DecisionPoint

DP Daily Diamonds - Mostly Defensive Plays

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Today, I ran my Diamond PMO Scan (bullish) as well as my Diamond Dogs PMO Scan (bearish) and found they are the inverse of each other. Essentially, they shave the strong momentum performers off the top and scrape the bottom for the dogs. Today, we saw 23 bullish stocks versus 108 bearish stocks, meaning there is more weakness than strength out there. The good news is that we had 12 more bullish stocks and 3 less bearish stocks. I did opt to post long positions rather than shorts today, but they are mostly defensive plays (Gold miners and Staples). Also, FYI, of the 23 scan results, three were ETFs that short the NDX. Technology is looking especially weak. The stocks I'm presenting below came from two different bullish scans.


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 simply stocks that I found interesting and the reasons why. The 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. There are no guaranteed winners here.


Current Market Outlook:

Market Trend: DP Trend Models are currently on BUY signals.

Market Condition: The market is overbought now that it has reached all-time highs. Be aware that the PMO is topping on most of the major market indexes.

Market Environment: It is important to consider the "odds" for success. Here are the current percentages on the Silver and Golden Cross Indexes, which are continuing to rise, although the Silver Cross Index is beginning to decelerate and turn over:

  • Silver Cross: 69.8% SPX ITTM Buy Signals
  • Golden Cross: 66.0% SPX LTTM Buy Signals

Be sure to read Carl's Weekly Wrap and the DP Alert Mid-Week for more comprehensive coverage of the overall market including Dollar, Gold, Oil and Bonds.


Euronet Services Inc (EEFT) - Earnings: 10/16/19 - 10/20-19

EEFT's bullish descending wedge has not yet executed, but the expectation is a breakout. The PMO is looking good, but it also bottomed in mid-August and that didn't amount to much. Despite a large amount of distribution in September, the OBV didn't break below the low in July, which I find favorable. The SCTR is also starting to wake up. With today's big upside move, we may want to wait for a pullback. If price decides to NOT challenge the top of this bullish wedge, don't go there. However, I am looking for the breakout with a target at $170 or above.

Gold Fields Ltd (GFI) - Earnings: N/A

This one is volatile and low-priced, so pay attention to your position size. I like how GFI tested the 200-EMA (and the February top) and bounced higher. It closed above the 20-EMA on Friday and closed on its high today. We do have a declining tops trend line, which could pose a problem, but with today's high above the 50-EMA, the rising PMO, healthy OBV and now a SCTR in the "hot zone" above 75, it's a bullish chart.

Kimberly Clark Corp (KMB) - Earnings: 10/22/19

Full disclosure: I own this stock and have since about March. I didn't like the corrective move, but it happened pretty fast and gave me little time to react. It was also sitting on support at the August low. Thankfully, it made a comeback and I suspect it will challenge the September high once again. This should hold up if the market takes a turn for the worse. The PMO is rising beautifully after a clean hook. The OBV is about to break above its declining tops trend line.

Monro Inc (MNRO) - Earnings: 10/23/19 - 10/28/19

MNRO had a textbook breakout from a bullish falling wedge. Though it wasn't a decisive 3%+ move, it still closed above its 20-EMA for the first time in over a month on this breakout. The PMO triggered a new BUY signal today and the OBV continued its upside breakout. The SCTR is turning back up as well.

Sandstorm Gold Ltd (SAND) - Earnings: N/A

We have a falling wedge that hasn't yet executed. The PMO is about to give us a BUY signal following a nice hook to the upside. The OBV is breaking out of a declining trend. I don't have a SCTR for this one. I also want to remind you that this is a low-priced stock, so you should watch your position sizing.

Full Disclosure: I own KMB. I am not looking to trade long right now; I'd prefer to watch and wait since I don't like shorting. I'm currently about 60% in cash.


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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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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