Indicators have been completely negative and screaming for a sizable decline. We believe the decline is now in motion and will likely gain traction amid mixed earnings this season. When I ran my scans today, the bullish results were almost nil.
What did result was a slew of inverse ETFs for the major market indexes. I did a visual scan of our ETF Tracker list (soon to be available on DecisionPoint.com) and found two ETFs I wanted to short, Real Estate (XLRE) and Airlines (JETS). For the inverse of Real Estate, I chose REK. JETS I'm presenting as a "short".
Finally, the last choice is one of my "go to's" for shorting the market in general, SDOW which is an ultrashort of the Dow Industrials. I am likely to add this one or one of the others this week. I believe more money is available to be made on the short side. So far, my stocks have not hit their stops, but I'm looking to sell and replace with a short or inverse.
If you have any favorite inverse market ETFs, you might want to take a peek at those charts.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": JETS (Short), REK and SDOW.
Runner-ups: SCO, SPDN, SPXS, DOG and PFIX.
** JULY VACATION **
I will be in Europe 7/14 - 7/27 so there will not be any Diamonds reports or trading rooms during that time. All subscribers with active subscriptions on 7/27 will be compensated with two weeks added to their renewal date.
RECORDING LINK (4/21/2023):
Topic: DecisionPoint Diamond Mine (4/21/2023) LIVE Trading Room
Passcode: April#21
REGISTRATION for 4/28/2023:
When: Apr 28, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (4/28/2023) 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 (4/24):
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.
US Global Jets ETF (JETS)
EARNINGS: N/A
JETS invests in both US and non-US airline companies. This concentrated portfolio is weighted towards domestic passenger airlines. Click HERE for more information.
Predefined Scans Triggered: Moved Below Lower Bollinger Band.
JETS is up +0.40% in after hours trading. Here we have a rare bearish triple-top chart pattern. The pattern was confirmed with today's break below the confirmation line. The minimum downside target of the pattern would bring it to the December low. The RSI is falling in negative territory and the PMO is about to give us a PMO Crossover SELL Signal. Stochastics just entered very bearish territory below 20. Relative strength is fading. The stop is set to the upside given it is a short at 7% or $16.35.
There is a bearish head and shoulders forming on the weekly chart. The minimum downside target of this pattern should it be confirmed with a drop below the neckline is the 2020 low. I don't know that it will reach that far down, but even if it challenges the October low which is definitely doable, it would still be an over 16% gain. The SCTR is in the basement as we would like on a short.
ProShares Short Real Estate (REK)
EARNINGS: N/A
REK provides inverse exposure to a market cap-weighted index of large US real estate companies, including REITs. Click HERE for more information.
Predefined Scans Triggered: New CCI Buy Signals.
REK is up +0.68% in after hours trading. As ugly as XLRE looks, REK looks beautiful on the inverse side. We have a nice rounded bottom that can provide foundation for a move higher. Today price effectively broke above short-term resistance. The RSI is positive, rising and not overbought. The PMO is rising toward a crossover BUY signal. We had a bullish positive OBV divergence that led into this rally and the OBV is currently confirming the rising trend. Stochastics are rising strongly and relative strength is beginning to increase. The stop is set below the 200-day EMA at 5.5% or $19.47.
The weekly chart is favorable with a positive RSI that is far from being overbought and a weekly PMO that is rising on a Crossover BUY Signal. The weekly PMO is not overbought and the OBV is confirming the rising trend with a rising trend of its own. Upside potential isn't listed that high, but there is no reason it couldn't move higher. The upside target is also twice the stop percentage which is my rule of thumb.
ProShares UltraPro Short Dow30 (SDOW)
EARNINGS: N/A
SDOW provides 3x inverse exposure to the price-weighted Dow Jones Industrial Average, which includes 30 of the largest US companies. Click HERE for more information.
Predefined Scans Triggered: P&F High Pole.
SDOW is down -0.15% in after hours trading. As the market breaks down, this chart is shaping up. I believe the Dow looks even more vulnerable than the SPX so an inverse on the Dow made the most sense. We have a nice rounded bottom price pattern. The RSI just entered positive territory. The PMO has now turned back up. The OBV is confirming the rally. Stochastics are moving quickly higher and should get above 80 shortly. Relative strength is picking up for obvious reasons and should continue to rise. The stop is set below support at 7.4% or $24.45.
The weekly chart is log scale so we can see price action. I've also included the thumbnail so you can see the weekly PMO Surge above the signal line. This is a 2x inverse ETF so if the Dow were to test October lows, this would be a 64% gain. However, this is a hedging tool not a longer-term investment. Of course if the market really picks up speed to the downside, this ETF will flourish.
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 30% long, 4% short.
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