On Wednesday afternoon, as I was preparing to record the DecisionPoint show, I did a scan of the sectors in preparation and the Industrial Sector SPDR (XLI) caught my eye after a nice gap up. I scanned my Tuesday DecisionPoint Diamonds and, sure enough, I had presented an Industrial stock to my Diamond readers! Today, I found another "diamond in the rough" Industrial you need to review at the bottom of the article.
Let's start with the chart of XLI. I continue to like this sector and the two stocks below it. You can see in the thumbnail what intrigued me before the DecisionPoint show on Wednesday... price closed above the previous short-term top and the Price Momentum Oscillator (PMO) triggered a crossover BUY signal. It has only continued higher since then and I believe it will follow-through with more upside movement in spite of overhead resistance at the June top.
My "Diamond of the Week" pick for the DecisionPoint show is below with TUESDAY's Diamonds Report commentary in italics; beneath that is the up to date chart in yellow. I still like this set-up:
"Teledyne Technologies (TDY) - Earnings: 10/21/2020 (BMO)
Teledyne Technologies, Inc. engages in the provision of electronic and communication products for wireless and satellite systems. It operates through the following business segments: Instrumentation; Digital Imaging; Aerospace & Defense Electronics; and Engineered Systems. The Instrumentation segment includes monitoring and control instruments for marine, environmental and industrial applications. The Digital Imaging segment offers sensors, cameras and infrared systems. The Aerospace & Defense Electronics segment provides electronic components, data acquisition, subsystems and communications equipment. The Engineered Systems segment develops and produces electrochemical energy systems and small turbine engines.
We could be seeing a double-bottom forming on TDY. Price closed above the 20-EMA and the RSI just moved into positive territory. The OBV is confirming the move and the PMO just triggered a BUY signal. The SCTR is beginning to improve.
The weekly PMO is trying to decelerate in oversold territory and upside potential is great.
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Today's ChartWatchers "Diamond of the Week":
FYI, in the July 24th ChartWatchers Newsletter, Natural Gas (UNG) was the "Diamond of the Week".
RBC Bearings Inc (ROLL) - Earnings: 10/29/2020 (AMC)
RBC Bearings, Inc. engages in the design, manufacture and marketing of engineered precision bearings and products. It operates through the following segments: Plain Bearings, Roller Bearings, Ball Bearings and Engineered Products. The Plain Bearings segment produces self-lubricating, metal-to-metal designs and other sub-classes, including rod end bearings, spherical plain bearings and journal bearings. The Roller Bearings segment manufactures anti-friction products that utilize cylindrical rolling elements. The Ball Bearings segment offers high precision aerospace, airframe control & thin section and industrial ball bearings. The Engineered Products segment consists of engineered hydraulics and valves, fasteners, precision mechanical components and machine tool collets used in aircraft and submarine applications, as well as aerospace and defense aftermarket services.
I like this chart even better than TDY. RBC just broke out of a declining trend alongside a new PMO BUY signal. The RSI has just moved positive above net neutral (50). I feel a little deja vu from Tuesday looking at the TDY chart. The indicators are so similar. However, I see something that TDY doesn't have---a positive divergence with On-Balance Volume (OBV). I show that it would take a 10% stop to get you to important support.
The weekly PMO has just turned up above the signal line and above the zero line, which I find especially bullish. I've marked several areas for upside targets.
Conclusion: I already had an affinity for the Industrial Sector on Wednesday afternoon and I still like it. It seems that money is beginning to rotate into this sector, as John Murphy described in his article today. It was the highest gainer among the SPDR Sectors this week. The two Industrial stocks above do seem to have some great upside potential based on the technicals. Be sure and sign up on our free email list to learn more about the new DecisionPoint Trading Room coming in late August! I can't wait to begin interacting live again with all of you! And don't forget, we are raising our rates, so lock in a good deal now with a 1-week trial (coupon code: dptrialcw).
Happy Charting! - Erin
Technical Analysis is a windsock, not a crystal ball.
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