It was an ugly trading day with every sector finishing lower. However, you'll note that the defensive sectors dropped less than the others. Last week's "Sector to Watch" and "Industry Group to Watch" produced one of today's "Diamonds in the Rough". The other two are from somewhat defensive areas of the market.
You will want to review the "Runner-ups". One of interest is Hollysys (HOLI) which looks very interesting on the pullback. I opted not to include it due to it being in the Technology sector.
Good Luck & Good Trading,
Today's "Diamonds in the Rough": ABC, EPRT and NWE.
Other requests: PPC, AVA, FE, HOLI, PINC, KBR and MDLZ.
RECORDING LINK (2/17/2023):
Topic: DecisionPoint Diamond Mine (2/17/2023) LIVE Trading Room
Recording Link HERE
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
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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.
AmerisourceBergen Corp. (ABC)
EARNINGS: 05/03/2023 (BMO)
AmerisourceBergen Corp. engages in the provision of pharmaceutical products and business solutions that improve access to care. It operates through the Pharmaceutical Distribution Services and Other segments. The Pharmaceutical Distribution Services segment distributes an offering of brand-name, specialty brand-name and generic pharmaceuticals, over-the-counter healthcare products, home healthcare supplies and equipment, and related services to healthcare providers, including acute care hospitals and health systems, independent and chain retail pharmacies, mail order pharmacies, medical clinics, and long-term care and alternate site pharmacies. The Other segment focuses on global commercialization services and animal health, and includes AmerisourceBergen Consulting Services ABCS, World Courier, and MWI. The company was founded by in Emil P. Martini in 1947 and is headquartered in Conshohocken, PA.
Predefined Scans Triggered: None.
ABC is up +0.04% in after hours trading. Today it pulled back after hitting overhead resistance on Friday. The RSI is positive now and the PMO just triggered a crossover BUY signal. Stochastics just moved into positive territory above net neutral (50). The group is performing somewhat better the market; ABC is a strong performer against the group and the SPY. Medical Supplies industry group is defensive. The stop is set thinly at 5.7% around 151.67.
This isn't a great weekly chart so consider this trade short-term. Price had a failed breakout. It currently is bouncing off the 43-week EMA and we can see that it is in ABC's personality to rally after those touches. However, I wouldn't count on that. The weekly RSI is positive, but the PMO is ugly as it falls on a crossover SELL signal. The SCTR isn't in the "hot zone", but it is close enough. Since it is only about 9% off its all-time highs, consider an upside target of about 15% near $184.96.
Essential Properties Realty Trust, Inc. (EPRT)
EARNINGS: 04/27/2023 (AMC)
Essential Properties Realty Trust, Inc. engages in the acquisition, and management of single-tenant properties that are net leased on a long-term basis to middle-market companies, which operates service-oriented or experience-based businesses. Its portfolio includes the following: Captain D's, Art Van Furniture, Mister and Zips Car Wash, AMC Theaters, Perkins, 84 Lumber, Mirabito, Ruby Tuesday and White Oak Station. The company was founded on January 12, 2018 and is headquartered in Princeton, NJ.
Predefined Scans Triggered: P&F Double Top Breakout.
EPRT is up +0.70% in after hours trading. This is my favorite set-up of the day, we'll see how it gels. Price broke out to a new high and promptly returned to the breakout point. It's now time to see follow-through on that breakout. The RSI is positive and the PMO is about to trigger a crossover BUY signal. Stochastics are rising strongly and should get above 80 this week. The industry group is performing well against the SPY and EPRT is a leader within the group. Consequently it is outperforming the SPY and increasing that outperformance. The stop is set at about 5.1% near 24.35.
This stock has been in a steady uptrend since November of last year. It has only just recently confirmed a long-term bullish double-bottom. The weekly RSI is positive and not overbought. The PMO is rising beautifully and is no where near overbought. The SCTR is in the "hot zone". 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 double-bottom minimum upside target would take EPRT to new all-time highs.
NorthWestern Corp. (NWE)
EARNINGS: 05/04/2023 (AMC)
NorthWestern Corp. engages in generating and distributing electricity and natural gas. It operates through the following segments: Electric, Gas, and Other. The Electric segment includes generation, transmission, and distribution of electric utility business as a vertically integrated generation transmission and distribution utility. The Gas segment comprises production, storage, transmission, and distribution of natural gas. The Other segment consists of unallocated corporate costs. The company was founded in November 1923 and is headquartered in Sioux Falls, SD.
Predefined Scans Triggered: Hollow Red Candles.
NWE is unchanged in after hours trading. We have a large double-bottom pattern that hasn't been confirmed. It almost confirmed on Friday, but closed beneath the confirmation line. The RSI is positive and the PMO just triggered a crossover BUY signal. The OBV is rising and confirming the rally. Stochastics are nearing 80 and rising. Relative strength studies are positive with the group outperforming the SPY and NWE outperforming the group. The stop is set at 5.6% around 54.83.
The weekly chart does show strong overhead resistance, but the indicators are good. The weekly RSI is in positive territory and the weekly PMO is rising after bottoming above the signal line which is especially bullish. The SCTR isn't in the hot zone, but is acceptable at 62.1%. Upside potential conservatively is about 14%.
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 20% exposed. EPRT is a likely add.
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
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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