It's ETF Day! The scans returned only three results and they were not up to snuff to be named "Diamonds in the Rough". When this happens I go to the ETF Tracker which is available to you on our website. I found some choices there, but I also studied my expansive ETF Listings charts and dug out a new ETF for you. It is definitely my favorite "Diamond in the Rough" today and is on my radar for a possible pick up this week in my own portfolio.
One problem I noticed while looking at the charts is that most everything is overbought with Price Momentum Oscillators (PMOs) that have been rising for some time. This is the nature of this strong market, but I would look for a possible pullback soon. So while some of these are on the overbought side, none have RSIs above 70 yet.
Tomorrow is Reader Request Day so send in your symbols to either erin@decisionpoint.com or support@decisionpoint.com before lunch tomorrow and maybe you'll see one featured in tomorrow's report!
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": DAPP, KRE and WTAI.
Runner-ups: AMLP, XBI, WCLD, BOTZ, SMH, ARKG, ARKQ and DRN.
RECORDING LINK (11/17/2023) (No Recording on 11/24):
Topic: DecisionPoint Diamond Mine (11/17/2023) LIVE Trading Room
Passcode: November#17
REGISTRATION for 12/1/2023:
When: Dec 1, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (12/1/2023) 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 11/27:
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.
VanEck Vectors Digital Transformation ETF (DAPP)
EARNINGS: N/A
DAPP tracks a market-cap-weighted index of global innovative companies that are involved in the digitalization of the world's economy through a diverse range of digital assets. Click HERE for more information.
Predefined Scans Triggered: Filled Black Candles.
DAPP is down -0.13% in after hours trading. This one is on my radar. The chart is excellent. We have a nice basing pattern that has developed and price yesterday broke above overhead resistance. There is a filled black candlestick today which does suggest a decline tomorrow. I'd like it to hold above this new support level. The RSI is nearly overbought, but based on July, it can hold those conditions for some time. The PMO is accelerating higher on a Crossover BUY Signal. Stochastics are above 80 indicating internal strength. It is outperforming the SPY. The stop is set as close to prior support as possible without making the percentage too high. I have it at 7.8% or $6.50.
The weekly chart is also very bullish. There is a large bullish reverse head and shoulders pattern. The weekly RSI is positive and rising. The weekly PMO is nearing a Crossover BUY Signal. The OBV is confirming the rising trend. The StockCharts Technical Rank (SCTR) is almost as high as it can get (max is 99.9). Consequently it is in the hot zone* above 70. We have some amazing upside potential on this one even if it just reaches the neckline of the reverse head and shoulders pattern.
*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.
SPDR S&P Regional Banking ETF (KRE)
EARNINGS: N/A
KRE tracks an equal-weighted index of US regional banking stocks. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green and P&F Double Top Breakout.
KRE is up +0.16% in after hours trading. I have the "Under the Hood" chart for KRE so we have more information to parse. I like price action as it just finished a small pullback and today's bar is a breakout. The RSI is positive and the PMO appears to be surging above the signal line. The Silver Cross Index is at a very healthy 86%, somewhat overbought but has more headroom. Participation of stocks above key moving averages is very healthy. Those readings are overbought, but participation indicators can maintain overbought conditions for some time. Look at July/August. Stochastics have just turned back up in positive territory. KRE still has to break above the 200-day EMA but with such robust participation, it will. The stop is set below the 50-day EMA at 7.7% or $41.56.
The weekly chart is very healthy. We have a developing bullish double bottom pattern. The weekly RSI is positive and not overbought. The weekly PMO is rising on a Crossover BUY Signal and is not overbought. The SCTR is in the hot zone. I see upside potential at about 19% but the chart pattern does call for a higher upside target at about $63.00.
WisdomTree Artificial Intelligence and Innovation Fund (WTAI)
EARNINGS: N/A
WTAI tracks an equally-weighted index of globally-listed stocks whose businesses are derived from artificial intelligence and innovation. Selection and weighting are overseen by a committee. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals, Moved Above Upper Price Channel and Shooting Star.
WTAI is up +0.64% in after hours trading. I do note a bearish shooting star candlestick so we could get a better entry tomorrow (although after hours trading suggests it will open higher). Price nearly closed above overhead resistance today. We have a relatively new "Golden Cross" of the 50/200-day EMAs. The RSI is getting overbought, but as with others, it has been able to maintain those condition for some time based on June. The PMO is rising and isn't really overbought. Stochastics are above 80. This one has been outperforming the market on its rally out of the October lows. The stop is set below the 50/200-day EMAs at 6.7% or $17.54.
We have another positive weekly chart suggesting these could be considered intermediate-term investments rather than just short-term trades. The weekly RSI is now in positive territory and is not overbought. The weekly PMO has turned around and is zeroing in on a Crossover BUY Signal. The SCTR is in the hot zone. I've opted to use an upside target of about 20% as I don't think it will have a problem overcoming overhead resistance at the 2023 top.
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. All three of these ETFs are on my list for possible adds.
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