As I sifted through the very meager scan results for ETFs today, I noticed a clear theme. This brings me to "false positives". I've found that many times a 'theme' will present itself in the scan results, but is it really a good theme?
I find that sometimes, scan results sway a particular direction based on simply one day of exceptional returns. I've run into this periodically and I find that I need to do just a little bit of research to make sure it isn't a one and done.
Today I felt a little of both. Materials were the theme today, in particular, metals. It was clear that metals and even mining had great days today, but the Materials sector itself didn't perform as well. I don't trust the mining stocks yet, but metals are interesting. The rallies have established themselves to I don't believe this is a false positive situation.
If you recall I mentioned Silver yesterday. Gold (IAU) looks pretty good today too although I didn't include it. Copper (CPER) has bullish characteristics and would've been 4th on the list if I covered four.
A note on Gold Miners (DUST): While I don't trust the mining stocks right now, they are at significant support and appear ready to rally a bit more. I have dropped this position primarily because it is leveraged.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": DBB, PSLV and URA.
Runners-up: EWW, IAU and CPER.
RECORDING LINK (8/18/2023):
Topic: DecisionPoint Diamond Mine (8/18/2023) LIVE Trading Room
Passcode: August#18
REGISTRATION for 8/25/2023:
When: Aug 25, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (8/25/2023) LIVE Trading Room
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Here is the last recording from 8/21:
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.
Invesco DB Base Metals Fund (DBB)
EARNINGS: N/A
DBB tracks an index of three base metal futures contracts. It selects contracts based on the shape of the futures curve to minimize contango. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green.
DBB is down -0.33% in after hours trading. Price is bouncing off a strong support level and still has some headroom before it comes up against resistance. The RSI is now in positive territory and the PMO is turning up. Stochastics are rising strongly and should hit positive territory very soon. The fund is also showing outperformance against the SPY. I've set the stop at 4.7% or $17.35.
The weekly chart needs work, but that is not surprising given the lengthy decline this year. The weekly RSI is still negative and the StockCharts Technical Rank (SCTR) is in the basement, well below the hot zone above 70*. The weekly PMO does appear to be decelerating and I do spy what could be a long-term bullish double bottom pattern.
*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.
Sprott Physical Silver Trust ETF (PSLV)
EARNINGS: N/A
The Sprott Physical Silver Trust (PSLV) is a closed-end trust that invests in unencumbered and fully-allocated London Good Delivery ("LGD") silver bars. Click HERE for more information.
Predefined Scans Triggered: Moved Above Upper Keltner Channel and Entered Ichimoku Cloud.
PSLV is down -0.24% in after hours trading. It was a major gap up today on the metal so you may want to wait on a pullback since price has hit overhead resistance. The RSI is positive, rising and not overbought. The PMO triggered a Crossover BUY Signal today. Stochastics are rising strongly in positive territory. Volume came in hot and heavy today as well. The metal is clearly outperforming the SPY. I've set the stop beneath support at 7.6% or $7.66.
The weekly chart suggests that this could be considered an intermediate-term investment. The weekly RSI is positive and the weekly PMO is beginning to turn back up. The SCTR is at the top of the hot zone. Should it overcome resistance at the 2023 top, I see it moving back toward the 2021 high.
Global X Uranium ETF (URA)
EARNINGS: N/A
URA tracks a market-cap-weighted index of companies involved in uranium mining and the production of nuclear components. Click HERE for more information.
Predefined Scans Triggered: P&F Double Top Breakout.
URA is up +0.60% in after hours trading. Price is nearing overhead resistance, but given it made it through near-term resistance at the June top, I would look for it to break out again. The RSI is positive and there is a new PMO Crossover BUY Signal. Volume is definitely coming in. Stochastics are strong above 80 and the metal has been outperforming the SPY for some time. I've set the stop at 7.9% or $21.64.
If price breaks out again as I expect it to, there is plenty of upside potential. This looks good as an intermediate-term investment given the strong configuration of the weekly chart. The weekly RSI is positive and not overbought and the weekly PMO is steadily rising. The SCTR is at the top of the hot zone.
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 8% long, 0% short. I own Gold (IAU).
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