Overall the scans came up with practically zero results for ETFs today. This meant I had to eyeball my ETF lists to find setups that looked good. It wasn't easy.
With the market on pause, most ETFs were in pullback mode. I'm not bearish enough on the market to go with an inverse market ETF as I think the decline will be short-term.
One major theme was commodities. WEAT and CORN have soared the past week and that has turned many of the commodity following ETFs upward. WEAT and CORN are very overbought and rising vertically. I think exposure using an overall Commodities ETF will serve us better. They also have plenty of upside potential.
I found a new ETF that is loosely cryptocurrency related, but isn't an actual crypto following ETF. I always include the links to the ETF websites so you may want to explore this ETF further.
Finally, I am not a fan of Gold Miners. A look at our Gold Miners (GDX) chart and you can see pitiful to no participation within the group. I don't think we'll see a rebound yet so the inverse ETF (DUST) could be a great short-term trade to take advantage of this weakness. I'll include our GDX chart in the section on DUST.
Tomorrow is Reader Request Day. Be sure to send in your symbol requests before noon PT tomorrow to ensure your symbol has a chance to be included in my report tomorrow. I try to send email with my quick read of the charts that I don't include...time permitting.
Good Luck & Good Trading,
Erin
(P.S. Apparently Charles will be out of town this Friday, so Fox Business is going to schedule me to be on next week's Making Money with Charles Payne. The suspense is killing me!)
Today's "Diamonds in the Rough": COMT, DAPP and DUST.
Runner-ups: VNM, ITA, MOO, GSG and FTRI.
** 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.
iShares Commodities Select Strategy ETF (COMT)
EARNINGS: N/A
COMT tracks a broad-market commodity index that utilizes a flexible dynamic roll strategy. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, Stocks in a New Uptrend (Aroon), Moved Above Ichimoku Cloud, Moved Above Upper Price Channel and P&F Double Bottom Breakout.
COMT is down -0.11% in after hours trading. After breaking out on Monday, COMT pulled back to below the breakout point which we often see. Today it surged higher, leaving overhead resistance in the rearview mirror. The RSI is positive and the PMO is crossing the zero line on a Crossover BUY Signal. Stochastics are above 80. Relative strength is picking up for COMT against the SPY. I've set the stop below support at 7% or $24.98.
I see a large bullish falling wedge on the weekly chart. It hasn't been confirmed with a breakout yet, but the current rally could push price out of the declining trend soon. The weekly RSI is technically negative, but it is rising and should reach above net neutral (50) soon. The weekly PMO is turning up. The StockCharts Technical Rank (SCTR) is outside the "hot zone" above 70*, but it is improving. Upside potential is great, but I'm not so sure it will actually recapture those prior highs. I'll settle for 20%.
*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.
VanEck Vectors Digital Transformation ETF (DAPP)
EARNINGS: N/A
DAPP tracks a market-cap-weighted index of global innovative companies that are involved in the digitalization of the worlds economy through a diverse range of digital assets. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Keltner Channel, P&F Spread Triple Top Breakout, Filled Black Candles and P&F Double Top Breakout.
DAPP is down -0.79% in after hours trading. I found the make-up of this ETF to be quite interesting. The rally in Bitcoin could have something to do with the current breakout, but just looking at the price chart, I know it trades differently than Bitcoin itself. Price did form a bearish filled black candlestick today so a decline tomorrow shouldn't be surprising. A pullback to the breakout point would make sense. The RSI is positive and not overbought. There is a new PMO Crossover BUY Signal in effect. Volume is coming in based on the OBV and Stochastics just moved above 80. This ETF has been outperforming the SPY for some time. It is increasing its outperformance currently. The stop is set beneath prior resistance at 7% or $5.88. This is a low-priced ETF so position size wisely.
The weekly chart shows a giant rounded bottom formation which goes alongside a positive weekly RSI and rising weekly PMO. The ETF is rather new so we don't have a real range for the weekly PMO yet. If we go by the lowest reading at around -30, we should expect the top of the range to run near +30, so a reading of 10.24 isn't overbought. The SCTR is fantastic sitting at the top of the heap at 99.7%. Upside potential is over 33% if it can retest the mid-2022 high.
Direxion Daily Gold Miners Index Bear 2x Shares (DUST)
EARNINGS: N/A
DUST provides 2x inverse exposure to a market-cap-weighted index of global gold and silver mining firms. Click HERE for more information.
Predefined Scans Triggered: New 52-week Highs, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
DUST is up +0.32% in after hours trading. This is a "juiced" or leveraged 2x ETF so understand the risks associated with trading these before you jump in. Indicators certainly suggest that Miners will continue to struggle. Below is the chart for Gold Miners (GDX) which shows the near zero participation this industry group is holding. That participation is also waning. The Silver Cross Index (SCI) is accelerating its decline. Near-term support was also lost today.
DUST does include exposure to Silver Miners so it isn't a pure inverse of GDX. The RSI is positive and the PMO has surged above the signal line. Stochastics turned up at net neutral (50) and continue to rise. DUST's performance against the SPY is improving slightly. I expect we will see this ETF outperform in a big way while the market pauses or pulls back.
The weekly chart (in log scale) is bullish given the rising and nearly positive RSI. The weekly PMO is on a recent Crossover BUY Signal. Upside potential is lucrative given this is a leveraged ETF. This one isn't a buy it and forget it investment. Leveraged ETFs should be monitored closely.
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 45% long, 0% short. COMT and DAPP are on my radar.
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
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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