I run all my scans each day and it is always interesting to see which produce the best results. Today saw a plethora of PMO "surges" above the signal line and the PMO Crossover Scan came in big. I have one from each.
The Diamond PMO Scan produced five ETFs that all had to do with Japan. I had to include EWJ, a common vehicle for trading iShares international ETFs. Japan wasn't the only international ETF, the Surge Scan turned up a ton of other international ETFs. I listed a few in the runner-ups group.
I opted to go with Jr Gold Miners (GDXJ), but GDX looks very good as well on today's upside reversal. The third choice is a little on the overbought side, Home Builders ETF (XHB). It's overbought on the weekly chart and not quite overbought on the daily chart. Today's breakout looked solid.
Good Luck & Good Trading,
Erin
Today's "Diamonds in the Rough": EWJ, GDXJ and XHB.
Runner-ups: VOX, XLF, PEJ, URA, MLPA, EZU and EWW.
RECORDING & DOWNLOAD LINK (3/15/2024):
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Topic: DecisionPoint Diamond Mine (3/22/2024) LIVE Trading Room
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Here is the latest recording from 3/18. 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.
iShares MSCI Japan ETF (EWJ)
EARNINGS: N/A
EWJ tracks a market-cap-weighted index which covers roughly 85% of the investable universe of securities traded in Japan. Click HERE for more information.
Predefined Scans Triggered: New CCI Buy Signals, Moved Above Upper Keltner Channel, P&F Spread Triple Top Breakout and P&F Double Top Breakout.
EWJ is up +0.43% in after hours trading. We don't have a breakout yet, but one seems imminent after the reverse island gap was covered (first gap). The RSI is positive and not overbought. The PMO is turning up well above the zero line. Stochastics look very favorable as they rise toward 80. Relative strength has been all over the place, but near-term it does appear on a rising trend. I've set the stop near the 50-day EMA at 5.1% or $67.82.
We have a breakout above what was all-time highs. The weekly RSI did just enter overbought territory, but we have a very positive looking weekly PMO. The OBV is rising in conjunction with price, but I would've liked to have seen it challenge the heights it saw at the prior all-time high. Technically it is a slight negative divergence with price since price is barely above that prior high. The StockCharts Technical Rank (SCTR) is within the hot zone* above 70. Consider an upside target of about 17% to $83.62.
*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.
VanEck Vectors Junior Gold Miners ETF (GDXJ)
EARNINGS: N/A
GDXJ tracks a market-cap-weighted index of global gold- and silver-mining firms, focusing on small caps. Click HERE for more information.
Predefined Scans Triggered: Elder Bar Turned Green, Parabolic SAR Sell Signals, Moved Above Ichimoku Cloud, Moved Above Upper Price Channel, P&F Low Pole and Bullish Engulfing.
GDXJ is up +0.94% in after hours trading. Today saw a bullish engulfing candlestick on a huge rally that likely was spurred on by news from the Fed that could see the Dollar falter. The pullback was somewhat severe, but this is a good place for a rebound. We saw a breakout move today. The RSI is positive and not overbought. The PMO has surged or bottomed above the signal line. Stochastics are taking up residence above 80. Relative strength is kicking into high gear and should continue. I've set the stop at the 50-day EMA or $34.64.
The weekly chart is favorable enough to consider this a possible intermediate-term investment rather than just a short-term trade. There is a large double bottom pattern that would suggest an upside target to overhead resist at about $50. The weekly RSI is positive and not overbought. The SCTR isn't quite in the hot zone, but it is acceptably above 50%.
SPDR S&P Homebuilders ETF (XHB)
EARNINGS: N/A
XHB tracks a broad-based, equal-weighted index of US companies involved in the homebuilding industry. Click HERE for more information.
Predefined Scans Triggered: New CCI Buy Signals, Moved Above Upper Keltner Channel, New 52-week Highs, Moved Above Upper Bollinger Band, Moved Above Upper Price Channel, P&F Ascending Triple Top Breakout and P&F Double Top Breakout.
XHB is up +0.35% in after hours trading. Price saw a nice breakout today that caught my eye. The RSI is not quite overbought in the short term. Notice the flat PMO above the zero line indicating pure strength. Today the PMO had a Crossover BUY Signal generate. Stochastics are rising again and are headed above 80. I really like the rising relative strength line that has been on the rise since January. The stop is set below support near the 50-day EMA at 7.4% or $100.41.
The big problem on the weekly chart is the very overbought RSI. XHB will need to cool again to help this condition, but it doesn't look like it will just yet. The weekly PMO is rising well above the zero line and the SCTR is at the top of the hot zone. Consider an upside target of about 17% to $126.87.
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 55% long, 0% short. I own GDXJ.
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