DecisionPoint

DecisionPoint Daily Diamonds - "Carl's Scan"

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Welcome to the "DecisionPoint Daily Diamonds", a newsletter in which we highlight five "diamonds in the rough," taken from the results of one of my DecisionPoint scans. Remember, these are not recommendations to buy or sell, but stocks that I found interesting. The objective is to save you the work of the initial, tedious culling process, but you need to apply your own analysis and to see it these stocks pique your interest. There are no guaranteed winners here.


To begin each newsletter, I will be sharing the "Silver Cross" indicator, which tells us the percentage of stocks on IT Trend Model BUY signals (20-EMA is above the 50-EMA). Additionally, the "Golden Cross" indicator plots the percentage of stocks on LT Trend Model BUY signals (50-EMA is above the 200-EMA). It is important to know the health of the overall market before you think long. Some days there may not be too many results to analyze on the long side, so I'll include some "dogs" for those who like to short.


Current Market Conditions:

Silver Cross: 50.4% on ITTM Buy Signals

Golden Cross: 60.8% on LTTM Buy Signals

Note the market is in a rising trend - all DP Trend Models are on "BUY signals" for SPX. Momentum is rising with the PMO on a BUY signal.


This week, I used a new scan that Carl developed from the general PMO scan that I use.

The basic parameters:

  • US stock with 20-EMA of volume above 100,000
  • PMO is below the zero line
  • PMO has been rising for 3 days
  • LT Trend Model BUY (50-EMA > 200-EMA)
  • IT Trend Model is on a Neutral signal (20-EMA < 50-EMA)

Carl likes to look for stocks that are beaten down (20-EMA < 50-EMA) but not broken (50-EMA is still above 200-EMA). He wants the PMO below zero to find oversold turns in momentum. The PMO needs to be rising strongly, but not enough to have crossed over its signal line (giving the opportunity to take advantage of rising momentum into a BUY signal).



Of the 35 results I got today, I narrowed it down to these five:

BCO: Double-bottom has executed with a breakout above the confirmation line. Minimum upside target is about $80.50. Possible short-term stop: $74. Watch for price to break above the 20-EMA.

ETV: We have a breakout from a declining trend with plenty of upside potential. I think you could set a tight stop at about the 20-EMA.

NEPT: We had a breakout from the declining trend. A cup formed and today's breakdown could be the "handle" of the cup-and-handle formation. I'm not thrilled with volume here, but the PMO is still rising.

PFL: Here's an ETF with a breakout from a declining trend with a bounce off the 200-EMA. Price closed above the 20-EMA, which is encouraging. Volume looks healthy.

WMC: This chart shows a bullish declining wedge that executed today, with the breakout above both the 20- and 50-EMAs.

I'm currently not investing in new longs, and I do not own or plan to buy any of the stocks listed above. I'm happy with my current portfolio. I'm about 20% cash, 60% defensive, 20% aggressive.


Watch the latest episode of DecisionPoint with Carl & Erin Swenlin LIVE on Mondays 5:00p EST or on the StockCharts TV YouTube channel here!


Technical Analysis is a windsock, not a crystal ball.

Happy Charting! - Erin

erinh@stockcharts.com



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".


Helpful DecisionPoint Links:

Erin's PMO Scan

DecisionPoint Shared ChartList and DecisionPoint Chart Gallery

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking


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Announcement from the Author

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Erin Swenlin
About the author: is a co-founder of the DecisionPoint.com website along with her father, Carl Swenlin. She launched the DecisionPoint daily blog in 2009 alongside Carl and now serves as a consulting technical analyst and blog contributor at StockCharts.com. Erin is an active Member of the CMT Association. She holds a Master's degree in Information Resource Management from the Air Force Institute of Technology as well as a Bachelor's degree in Mathematics from the University of Southern California. Learn More
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