Technology led the charge today and that was clear when I reviewed today's ETF scan results. Of the scan results, two groups appeared to be in the driver's seat. With many of the ETF results holding the same theme, I was able to hone it down to the best ETF to cover that area of the market.
The two industry groups were cybersecurity and cloud computing. There a couple of different ETFs for both areas of the market. I decided to find the ones with the most upside potential.
Tomorrow is Reader Request Day so feel free to send your symbol(s) to email@example.com. If you have a StockCharts.com ChartList of the symbols, you can share the list to firstname.lastname@example.org.
Good Luck & Good Trading,
Today's "Diamonds in the Rough": BUG, EPOL and WCLD.
Runner-ups: CIBR, CLOU, HACK, METV and SKYY.
** 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 (5/5/2023):
Topic: DecisionPoint Diamond Mine (5/5/2023) LIVE Trading Room
REGISTRATION for 5/12/2023:
When: May 12, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (5/12/2023) 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 (5/8):
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 Cybersecurity ETF (BUG)
BUG tracks a modified market-cap-weighted global index of companies selected on the basis of revenue related to cybersecurity activities. Click HERE for more information.
Predefined Scans Triggered: Moved Above Ichimoku Cloud.
BUG is up +0.22% in after hours trading. The rally off support is strong and forceful. It has changed the character of the chart. Notice that Monday's gap up moved above prior gap resistance and held. The 5-day EMA has crossed above the 20-day EMA for a ST Trend Model BUY Signal. The RSI is positive, rising and not at all overbought. The PMO just triggered a Crossover BUY Signal today. The OBV is mostly confirming the rally (it did flatten out a bit). Stochastics are very strong and nearing territory above 80. Outperformance is visible with the rising relative strength line. The stop is set at 6.1% or $21.33.
I love the recent PMO "Surge" above the signal line where the weekly PMO was original in decline and then turned back up before triggering a Crossover SELL Signal. The weekly RSI is nearing positive territory. The SCTR isn't in the "hot zone"* above 70, but it is rising vertically as this rally gets going. Upside potential is about 26%.
*If a stock is in the "hot zone" above 70, it implies that it is stronger than 70% of its universe (large-, mid-, small-caps and ETFs) primarily in the intermediate to long terms.
iShares MSCI Poland Capped ETF (EPOL)
EPOL tracks a market-cap-weighted index of the broader Polish equity market. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals, Moved Above Upper Keltner Channel, New 52-week Highs, Parabolic SAR Buy Signals and P&F Double Top Breakout.
EPOL is down -0.06% in after hours trading. Today it just about broke out of the trading range it has been in. I picked this one from the PMO Surge Scan. You can see how the PMO has bottomed above the signal line. A surge is especially bullish. The PMO isn't that overbought either. Stochastics turned up in positive territory and relative strength is excellent. The stop was easy to set below the trading range at 5.9% or $16.89.
The structure of the weekly chart shows a messy reverse head and shoulders which is bullish. The weekly RSI isn't overbought despite the long rally this quarter. The weekly PMO surged above the signal line and continues higher. If we want something to worry about, the weekly PMO is getting somewhat overbought. The SCTR is about as good as you can get at 99.5%. Upside potential is 28%.
WisdomTree Cloud Computing Fund (WCLD)
WCLD tracks and index of US companies primarily focused on cloud software and services. Stocks are equal weighted in the index. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green, Bullish MACD Crossovers and Parabolic SAR Buy Signals.
WCLD is down -0.18% in after hours trading. I chose this one because it had a longer distance between the current price and the February high in comparison to the other ETFs that came up for Cloud Computing. The chart looked about the same as far as indicators go so it seemed a good reason to select this one. The RSI is now back in positive territory. There is a PMO Crossover BUY Signal on tap. The OBV is confirming the rally. Stochastics are rising and went above net neutral (50) today. This industry group has been easily outperforming the market. The stop is set below the May low at 7.2% or $25.28.
It's a bit of an eye test, but the weekly PMO has surged above the signal line. The weekly RSI is not in positive territory, but it is rising. The SCTR, while not in the "hot zone", is moving up vertically toward that zone. Upside potential is over 20% should it reach the 2023 high.
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 18% long, 7% 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
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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