I really enjoy Reader Request Day. It is always interesting to see what symbols are on your mind and give myself a break from teasing out "Diamonds in the Rough" from a lot of scan results like we had today. (Beta testers, some days will have overwhelming results depending on market conditions.)
One of the stocks brought to the table today was Amazon (AMZN), one of the well-known "Magnificent 7" stocks.
Two of the stocks come from an industry group that isn't performing very well, but the symbols given to me look very bullish.
The final stock is a shorting opportunity brought in by regular trading room attendee, Joe. Diamond Mine attendees definitely know who I'm referencing. This one is very interesting and worth a look by my readers.
I liked all of the requests today, but I had to pick just four. I've listed the others for your review.
Don't forget to sign up for tomorrow's Diamond Mine trading room! Information is below. If you can't attend live, the recording links are always available. You can also download the recording for later viewing before the link expires.
I'm in need of a moderator for tomorrow's Diamond Mine as our good friend, Fred is unavailable. If you're interested, please email me.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": AMZN, CTVA, NTR and PHM (Short).
Other Requests: ARLO, VALE, HNRG, ASB, GILD, TOL (Short) and PNW.
RECORDING LINK (9/8/2023):
Topic: DecisionPoint Diamond Mine (9/8/2023) LIVE Trading Room
Passcode: Sept#8th
REGISTRATION for 9/15/2023:
When: Sep 15, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (9/15/2023) 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 9/11:
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.
Amazon.com, Inc. (AMZN)
EARNINGS: 11/02/2023 (AMC)
Amazon.com, Inc. is a multinational technology company, which engages in the provision of online retail shopping services. It operates through the following segments: North America, International, and Amazon Web Services (AWS). The North America segment is involved in the retail sales of consumer products including from sellers and subscriptions through North America-focused online and physical stores. It also includes export sales from online stores. The International segment focuses on the amounts earned from retail sales of consumer products including from sellers and subscriptions through internationally-focused online stores. The AWS segment consists of global sales of compute, storage, database, and other services for start-ups, enterprises, government agencies, and academic institutions. The company was founded by Jeffrey P. Bezos in July 1994 and is headquartered in Seattle, WA.
Predefined Scans Triggered: New 52-week Highs, Stocks in a New Uptrend (Aroon), P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
AMZN is down -0.12% in after hours trading. AMZN broke out yesterday and cooled today. It has formed a nice base that should mean this breakout will lead to higher prices. The RSI is positive and the PMO is on a Crossover BUY Signal. Stochastics are above 80. Relative strength is positive for the group and AMZN is outperforming both the group and the SPY. I've set the stop near the 50-day EMA and below support at the July top at 6.5% or $135.31.
I really like Amazon's weekly chart. Everything is going right with the exception of an overbought weekly RSI. However, I'm not worried about the weekly RSI. Look at mid-2020, it held overbought conditions for weeks. The weekly PMO looks as if it surged above the signal line and isn't overbought. The StockCharts Technical Rank (SCTR) is at the top of the hot zone*. If it can challenge all-time highs it would be a 30% gain. Not so sure the market will accommodate that just yet, but AMZN looks great on this week's breakout.
*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.
Corteva Inc. (CTVA)
EARNINGS: 11/02/2023 (AMC)
Corteva, Inc. engages in the provision of seed and crop protection solutions, which focus on the agriculture industry and contributing to food supply. It operates through the Seed and Crop Protection segments. The Seed segment is involved in developing and supplying advanced germplasm and traits that produce yield for farms. The Crop Protection segment offers the global agricultural input industry with products that protect against weeds, insects, other pests, and diseases, and that improve overall crop health both above and below ground via nitrogen management and seed-applied technologies. The company was founded in 1802 and is headquartered in Indianapolis, IN.
Predefined Scans Triggered: P&F Low Pole and Ichimoku Cloud Turned Red.
CTVA is down -0.34% in after hours trading. There is a bullish double bottom pattern and price has confirmed the pattern with a breakout. It was nice to see a rally today after yesterday's bearish shooting star. The minimum upside target of this pattern would bring price up to about $55.50. The RSI is positive and not overbought. The PMO previously surged above its signal line on this rally. Stochastics are now above 80. The industry group isn't performing well, but CTVA is having no problem outperforming the group and consequently it is beginning to build relative strength against the SPY. The stop is set below support at 7.9% or $48.45.
This isn't the best weekly chart. I see a rounded top. The one positive I see is that it is rebounding off strong support at 2021 highs. The weekly RSI is rising, but negative. The weekly PMO has decelerated, but is still declining. The SCTR is seeing improvement, but it is well outside the hot zone. I don't have high hopes for this one in the intermediate term but if it can get a rally going and reach all-time highs it would be a nice 29% gain.
Nutrien Ltd. (NTR)
EARNINGS: 11/01/2023 (AMC)
Nutrien Ltd. is a crop nutrient company, which engages in the production and distribution of products for agricultural, industrial, and feed customer. It operates through the following segments: Retail, Potash, Nitrogen, and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed, and merchandise. The Potash, Nitrogen, and Phosphate segments produces differentiated chemical nutrient contained in each products. The company was founded on June 2, 2017 and is headquartered in Saskatoon, Canada.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals and P&F Low Pole.
NTR is up +0.31% in after hours trading. What caught my eye on this one was the bullish cup with handle pattern. Today's rally appears to be confirming the pattern. The RSI is positive and rising. The PMO is a bit suspect as it is so flat but technically it is on a Crossover BUY Signal. Stochastics turned up in positive territory. As noted earlier, the industry group isn't particularly healthy, but like CTVA, NTR is showing relative strength. If the group gets going it could be very exciting for these two symbols. The stop is set below support at 7.3% or $59.69.
The weekly chart is looks better than CTVA's. The SCTR needs help, but it is rising somewhat. The weekly RSI is rising toward positive territory. The weekly PMO is on a Crossover BUY Signal and rising. The one problem is that price is underneath very strong resistance and that could pose a problem in both the short and intermediate terms so be careful.
PulteGroup, Inc. (PHM) - SHORT
EARNINGS: 10/24/2023 (BMO)
PulteGroup, Inc. engages in the homebuilding business. The firm is also involved in mortgage banking and title and insurance brokerage operations. It operates through the Homebuilding and Financial services business segments. The Homebuilding segment includes operations from Connecticut, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Virginia, Georgia, North Carolina, South Carolina, Tennessee, Florida, Illinois, Indiana, Kentucky, Michigan, Minnesota, Missouri, Ohio, Texas, Arizona, California, Nevada, New Mexico, and Washington. The Financial Services segment is composed of mortgage banking and title operations. The company was founded by William J. Pulte in 1950 and is headquartered in Atlanta, GA.
Predefined Scans Triggered: P&F Double Bottom Breakdown and Elder Bar Turned Blue.
PHM is down -1.34% in after hours trading, so our friend Joe might be onto something here. I noticed a large bearish rounded top. Remember this is a short so we want the chart to look as ugly as possible. The one positive on the chart is that support at $75 hasn't been broken and so it could hold up. Other than that everything is looking negative. The RSI is in negative territory right now, albeit currently rising. The PMO is declining and should drop beneath the zero line soon. Stochastics are tumbling lower in negative territory. I noticed a reverse divergence on the OBV. Notice that volume has been increasing, but price is not following volume with higher highs. Relative strength is failing across the board. The stop is set above the current price since this is a short. I've set it at the two previous tops at 6.4% or $83.60.
It looks very toppy on the weekly chart, but as noted above, support hasn't broken down yet. The weekly RSI is declining, but is still in positive territory. The SCTR is at the top of the hot zone* so it isn't losing intermediate-term internal strength yet. The weekly PMO definitely supports this short position as it is on a new Crossover SELL Signal that arrived in very overbought territory. I've marked the downside potential at support at the 2021 and early 2023 highs.
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 40% long, 0% 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
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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