Many of you know that I am an avid Fantasy Football player. One of the stats that are available when you look up a player is "Boom or Bust". Basically it gives you a percentage as to whether the player is likely to boom or bust.
I was thinking about this nomenclature as I reviewed some of the "Diamonds in the Rough". While I can't give you stats on whether a stock will boom or bust, I can let you know if a trade is higher risk. I've decided to name some of the higher risk selections as "boom or bust" stocks. These would be stocks with incredible upside potential, but also carry the risk of deeper declines.
The stocks I selected today are in the Boom or Bust category. They have excellent upside potential, but a few of the stops need to be very deep. I would be careful if you have a smaller risk appetite. Personally, while I would consider adding Boom or Bust stocks to my own portfolio, I only carry one of these types of stocks in my account at one time, if at all.
Let's hope we see some big 'booms' on today's "Diamonds in the Rough".
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": GLBE, HOOD and REPL.
Runner-ups: AU, ALLY, WRK, PKG and RBA.
RECORDING LINK (11/17/2023) (No Recording on 11/24):
Topic: DecisionPoint Diamond Mine (11/17/2023) LIVE Trading Room
Passcode: November#17
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When: Dec 1, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (12/1/2023) LIVE Trading Room
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Here is the last recording from 11/13 (no recording for 11/20):
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.
Global E Online Ltd. (GLBE)
EARNINGS: 02/22/2024 (BMO)
Global-e Online Ltd. engages in the provision of cross-border e-commerce solutions. It offers Global-e Pro and Global-e enterprise. The company was founded by Shahar Tamari, Amir Schlachet, and Nir Debbi on February 21, 2013 and is headquartered in Petach Tikva, Israel.
Predefined Scans Triggered: Bullish MACD Crossovers and P&F Low Pole.
GLBE is down -0.85% in after hours trading. Price is coming back after a big gap down from earnings. This chart needs time to ripen a bit more as I'd like to see price get back above the 50/200-day EMAs soon. It already overcame resistance at the October low. I believe the gap down was overdone which is why we are seeing retracement. The RSI is now positive and we have a new PMO Crossover BUY Signal. The OBV is confirming the rally as volume is returning overall. Stochastics are rising and should hit positive territory soon. Relative strength is rising for the group and GLBE is showing leadership against the group and the SPY. I've set the stop at 7.9% or $31.59.
The weekly chart is nothing to look at so we should think short-term for this trade. The weekly RSI is rising, but is still in negative territory. The weekly PMO is in decline, but does appear to be decelerating somewhat. The StockCharts Technical Rank (SCTR) is outside the hot zone* above 70, but it is rising vertically right now reflecting short-term strength. If it can return to the 2023 high, it would be an over 34% 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.
Robinhood Markets Inc. (HOOD)
EARNINGS: 02/07/2024 (AMC)
Robinhood Markets, Inc is a financial services platform that pioneered commission-free stock trading with no account minimums and fractional share trading. The firm is focused on providing retail brokerage and offers trading in U.S. listed stocks and Exchange Traded Funds, related options, and cryptocurrency trading, as well as cash management, which includes debit cards services. The company was founded by Vladimir Tenev and Baiju Prafulkumar Bhatt in 2013 and is headquartered in Menlo Park, CA.
Predefined Scans Triggered: P&F Double Bottom Breakdown and P&F Triple Bottom Breakdown.
HOOD is down -0.12% in after hours trading. This is a reversal stock and a Boom or Bust stock. What attracted me to this chart was the small short-term bullish double bottom pattern. It hasn't been confirmed with a breakout yet so it is early. The RSI hasn't reached positive territory yet, but there is a new PMO Crossover BUY Signal. I noted a slight positive divergence between price lows and OBV bottoms. Stochastics are rising strongly. The Software group has been outperforming for some time. HOOD hasn't been so fortunate, but it is showing signs of improvement to relative strength. The stop is set deeply so it lines up with support at 9% or $7.86.
The weekly chart needs help so I would keep this one in the short-term timeframe for now. The positives on the chart are the positive OBV divergence and the fact that price is near the bottom of a steady trading range. This offers a nice upside target around 53%. The SCTR is rising, but is well outside the hot zone.
Replimune Group, Inc. (REPL)
EARNINGS: 02/08/2024 (BMO)
Replimune Group, Inc. is a clinical-stage biotechnology company. It engages in the business of developing oncolytic immunotherapies for the treatment of cancer. The company was founded by Philip Astley-Sparke, Colin A. Love, and Robert Coffin in March 2015 and is headquartered in Woburn, MA.
Predefined Scans Triggered: Elder Bar Turned Green and Parabolic SAR Buy Signals.
REPL is up +3.64% in after hours trading. I hesitated on this "Diamond in the Rough" given the huge gain it saw today. I figured it would need a pullback, but then I saw it was flying in after hours trading. This is a high risk reversal candidate or a 'Boom or Bust' stock. Upside potential is incredible, but we had to put in a deep stop, primarily due to today's big gain. The RSI is negative but rising. The PMO is on a brand new Crossover BUY Signal. Stochastics are rising strongly but are below 50 still. Relative strength could be better, but it does seem to be improving for REPL against the group and SPY. The stop is deep at 10.1% or $10.36.
Price is nearing support. It reversed before testing it which is bullish, but it could still decide to make a move back to that level which does add risk. We need to keep this in the short-term timeframe as the weekly indicators need improvement. The RSI is very negative (although rising). The weekly PMO is in decline still and the SCTR is near the bottom of the range. If it can keep the rally alive, the next area of overhead resistance doesn't arrive until we have a 31% gain.
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 70% 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)
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