Another day were the scans produced very little. I had to go out and review our ETF Tracker ChartList (available to subscribers on the upper lefthand side of the Blogs and Links page) manually to see if I could find any strength across the market. I managed to find two ETFs that way with the final ETF coming from my PMO Surge Scan.
There is one familiar face that has been driving us all crazy, but the Natural Gas ETF (UNG) is starting to look very bullish again, particularly with today's breakout. If you want to give this one a try, I'd consider just a small position. UNG has been traveling in fits and starts and then breaking back down. I currently have a long-term hold on UNG. I signed up for the volatility months ago and am simply waiting it out because I just believe Nat Gas prices won't stay this low forever.
Reader Requests have been coming in light on Thursday. Here's your reminder to send me the symbols that are currently on your mind for adds or holds.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": COMT, IGE and UNG.
Runner-ups: INFL, GSG, IEO and UMI.
RECORDING LINK (8/4/2023):
Topic: DecisionPoint Diamond Mine (8/4/2023) LIVE Trading Room
Passcode: August#4th
REGISTRATION for 8/11/2023:
When: Aug 11, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (8/11/2023) 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 from 8/7:
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: Elder Bar Turned Green, Moved Above Upper Keltner Channel, Moved Above Upper Price Channel and Parabolic SAR Buy Signals.
COMT is unchanged in after-hours trading. Today saw a breakout above a congestion area. There is a PMO Surge above the signal line. The RSI is positive and not quite overbought yet. Stochastics have been oscillating above 80 for some time so there is internal strength. Given the rally, it has been outperforming the SPY. I like that you do not have to set a deep stop on this one. I've opted to set it at the 200-day EMA at 4.5% or $27.31.
This looks like an intermediate-term investment to me given the strength of the weekly chart. Price has broken out of a bullish falling wedge. The weekly RSI is positive and the weekly PMO is on a BUY Signal and should vault the zero line shortly. The StockCharts Technical Rank (SCTR) is in the hot zone* above 70.
*If a stock/ETF 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 North American Natural Resources ETF (IGE)
EARNINGS: N/A
IGE tracks a market-cap-weighted index of US-listed natural-resource-related companies. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals, Parabolic SAR Buy Signals and P&F Double Top Breakout.
IGE is down -1.10% in after hours trading. I like the make-up of this particular ETF; take a look at the Top Ten Holdings above. It has mostly Energy related stocks and that sector is still clicking higher. With Crude Oil likely to continue higher, I believe this ETF will continue to outperform as it already is. It appears the PMO surged yesterday (had a bottom above the signal line). One issue is the bugle shaped formation we have. This implies more volatility and volatility is generally not our friend. Still, the RSI is positive and the OBV is rising while price lows are declining. That's a positive OBV divergence. Stochastics are positive and close to 80. It is an ETF showing relative strength. The stop is set deeper than it necessarily needs to be set so use your own judgement. I've set it below support at 7.1% or $38.79.
We're starting to see a tiny breakout above the declining tops trendline that forms the top of a symmetrical triangle. This triangle is attached to a long flagpole so an upside breakout is the expectation. The weekly RSI is positive and the weekly PMO just triggered a Crossover BUY Signal. The SCTR is in the hot zone. If we get the breakout to new all-time highs, I would consider this an intermediate-term investment. Consider at upside target of 16% to $48.44.
United States Natural Gas Fund (UNG)
EARNINGS: N/A
UNG holds near-month futures contracts in natural gas, as well as swap contracts. Click HERE for more information.
Predefined Scans Triggered: Gap Ups, Moved Above Upper Keltner Channel, Filled Black Candles, Runaway Gap Ups and P&F Low Pole.
UNG is unchanged in after hours trading. Monday saw a breakaway gap and today's breakout rally is a runaway gap. These gaps imply more upside to come. I really like the breakout from the longer-term trading range. This is very encouraging. The indicators are favorable as well. The PMO had a Crossover BUY Signal this week and Stochastics are above 80. In spite of a strong rally this week, the RSI isn't overbought. Amazingly, it is finally beginning to outperform the market. For those with big risk appetites, you could use the 2x leveraged Nat Gas ETF (BOIL). The stop had to be set deeply due to today's nearly 6% gain. Depending on where you enter, you can adjust it as appropriate. I set it at 9.1% or $7.24.
The weekly chart has been improving since we last looked at UNG on June 15th. The weekly RSI is rising and should hit positive territory soon. The weekly PMO has continued to rise on a Crossover BUY Signal. The SCTR is something other than zero! Still, consider this a short-term trade unless you don't mind the wide volatility it has been experiencing. I've set the upside target at the late 2021 low for an over 46% gain.
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% long, 4% short. I own UNG.
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