The scans barely turned up three ETFs to share and two of them I typically wouldn't present as they are at decision points. What I mean by that is two of them are sitting right up against overhead resistance. They have to decide if they will break out or turn back down. Obviously the indicators are ripe or they wouldn't have hit the scan results. You just may prefer to wait to see if the breakouts actually occur. That is dependent on your risk appetite.
I only have two runners-up for you. I own TYO and I like the chart, it just may be time for interest rates to cool so a 3x leveraged inverse ETF of 7-10 year Bonds may not be your cup of tea right now should rates pause. The other is the inverse of Energy (ERY). The sector is showing weakness as Crude pulls back, but it has suffered even when Oil has been up. I see quite a bit of weakness in that sector so it could be a possible hedge if you're looking for one.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": BTAL, FTXG and KCCA.
RECORDING LINK (10/20/2023):
Topic: DecisionPoint Diamond Mine (10/20/2023) LIVE Trading Room
Passcode: October@20
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When: Oct 27, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (10/27/2023) LIVE Trading Room
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Here is the last recording from 10/23:
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.
QuantShares U.S. Market Neutral Anti-Beta Fund (BTAL)
EARNINGS: N/A
BTAL is an actively managed fund that takes long positions in low beta US stocks, offset by short positions in high beta US stocks. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green, moved Above Upper Keltner Channel, Moved Above Upper Bollinger Band and Moved Above Upper Price Channel.
BTAL is down -2.00% in after hours trading so it is taking back most of today's strong rally. This is one of the ETFs nearing overhead resistance. As long as the rising trend stays intact, you should be fine with this one. The RSI is overbought right now. If the after hours decline stays in force tomorrow, that should clear the RSI's overbought condition. The PMO has surged above the signal line. I like the price pattern here. We know that the market has been in decline and yet this fund is rising like an inverse. Stochastics are oscillating above 80 suggesting internal strength. The fund has been outperforming the SPY since the September bottom. I've set the stop at 6.2% or $19.69 right around the August top and 200-day EMA.
The weekly chart suggests this could be considered an intermediate-term investment not just a short-term trade. The weekly RSI is positive, rising and not overbought. The weekly PMO is now rising above the zero line on a Crossover BUY Signal. The StockCharts Technical Rank (SCTR) is at the top of the hot zone*. One issue would be overhead resistance arriving at the top of the trading range, but this looks poised to breakout not turn back down. If it can recapture the 2019 high it would be about a 17% gain.
*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.
First Trust Nasdaq Food & Beverage ETF (FTXG)
EARNINGS: N/A
FTXG follows a liquidity-selected, multi-factor-weighted index of US food & beverage companies. Click HERE for more information.
Predefined Scans Triggered: P&F Double Bottom Breakdown and Elder Bar Turned Green.
FTXG is up a whopping +4.87% in after hours trading. We're onto something here. Coke (KO) is likely helping, but remember that last week we had XLP as an ETF "Diamond in the Rough". I like the mix on this ETF. It has struggled alongside the Consumer Staples sector, but it is starting to show some improvement. The RSI is still negative, but it is rising. The PMO just gave us a Crossover BUY Signal. Stochastics are in negative territory but are rising. It is definitely outperforming the SPY right now. The stop can be set thinly at 4.2% or $21.45.
Price is right up against longer-term resistance and weekly indicators don't look that great. The daily chart tells me that this resistance level should be broken. It will take some time for the weekly indicators to ripen. Keep this one short-term until this chart gets more bullish. The weekly RSI is rising, but is very negative. The weekly PMO has decelerated, but continues lower. It is very oversold, so that does bode well if it can reverse back up. The SCTR is terrible. If it overcomes resistance, I don't know that we'll see a move of 21%, but I do see some excellent potential.
Kraneshares California Carbon Allowance ETF (KCCA)
EARNINGS: N/A
KCCA tracks an index of CCA carbon credit futures. The index holds futures that mature in December of the next one or two years. Click HERE for more information.
Predefined Scans Triggered: None.
KCCA is down -0.44% in after hours trading. We do have a possible reverse island here so I would want to wait on entering this one. The RSI is currently overbought, but this rally was impressive enough to expect some followthrough. We have a new PMO Crossover BUY Signal and volume poured in on today's rally. Stochastics are above 80 and it is definitely an outperforming ETF versus the SPY. I've set the stop below support at 6% or $27.50.
This one is right up against overhead resistance, but it does favor a breakout based on the PMO surge above the signal line. The SCTR is also at the top of the hot zone. I would look for a breakout to new all-time 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 20% long, 6% 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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Watch the latest episode of DecisionPoint Trading Room with Carl & Erin Swenlin on Mondays 3:00p 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)
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