi-factor-weighted index of US food & beverage companies. Click HERE for more information.
Predefined Scans Triggered: Parabolic SAR Buy Signals.
FTXG doesn't appear to trade after hours. This is actually a pretty slow mover so upside potential is somewhat limited; however, the nice thing about that is that we can have a very thin stop which I set at 3.1% around $25.88. The RSI has just moved into positive territory. There is a bullish double-bottom pattern visible. The PMO is rising on a crossover BUY signal. Stochastics are rising strongly and should reach above 80 soon. Relative strength looks excellent. This ETF will take advantage of the rotation into Consumer Staples. One issue is that price hasn't confirmed the double-bottom with a breakout.
As noted above upside potential is somewhat limited so I would consider a 15% upside target around $30.72. The weekly RSI just entered positive territory and the SCTR is on the rise and should get above 70% soon. The one big problem is the falling weekly PMO. Consider this more for the short term versus the intermediate term.
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 22% 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 2023 DecisionPoint.com
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