Only three readers presented me with requests this week. One that was requested I already presented on Tuesday so I definitely like Temper-Pedic (TPX). One person requested a few stocks that had PMOs moving lower, but one I felt looked interesting on a recent pullback. The third person presented me with quite a few symbols fitting the "Diamond in the Rough" criteria. I was able to pull two from this reader.
The SPY triggered a PMO BUY Signal today and it appears it wants to inch ever higher. I still believe our best course of action is to set stops and let the market take us out.
I've decided that I will try to annotate PMO "pure strength" on the charts when it is apparent. It is not a new concept, but one I've recently reacquainted myself with. The PMO has many uses and determining pure strength or pure weakness is excellent in conjunction with our other indicators.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": ALB, RUSHA and STRO.
Other requests: STTK, TYRA, FND, ITGR, SLG and SNV.
RECORDING & DOWNLOAD LINK (2/23/2024):
Topic: DecisionPoint Diamond Mine (2/23/2024) LIVE Trading Room
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Passcode: February#23
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When: Mar 1, 2024 09:00 AM Pacific Time (US and Canada)
Topic: DecisionPoint Diamond Mine (3/1/2024) LIVE Trading Room
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Here is the latest recording from 2/26. Click HERE to subscribe to the DecisionPoint YouTube Channel to be notified when new content is available.
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.
Albemarle Corp. (ALB)
EARNINGS: 05/01/2024 (AMC)
Albemarle Corp. engages in the development, manufacture, and marketing of chemicals for consumer electronics, petroleum refining, utilities, packaging, construction, transportation, pharmaceuticals, crop production, food-safety, and custom chemistry services. It operates through the following segments: Energy Storage, Specialties, Ketjen, and All Other. The Energy Storage segment develops and manufactures a broad range of basic lithium compounds, including lithium carbonate, lithium hydroxide, and lithium chloride. The Specialties segment focuses on optimizing a portfolio of bromine and specialized lithium solutions. The Ketjen segment consists of clean fuels technologies, fluidized catalytic cracking catalysts and additives, and performance catalyst solutions, which is primarily composed of organometallics and curatives. The All Other segment refers only to the FCS business that did not fit into any of the company's core businesses. The company was founded in 1993 and is headquartered in Charlotte, NC.
Predefined Scans Triggered: P&F Bullish Catapult, Moved Above Upper Keltner Channel, Stocks in a New Uptrend (ADX), Moved Above Ichimoku Cloud, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
ALB is up +0.42% in after hours trading. I like this rally coming in. We saw a breakaway gap followed by a continuation gap today. The PMO just moved above the zero line so we are seeing pure strength coming in. The RSI is not overbought. The OBV is confirming this rally with a strong rise of its own. Stochastics are above 80 suggesting internal strength. Relative strength lines are all rising. The stop is set at 7.7% near the 50-day EMA at $127.23.
It isn't as obvious on the daily chart, but there is a nice double bottom pattern developing. It would be confirmed with a move above overhead resistance. The weekly RSI is not overbought and is rising strongly. There is a new PMO Crossover BUY Signal. It is coming well below the zero line so we have to read it as diminishing weakness, not necessarily new strength. The StockCharts Technical Rank (SCTR) is in the basement so keep this one in the short-term timeframe. I've marked upside potential to where the double bottom upside target is.
*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.
Rush Enterprises Inc. (RUSHA)
EARNINGS: 04/23/2024 (AMC)
Rush Enterprises, Inc. engages in the business of retailing commercial vehicles. It operates under the Truck and All Other segments. The Truck segment includes an operating network of commercial vehicle dealerships that provide an integrated one-stop source for the commercial vehicle needs of its customers, including retail sales of new and used commercial vehicles, aftermarket parts, service, and collision center facilities, and financial services, including the financing of new and used commercial vehicle purchases, insurance products, and truck leasing and rentals. The All Other segment focuses on the retail tire company, an insurance agency, and a guest ranch operation. The company was founded by W. Marvin Rush in 1965 and is headquartered in New Braunfels, TX.
Predefined Scans Triggered: Moved Above Upper Bollinger Band, P&F Double Top Breakout and P&F Triple Top Breakout.
RUSHA is unchanged in after hours trading. It is certainly overdue for a pullback, but it did see a tiny breakout today that could turn into more tomorrow. The RSI is positive and not overbought. The PMO is flashing pure strength as it is flat above the zero line. Today's Crossover BUY Signal helps too. Stochastics are now above 80 and relative strength looks very good. I've set the stop at the 50-day EMA or 7.3% at $45.14.
I like everything about the weekly chart so this could be considered a more intermediate-term investment not just a short-term trade. The weekly RSI is positive and not overbought. The weekly PMO is accelerating above the signal line well above the zero line so this is pure strength. The SCTR is even in the hot zone. Consider an 17% upside target to $56.98.
VanEck Vectors Rare Earth/Strategic Metals ETF (REMX)
EARNINGS: 03/05/2024 (AMC)
Sutro Biopharma Inc. engages in the drug discovery, development and manufacture of pharmaceutical products. It focuses on the next generation cancer and autoimmune therapeutics. The company was founded by James R. Swartz and Sutanto Widjaja on April 21, 2003 and is headquartered in South San Francisco, CA.
Predefined Scans Triggered: Elder Bar Turned Blue.
STRO is up 2.04% in after hours trading so we may be looking at the end of the current pullback. There is a nearing "golden cross" of the 50/200-day EMAs. The RSI is positive. The PMO has been flashing pure strength as it has flattened above the zero line, well above the zero line I might add. Now we have a nearing PMO Crossover BUY Signal. You cannot see it, but today's decline caused the PMO to top beneath the signal line. Stochastics also topped. That could be dangerous. This is also a very low-priced stock so position size wisely. Based on after hours trading, I believe this one will hold up. If it doesn't, you can scratch it from the list. The stop is set below the 20-day EMA at 7.6% or $4.53.
The weekly chart boosts my confidence a bit more in this trade. The weekly RSI is positive and not overbought. The weekly PMO is accelerating above the signal line and zero line. The SCTR is nearly in the hot zone. This stock could boom as it is more than 44% away from overhead resistance.
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 60% 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