It wasn't purposeful, but after looking at all of my prospective "Diamonds in the Rough" today, I decided to go with a Healthcare theme. I had a good amount of candidates today, the big problem right now is finding stocks that aren't overbought. There are overbought RSIs everywhere.
I looked at the Healthcare sector (XLV) chart and determined that the sector looks healthy enough (no pun intended) to fish from. Interestingly two of today's "Diamonds in the Rough" are from the Pharmaceutical industry group. As a whole, I'm not particularly impressed with the group given that relative strength is declining currently, but the two stocks I picked in this area should perform in spite of the group.
We have three categories of stocks today. A reversal candidate, a boom or bust stock and a winner that should keep on winning.
Remember that you can download the latest Diamond Mine trading room video for watching later or to file away. I only keep videos up for two weeks so download them right away.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": ANIP, MOH and TARS.
Runners-up: CW, ITRI, V, AXP, BR, ANET, ODP, GPRE and ACRE.
RECORDING & DOWNLOAD LINK (12/8/2023):
Topic: DecisionPoint Diamond Mine (12/8/2023) LIVE Trading Room
Passcode: December#8
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When: Dec 15, 2023 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (12/15/2023) LIVE Trading Room
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Here is the last recording from 12/4, no recording on 12/11:
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.
ANI Pharmaceuticals, Inc. (ANIP)
EARNINGS: 03/07/2024 (BMO)
ANI Pharmaceuticals, Inc. is a bio-pharmaceutical company, which engages in developing, manufacturing, and marketing branded and generic prescription pharmaceuticals. Its areas of product development include narcotics, oncolytics, hormones and steroids, and complex formulations involving extended release and combination products. The company was founded on August 29, 1996 and is headquartered in Baudette, MN.
Predefined Scans Triggered: P&F Double Bottom Breakdown, Elder Bar Turned Green, Ichimoku Cloud Turned Green and Parabolic SAR Buy Signals.
ANIP is unchanged in after hours trading. Here is the reversal candidate. It's been struggling since earnings weren't well received at the beginning of November. It has traveled steadily lower since. It now appears ready for an upside reversal. The main reason is the breakout from the declining trend and the new PMO Crossover BUY Signal. The RSI is negative but is improving. Stochastics are in negative territory but are rising strongly right now. The indicators are just now shaping up, hence 'reversal candidate'. I've set the stop below support at 7.3% or $47.83.
It is also evident from the weekly chart that this is a reversal candidate. The indicators are not favorable yet. There is a negative weekly RSI and a falling weekly PMO. The StockCharts Technical Rank (SCTR) is rising, but is outside the hot zone* above 70. If I am right about a reversal coming now, upside potential is almost 30% before it hits overhead resistance again.
*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.
Molina Healthcare, Inc. (MOH)
EARNINGS: 02/07/2024 (AMC)
Molina Healthcare, Inc. engages in the provision of health care services. It operates through the following segments: Medicaid, Medicare, Marketplace, and Other. The company was founded by C. David Molina in 1980 and is headquartered in Long Beach, CA.
Predefined Scans Triggered: Elder Bar Turned Green, New CCI Buy Signals, New 52-week Highs, Moved Above Upper Bollinger Band, Moved Above Upper Price Channel and P&F Double Top Breakout.
MOH is up +0.45% in after hours trading. This is a likely "winner that keeps on winning" stock. I was impressed with today's breakout above overhead resistance. The RSI is positive and there is a new PMO Crossover BUY Signal. Stochastics have just reached above 80. The Health Care Providers industry group is healthier than the Pharma group as we see a rising relative strength line. MOH is outperforming on its own against the SPY as it is traveling in line with the group itself. I've set the stop below support at 7.9% or $348.58.
This breakout took price to all-time highs. The weekly RSI is getting overbought, but that is a condition that will likely persist on the weekly chart. It is terribly overbought, only slightly. The weekly PMO is very healthy and best of all it is not overbought. Additionally, the SCTR is well within the hot zone above 70. Since it is at all-time highs, consider an upside target around 17% or $442.82.
Tarsus Pharmaceuticals Inc. (TARS)
EARNINGS: 03/13/2024 (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: P&F Double Top Breakout and P&F Bearish Signal Reversal.
TARS is down -3.16% in after hours trading so this "boom or bust" stock may struggle a bit near-term. I don't see what is going on in after hours trading until I start writing. I don't want it to be a determining factor on picking "Diamonds in the Rough". I was drawn to the chart due to the bull flag formation and the confirmation of the pattern on the breakout. Based on the chart pattern, price should make its way to the July high once again. The RSI is positive and there is a new PMO Crossover BUY Signal. Stochastics have been rising strongly. As noted earlier, the group isn't doing so hot, but TARS is outperforming both the SPY and the group right now. The stop is set to land right around the 50-day EMA at 7.8% or $16.61.
The weekly chart does suggest that overhead resistance is very strong at 2022 highs, but we've see a breakout before and given the maturing weekly indicators, I think we can look for it. The weekly RSI is positive and rising. The weekly PMO has whipsawed back into a Crossover BUY Signal. The SCTR is almost back in the hot zone. If we can get that breakout, this one could boom over 43%.
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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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