The market appears ready to digest the prior rally so it would make sense to move into more defensive categories like Consumer Staples and possibly Healthcare. I did see quite a few Industrials hit the scan results today so I did include one.
The choice for Consumer Staples is a Food Products stock, Simply Good Foods (SMPL) and my choice in the Healthcare space is Abbott Labs (ABT). The Industrial stock Verisk (VRSK) has the best chart today and had to be included.
The runner-up list is small, but you'll note it is heavy Consumer Staples. This was our Sector to Watch on Friday and it appears to be set-up nicely for the week. A correction will pose a problem, but at this point we aren't looking for anything that deep.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": ABT, SMPL and VRSK.
Runner-ups: CL, KMB, PLMR, KO, PG and MRK.
** JULY VACATION **
I will be in Europe 7/14 - 7/28 so there will not be any Diamonds reports or trading rooms during that time. All subscribers with active subscriptions on 7/28 will be compensated with two weeks added to their renewal date.
RECORDING LINK (6/16/2023):
Topic: DecisionPoint Diamond Mine (6/16/2023) LIVE Trading Room
Recording Link
Passcode: June*16th
REGISTRATION for 6/23/2023:
When: Jun 23, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (6/23/2023) 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 (6/12 - No Recording on 6/19):
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.
Abbott Laboratories (ABT)
EARNINGS: 07/19/2023 (BMO)
Abbott Laboratories engages in the discovery, development, manufacture, and sale of a broad and diversified line of health care products. It operates through the following business segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices. The Established Pharmaceutical Products segment refers to the international sales of a line of branded generic pharmaceutical products. The Diagnostic Products segment markets diagnostic systems and tests for blood banks, hospitals, commercial laboratories, and alternate-care testing sites. The Nutritional Products segment caters to the worldwide sales of adult and pediatric nutritional products. The Medical Devices segment includes electrophysiology, heart failure, vascular and structural heart devices for the treatment of cardiovascular diseases, and diabetes care products for people with diabetes, as well as neuromodulation devices for the management of chronic pain and movement disorders. The company was founded by Wallace Calvin Abbott in 1888 and is headquartered in Abbott Park, IL.
Predefined Scans Triggered: New CCI Buy Signals and P&F High Pole.
ABT is down -0.58% in after hours trading. ABT enjoyed quite a rally last week and today it continued higher, forming a bullish engulfing candlestick. The indicators are lined up well with the RSI firmly positive and not overbought. We have a recent PMO Crossover BUY Signal and Stochastics have risen above 80. The Pharma industry group isn't outperforming the market right now, but it isn't underperforming either. ABT is showing new leadership against the group and the SPY. I've set the stop below the bullish double-bottom pattern at 6.3% or $99.97.
The weekly chart looks good enough to consider this one a possible intermediate-term investment. The only detractor is the StockCharts Technical Rank (SCTR) which is outside of the "hot zone" above 70*. Still, it is rising strongly so that condition could clear very soon. The weekly RSI just moved into positive territory, but most importantly, the weekly PMO has surged above its signal line (bottom above the signal line). I decided not to get too optimistic on the upside target and listed it at 20%. It could move further if overhead resistance is broken.
*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.
The Simply Good Foods Co. (SMPL)
EARNINGS: 06/29/2023 (BMO)
The Simply Good Foods Co. is a consumer packaged food and beverage company, which engages in the development, marketing, and sale of nutritional food and snacking products. Its products include nutrition bars, ready-to-drink shakes, snacks, confectionery, and frozen meals under the Atkins and Quest brands. The company was founded on March 30, 2017 and is headquartered in Denver, CO.
Predefined Scans Triggered: New CCI buy Signals, Ichimoku Cloud Turned Green and P&F Double Bottom Breakout.
SMPL is unchanged in after hours trading. After a strong rally on Friday, SMPL took a bit of a break today, pulling back just below the breakout point. This did tip the RSI over, but it is still above net neutral (50). The PMO is triggering a Crossover BUY Signal right now. Stochastics are rising strongly in positive territory. The biggest detractor on the chart is the industry group it is in. Food Products are underperforming the market right now and could be a drag on SMPL; however, with the market likely ready to pause or pullback, this defensive area should perk back up. In spite of the industry group, SMPL is beginning to outperform the market. I've set the stop below the six-month trading range at 5.3% or $34.79.
The weekly chart suggests this will be a better short-term trade than an intermediate-term investment. The weekly RSI is in negative territory right now. The weekly PMO is declining on a Crossover SELL Signal. The SCTR is well outside the "hot zone" and isn't really rising. Should price be able to break out of the 2023 trading range, I think it could go back and test all-time highs. A breakout would likely change the complexion of this weekly chart.
Verisk Analytics Inc. (VRSK)
EARNINGS: 08/02/2023 (BMO)
Verisk Analytics, Inc. engages in the provision of data analytics services. It serves insurance customers and focuses on the prediction of loss, the selection and pricing of risk, and compliance. The company was founded in 1971 and is headquartered in Jersey City, NJ.
Predefined Scans Triggered: New 52-week Highs, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
VRSK is down -0.64% in after hours trading. This chart is great with the exception of the negative OBV divergence with price tops. It's not a primary indicator so I'll let it go. The main reason we have the problem is the big volume decline on Friday. I think the chart has merit in spite of that divergence. The RSI is very positive and the PMO is attempting to give us another Crossover BUY Signal. Stochastics are above 80. The group is cooling its relative strength in the near near term, but overall it has still seen outperformance. VRSK is showing new relative strength against the group and the SPY. The stop can be set beneath support at 6.2% or $211.95.
This could be considered an intermediate-term investment, particularly if we get the breakout. The weekly RSI is overbought, but look at 2019. It can hold these conditions in a strong rally. The weekly PMO is rising and isn't as overbought as it can get. The SCTR is well within the hot zone. I also notice steady increase in the weekly OBV. Since it is at 52-week highs, consider an upside target of 16% which would take price to $262.12.
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 25% long, 0% short. I plan on adding all three of these symbols tomorrow. I dropped positions today in preparation.
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:
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
For more links, go to DecisionPoint.com