This week's Sector to Watch was Industrials. I found quite a few peppering my scan results today so I was able to include two in today's report. I still like this area of the market this week, but I also noticed a new theme coming through and that is Healthcare (XLV). In fact one of my scans picked up a similar ETF for that sector.
I was able to find a Biotech with promise to take advantage of the sector rotation into Healthcare.
The last stock is from the Financial sector and while I'm not that keen on that area of the market currently, I kept coming back to the chart for this stock during my review process.
Finally, one stock that is looking very good right now is Fortinet (FTNT). I presented it earlier in the month so I didn't want to repeat, but this chart looks very constructive and suggests FTNT has higher to go.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": AXON, DLX, MYGN and TTEK.
Runner-ups: AAOI, AVAV, IDXX, AAL and FTNT.
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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.
Axon Enterprise, Inc. (AXON)
EARNINGS: 02/27/2024 (AMC)
Axon Enterprise, Inc. engages in the development, manufacture, and sale of conducted electrical weapons for personal defense. It operates through the TASER segment and Software and Sensors segment. The TASER segment sells conducted electrical weapons, accessories, and other related products and services. The Software and Sensors segment includes devices, wearables, applications, cloud, and mobile products. The company was founded by Patrick W. Smith and Thomas P. Smith on September 7, 1993 and is headquartered in Scottsdale, AZ.
Predefined Scans Triggered: New CCI Buy Signals and Parabolic SAR Buy Signals.
AXON is unchanged in after hours trading. Price is making its way back up toward overhead resistance. The PMO has now turned up above the zero line suggesting a breakout ahead. The RSI is positive and not yet overbought. Stochastics are rising toward 80. The group is trying to outperform the market, for now, it is traveling mostly inline. AXON is a clear leader within the group as it has been outperforming the group since last year. I've set the stop below support at 7.5% or $240.00.
This looks like a winner that will keep on winning based on the weekly chart. The weekly RSI is positive and not overbought. The weekly PMO is surging above the signal line. The StockCharts Technical Rank (SCTR) is at the top of the hot zone* above 70. Since it is making all-time highs, consider an upside target of about 17% to $303.57.
*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.
Deluxe Corp. (DLX)
EARNINGS: 05/02/2024 (BMO)
Deluxe Corp. engages in the provision of marketing products and services. It operates through the following segments: Payments, Cloud Solutions, Promotional Solutions, and Checks. The Payments segment includes treasury management solutions, including remittance and lockbox processing, remote deposit capture, receivables management, payment processing and paperless treasury management. The Cloud Solutions segment is composed of web hosting and design services, data-driven marketing solutions and hosted solutions, including digital engagement, logo design, financial institution profitability reporting and business incorporation services. The Promotional Solutions segment offers business forms, accessories, advertising specialties, promotional apparel, retail packaging and strategic sourcing services. The Checks segment consists of printed personal and business checks. The company was founded by W. R. Hotchkiss in 1915 and is headquartered in Minneapolis, MN.
Predefined Scans Triggered: None.
DLX is unchanged in after hours trading. I believe the reason I kept coming back to this chart is the double bottom pattern. These patterns suggest you will see a rally the height of the pattern when the confirmation line is overcome. That line is at $20.50 and it has been overcome. The RSI is positive and not overbought. The PMO has given us a Crossover BUY Signal above the zero line. Stochastics are rising and are now above 80. Relative strength for the group could be better, but DLX is outperforming the group and the SPY. If the group gets going this could be a very nice stock to own. I've set the stop beneath the 50-day EMA at 6.9% or $19.40.
We have a nice basing pattern on the weekly chart. The weekly RSI is positive and not overbought and the weekly PMO is surging above the signal line. The SCTR is not in the hot zone, but it is very close and could easily move into it before the week is out. Should this breakout be successful, I see upside potential of over 43%.
Myriad Genetics, Inc. (MYGN)
EARNINGS: 02/27/2024 (AMC)
Myriad Genetics, Inc. engages in the discovery, development, and marketing of transformative molecular diagnostic tests. It operates through the Diagnostics and Other segments. The Diagnostics segment provides testing and collaborative development of testing that is designed to assess an individual's risk of developing a disease later in life. The Other segment offers testing products and services to the pharmaceutical, biotechnology and medical research industries, research and development, and clinical services for patients, and also includes corporate services. The company was founded by Walter A. Gilbert, Mark H. Skolnick, and Peter D. Meldrum in May 1991 and is headquartered in Salt Lake City, UT.
Predefined Scans Triggered: Elder Bar Turned Green.
MYGN is unchanged in after hours trading. It still needs to break through overhead resistance, but given the strength of the current rally I would say a breakout is imminent. The RSI is positive and not at all overbought. The PMO has surged above the signal line well above the zero line. Stochastics turned up in positive territory. The group is overall doing well and MYGN is outperforming the group and the SPY by a mile. I set the stop at about 7.9% or $20.68 which is on support, you may want it a bit deeper.
It has a good weekly chart, overhead resistance is the only sticking point. The weekly RSI is positive and the weekly PMO is rising above the zero line. The SCTR is even in the hot zone. I'm looking for upside potential to the 2022 top.
Tetra Tech Inc. (TTEK)
EARNINGS: 05/08/2024 (AMC)
Tetra Tech, Inc. engages in the provision of consulting and engineering services that focus on water, environment, infrastructure, renewable energy, and international development. It operates through the following segments: Government Services Group (GSG) and Commercial and International Services Group (CIG). The GSG segment offers consulting and engineering services primarily to United States government clients such as federal, state and local, and development agencies worldwide. The CIG segment provides consulting and engineering services to US commercial clients and international clients inclusive of the commercial and government sectors, as well as infrastructure, environmental, engineering, and project management services across Canada, Australia, New Zealand, the United Kingdom, Brazil, and Chile. The company was founded in 1966 and is headquartered in Pasadena, CA.
Predefined Scans Triggered: New 52-week Highs, Moved Above Upper Bollinger Band, Moved Above Upper Price Channel, P&F Double Top Breakout, P&F Triple Top Breakout and P&F Quadruple Top Breakout.
TTEK is unchanged in after hours trading. It currently is range bound, but the PMO suggests a possible breakout ahead. The RSI is positive and not overbought yet. There is a new PMO Crossover BUY Signal. The rally off support has been strong and also suggests a likely breakout. Stochastics are positive and rising toward 80. Relative strength for the group is inline with the SPY currently. TTEK is beginning to outperform both the group and the SPY. The stop is set beneath the trading range at 7.5% or $157.45.
It may look like a trading range on the daily chart, but we have a nice rising trend channel on the weekly chart and price is headed to the top of it. The weekly RSI is positive and has been for some time. The weekly PMO has turned up and is on a Crossover BUY Signal. The SCTR may not be in the hot zone currently, but it is very close and should find its way there soon. Consider an upside target of about 17% to $199.16.
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 20% 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)
For more links, go to DecisionPoint.com