I expected to see some inverse ETFs or shorts come in for Reader Request Day, but all of the requests were on the long side. Readers found some very nice charts considering the pickings are rather slim with the market in decline.
One of the picks that I'm not doing is CBOE. The chart looks bullish, but this was a prior "Diamond in the Rough" this month. It's doing well.
A pick that I am doing is BOIL, the ultra Natural Gas ETF. UNG does look like it will rally in the short term. If you aren't a fan of going all in with BOIL, UNG is a good vehicle.
DEA was also a request, but the momentum is very negative and so it didn't make the cut today.
Tomorrow is the Diamond Mine trading room! Be sure to use the link below to register. I'll see you there and I'll be ready to cover all of your symbol requests!
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": BAH, BOIL, RNR and TARS.
RECORDING LINK (9/29/2023):
Topic: DecisionPoint Diamond Mine (9/29/2023) LIVE Trading Room
Passcode: Sept#29th
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When: Oct 6, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (10/6/2023) LIVE Trading Room
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Here is the last recording from 10/2:
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.
Booz Allen Hamilton Holding Corp. (BAH)
EARNINGS: 10/27/2023 (BMO)
Booz Allen Hamilton Holding Corp. engages in the provision of management and technology consulting services. It offers analytics, digital solutions, engineering, and cyber expertise. The company was founded by Edwin Booz in 1914 and is headquartered in McLean, VA.
Predefined Scans Triggered: Moved Above Upper Keltner Channel.
BAH is down -0.51% in after hours trading. Price broke out above overhead resistance today. The 20-day EMA is about to cross above the 50-day EMA for a IT Trend Model "Silver Cross" BUY Signal. The RSI is positive and not overbought. The PMO is on a new Crossover BUY Signal in oversold territory. Stochastics are above 80 suggesting internal strength. I really like the outperformance by BAH against both the industry group and the SPY. The industry group is trending up, but is rather choppy. The stop is set thinly below support at 5.1% or $110.75.
The weekly PMO has turned back up and is headed for a Crossover BUY Signal. The weekly RSI is already in positive territory, rising and is not overbought. The StockCharts Technical Rank (SCTR) is in the hot zone* above 70 and rising further. Since it is already at all-time highs, consider an upside target of about 17% or $136.55.
*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.
ProShares Ultra Bloomberg Natural Gas (BOIL)
EARNINGS: N/A
BOIL provides 2x the daily return of an index that measures the price performance of natural gas as reflected through publicly traded natural gas futures contracts.
Predefined Scans Triggered: New CCI Buy Signals, Moved Above Upper Bollinger Band, Moved Above Upper Price Channel, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
BOIL is up +0.30% in after hours trading. This is for the risk taker given it is a 2x ETF. The reader asked if it was overbought. I don't think so given the RSI is positive and not above 70. It was an extraordinary day for BOIL as Nat Gas is finally seeing another rally. The PMO is giving us an oversold BUY signal. It's the first BUY signal since early August. Be careful though, these signals have been arriving shortly before another decline. Stochastics are rising vertically and should be above 80 soon. Again, think very short-term as these signals have been arriving late to the party. The stop has to be set deeply and really could be set deeper since this is a 2x coverage. Think double the stop level you would put on UNG. I've opted to go with a 13.1% stop around $54.95.
The weekly PMO looks very healthy on BOIL as it is on a Crossover BUY Signal and is accelerating higher. The weekly RSI is terrible and I note that volume disappeared on BOIL this year, likely due to the unpredictability of Natural Gas, but it should be noted it did see marked improvement over the past two weeks. If it can get back to the top of the trading range, it would be an over 30% gain.
Renaissance RE Holdings Ltd. (RNR)
EARNINGS: 11/01/2023 (AMC)
RenaissanceRe Holdings Ltd. engages in the provision of reinsurance and insurance services. It operates through the following business segments: Property, Casualty and Specialty, and Other. The Property segment focuses on catastrophe, and other property reinsurance and insurance. The Casualty and Specialty segment deals with casualty and specialty reinsurance, and insurance. The Other segment includes strategic investments, investments unit, corporate expense, capital servicing costs, and non-controlling interests. The company was founded by Neill Alexander Currie on June 7, 1993, and is headquartered in Pembroke, Bermuda.
Predefined Scans Triggered: New CCI Buy Signals.
RNR is down -0.95% in after hours trading so it is taking back some of today's gain. I like the set up. The EMAs are configured positively with the fastest EMA on top and slowest on the bottom. There is a bull flag on the chart and it was confirmed with today's breakout. The pattern suggests we'll see price move well above the May top. There is a new PMO Crossover BUY Signal today. Stochastics have reversed and are in positive territory and the RSI is positive and not overbought. Relative strength studies are excellent as all relative strength lines are angling higher. The stop is set beneath support at 5.8% or $194.01.
The weekly chart is shaping up too. The weekly PMO is nearing a Crossover BUY Signal and the weekly RSI is rising, positive and not at all overbought. Price is holding above support at the 2020 highs. The SCTR is in the hot zone above 70. It is near 52-week highs so consider an upside target around 17% or $240.97.
Tarsus Pharmaceuticals Inc. (TARS)
EARNINGS: 11/09/2023 (AMC)
Tarsus Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company, which focuses on the development and commercialization of therapeutic candidates. Its product candidate, TP-03, is a novel therapeutic in Phase 2b/3 that is being developed for the treatment of blepharitis caused by the infestation of Demodex mites, which is referred to as Demodex blepharitis. The company was founded by Bobak Azamian and D. Michael Ackermann in 2017 and is headquartered in Irvine, CA.
Predefined Scans Triggered: Improving Chaikin Money Flow, Moved Above Upper Bollinger Band, Moved Above Upper Price Channel and P&F Double Top Breakout.
TARS is unchanged in after hours trading. Today saw a breakout that confirmed the reverse head and shoulders pattern. The pattern's minimum upside target is about $21. That would mean a breakout at $20. I think it is possible given the positive RSI and Stochastics above 80. The PMO is now above zero and rising which also bodes well. The industry group isn't performing that well, but TARS is a clear outperformer against the group and consequently the SPY. I've set the stop at about 8.1% around $17.01.
I really like the weekly PMO's reversal into a Crossover BUY signal this week. The weekly RSI just moved into positive territory. Volume is definitely coming in based on the OBV rising so strongly. The SCTR is at the top of the hot zone. The biggest risk is that price is in the middle of a trading range and is therefore vulnerable to a trip back down. Indicators are positive though so I would look toward upside potential at over 35%.
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 10% 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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