One measure of market strength is how many reader requests I receive. Only one person submitted and instead of a usual long list of stocks, there were only three. I picked one and decided to run my scans to scare up another two. The Surge Scan came through with only two selections, but both had merit.
Be very careful with long positions in your portfolio. The market is very weak. You will likely find more shorts available than longs. I am not adding to my portfolio at this time unless I find an inverse or shorts that look interesting. Still, take a look at today's selections and if nothing else consider them for a watch list.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": AM, CBAY and RGR.
RECORDING LINK (10/20/2023):
Topic: DecisionPoint Diamond Mine (10/20/2023) LIVE Trading Room
Passcode: October@20
Recordings can be downloaded for two weeks.
REGISTRATION for 10/27/2023:
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.
Antero Midstream Corp. (AM)
EARNINGS: 10/25/2023 (AMC)
Antero Midstream Corp. is a growth-oriented midstream energy company, which owns, operates, and develops midstream energy assets to service Antero Resources production and completion activity. It operates through the Gathering and Processing and Water Handling segments. The Gathering and Processing segment includes a network of gathering pipelines and compressor stations that collect and process production from Antero Resources wells in West Virginia and Ohio. It also includes equity in earnings from the company's investments in the Joint Venture and Stonewall. The Water Handling segment focuses on two independent systems that deliver fresh water from sources including the Ohio River, local reservoirs, and several regional waterways. The company was founded on September 23, 2013 and is headquartered in Denver, CO.
Predefined Scans Triggered: Elder Bar Turned Green, New 52-week Highs, Stocks in a New Uptrend (Aroon) and P&F Double Top Breakout.
AM is up +1.05% in after hours trading. They reported yesterday. Crude Oil is likely on the rise again and that will benefit this stock. We have a bullish flag formation that was confirmed with today's breakout move. The RSI is positive, rising and not overbought. The PMO has surged above the signal line. Stochastics were falling, but on two days of rally, they are turning back up. Relative strength shows rising trends for the group and the stock. I set the stop arbitrarily at 6% or $11.61.
It is at all-time highs and it likely will continue to log them. I like that the weekly RSI isn't overbought yet. The weekly PMO is on a Crossover BUY Signal and the StockCharts Technical Rank (SCTR) is near the top of the hot zone* above 70. I would consider a 17% upside target to around $14.46.
*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.
CymaBay Therapeutics Inc. (CBAY)
EARNINGS: 11/13/2023 (AMC)
CymaBay Therapeutics, Inc. engages in the provision and development of access to therapies for patients with liver and other chronic diseases with high unmet medical needs. Its products pipeline includes Seladelpar, MBX-2982, CB-0406, and CB-001. The company was founded on October 5, 1988 and is headquartered in Newark, CA.
Predefined Scans Triggered: P&F Double Top Breakout.
CBAY is down -0.53% in after hours trading. We have a cup-shaped basing pattern that could also be a reverse head and shoulders pattern. The RSI is positive and there is a relatively new PMO Crossover BUY Signal. Stochastics are oscillating above 80 now. Relative strength studies are very positive with both the group and the stock outperforming the SPY. I've set the stop below support at 7.1% or $14.10.
The weekly chart is mixed. The weekly RSI is positive and rising and the SCTR is in the hot zone, but the PMO is holding a Crossover SELL Signal. The weekly PMO does appear to be decelerating so circumstances could improve soon. If it can reach this year's top, it would be an over 20% gain.
Sturm Ruger & Co., Inc. (RGR)
EARNINGS: 11/01/2023 (AMC)
Sturm, Ruger & Co., Inc. engages in the design, manufacture, and sale of firearms to domestic customers. It operates through the Firearms and Castings segments. The Firearms segment manufactures and sells rifles, pistols, and revolvers principally to a number of federally-licensed, independent wholesale distributors primarily located in the United States. The Castings segment manufactures and sells steel investment castings and metal injection molding parts. The company was founded by William B. Ruger in 1949 and is headquartered in Southport, CT.
Predefined Scans Triggered: Elder Bar Turned Green.
RGR is unchanged in after hours trading. Here we have a cup with handle pattern that is being confirmed with this new rally. Certainly Defense should continue to outperform given the wars. The RSI is positive and rising. The PMO has surged above the signal line. It appears overbought, but given it hit territory around -2, it could see a move to +2. Stochastics are rising after reversing in positive territory. The group is outperforming and as I mentioned I believe that will continue. RGR isn't the best performer, but it is staying inline with its already successful industry group. The stop was set below support somewhat arbitrarily at 5% or $51.98.
The weekly RSI is firmly planted in positive territory. The weekly PMO just gave us a Crossover BUY Signal. The SCTR is in the hot zone. If it can reach the 2022 high, it would be an over 19% gain. This has possibilities for the intermediate term.
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, 15% 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)
For more links, go to DecisionPoint.com