Diamond scans have picked up the weakness in the market. For ETF Day I had numerous hedging ETFs on both the SP500 and Dow. I even saw the Semiconductors inverse ETF. They all look very good right now. I opted not to present any of these ETFs, but you will find their symbols in the "Runner-ups" list.
Another theme that I won't be presenting was a bullish Dollar. I had UUP come up as well as a bear ETF for the Euro. I like the Dollar on this near-term reversal. Both of those should be fairly good choices moving forward.
The Utilities sector (XLU) is up and a few Utilities ETFs came to the forefront. I'm presenting FUTY which is the Fidelity version.
One of the picks is an ETF that I own. It is a Dynamic Income Fund that I have so far been very pleased with. I presented it as a Diamond sometime last month, but it deserves to be presented on a new PMO BUY Signal.
Finally, I want to discuss another ETF pick today, DUST. The Gold Miners are looking incredibly weak under the hood so I wasn't surprised to see the inverse ETF come up. It is leveraged so remember you may have a bumpy ride.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": DUST, FUTY and PDO.
Runner-ups: EUO, UUP, HIBS, SDS, SDOW and SOXS.
RECORDING & DOWNLOAD LINK (12/29/2023):
Topic: DecisionPoint Diamond Mine (12/29/2023) LIVE Trading Room
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Passcode: December#29
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When: Jan 5, 2024 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (1/5/2024) LIVE Trading Room
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Here is the last recording from 12/18 (no recording on 12/25 or 1/1):
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Tuesday, 1/9, 2p ET at the "Analyze Your Trade" Live Charting Event. The Event runs January 8th and 9th beginning at 10a ET. Click HERE to sign up.
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.
Direxion Daily Gold Miners Index Bear 2x Shares (DUST)
EARNINGS: N/A
DUST provides 2x inverse exposure to a market-cap-weighted index of global gold and silver mining firms. Click HERE for more information.
Predefined Scans Triggered: Gap Ups and Runaway Gap Ups.
DUST is up +0.18% in after hours trading. I've put the GDX chart below the daily chart for DUST so you can see how participation has been decimated. This is a sector that has already struggled and with Gold looking weak again on the Dollar's strength and the market looking weak, this group is bound to suffer further. This would be a very short-term trade given it is leveraged 2x. The RSI is now positive and the PMO just triggered a Crossover BUY Signal. Stochastics are rising strongly and relative strength is picking up. While I have set a 7.9% stop, it honestly should be set deeper based on the leverage. The current stop level is 7.9% or $10.17.
The weekly chart is fairly ugly given Gold Miners have been in a declining trend for most of the 4th quarter of 2023. The weekly RSI is negative and the weekly PMO is falling. There is no StockCharts Technical Rank (SCTR) for this ETF so we don't know whether it would be in the hot zone* above 70. Keep this very short-term.
*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.
Fidelity MSCI Utilities Index ETF (FUTY)
EARNINGS: N/A
FUTY tracks the MSCI US IMI Utilities 25/50 Index, a market-cap-weighted index of stocks in the US utilities sector. Click HERE for more information.
Predefined Scans Triggered: New CCI Buy Signals and P&F Low Pole.
FUTY is unchanged in after hours trading. If any sector is going to do well in a downturn, Utilities should as they are very defensive. Money needs to rotate somewhere and I would look for this sector to be the place. I won't say there will be huge upside on this one, but it should stay on its rising trend, if it doesn't get rid of it, you don't have to ride it down to the stop level if you choose not to. The new PMO Crossover BUY Signal well above the zero line is what attracted me to this chart. The RSI is also positive and not overbought. Stochastics are nearly in positive territory. Volume is coming in based on the OBV and it is beginning to really outperform. The stop is set at 6.7% or $38.75.
Price has reentered the prior trading range. The weekly RSI is positive, rising and not overbought. The weekly PMO is rising strongly on a Crossover BUY Signal. The SCTR isn't great and is well below the hot zone so keep this in the short-term timeframe for now.
PIMCO Dynamic Income Opportunities Fund (PDO)
EARNINGS: N/A
The fund utilizes an opportunistic approach to pursue high conviction income-generating ideas across credit markets to seek current income as a primary objective and capital appreciation as a secondary objective. Click HERE for more information.
Predefined Scans Triggered: Stocks in a New Uptrend (ADX), Stocks in a New Uptrend (Aroon) and Moved Above Upper Price Channel.
PDO is down -0.88% in after hours trading. As noted earlier I do happen to own this one. I picked it up after I chose it last November 1st. I think it has more upside potential despite already making quite a move out of the October low. The reason I picked it was the new PMO Crossover BUY Signal that is arriving well above the zero line. The RSI also is positive and not overbought. Stochastics have risen above 80 and it is really beginning to outperform. The stop can be set below support at 5.2% or $11.82.
Admittedly it is arriving at very strong overhead resistance, but the weekly RSI is very positive and the weekly PMO is rising above the zero line on a Crossover BUY Signal. The SCTR is outside the hot zone, but it is rising quickly. I believe we'll get the breakout. I'm setting upside potential at about 20%.
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 75% long, 0% short. I own PDO.
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