For those of you not yet familiar, I have started a new report in our blog called "DecisionPoint Daily Diamonds", in which I select five stocks or "diamonds in the rough" from the results of one of my many DecisionPoint scans. Basically, I do the work for you regarding selections to review. In addition, I annotate each chart carefully so that you understand why I chose them.
Periodically, I will revisit the Diamond Reports and find what I call "Darlings and Duds", in order to analyze what might have gone wrong and what seems to have gone right. It is only fair that I revisit a "dud" as selections are not perfect... they are "diamonds in the rough," after all. Today, I decided to revisit my September 27, 2019 Diamond Report (available here). Let's revisit two darlings and one dud from that report. The first chart will be an image of what I presented on 9/27 and the second chart will be a real-time version that we'll use for comparison.
Darling #1: Allegion Public Ltd (ALLE)
For ALLE, I was looking at a flag formation to execute and bring price above $112. The PMO was not yet overbought.
You can see we have had a roughly 15% gain since 9/27. The flag executed and not only hit its minimum upside target, but continued higher. I would likely take profit here on all or part of my position if the PMO generates a crossover SELL signal, as the PMO is very overbought.
Darling #2: Enbridge Inc (ENB)
I noted another flag formation back on 9/27. The minimum upside target for that formation would be around $38.50.
I'm using an unadjusted chart for ENB so that there isn't confusion. The flag executed and price did reach a high above $38.50. Currently there is 5.8% gain. I would continue to hold this one given that the PMO has bottomed above its signal line. I would set a tight stop at $37, as the PMO is technically overbought (given that its "normal" range is between -2 and +2). That would still give me some profit on the trade should it go south.
Dud: Avangrid Inc (AGR)
I really liked the breakout on AGR back then and the PMO was rising strongly without being that overbought. The OBV was confirming the move and the breakout.
This one was a stinker. However, had you paid attention to the PMO, the negative crossover would have limited your losses on this one. With price dropping that steeply after the breakout, the warning signs were there. Had you held on tightly during the rollercoaster ride down, you'd currently be down about 7%. The good news is that it does appear to have bounced off support and the PMO is turning up in oversold territory. Price is near the bottom of a trading range, so a ride back up could pare some of the losses. I don't consider this one a "diamond in the rough" any longer, so I wouldn't recommend getting in here.
I hope you enjoyed this first edition of "DP Diamonds: Darlings and Duds"! I'll be doing these periodically in ChartWatchers Newsletters in the future! Be sure to subscribe to the DecisionPoint blog so you'll be notified as soon as I post a new Diamond Report!
Watch the latest episode of DecisionPoint with Carl & Erin Swenlin LIVE on Fridays 4:30p EST or on the StockCharts TV YouTube channel here!
Technical Analysis is a windsock, not a crystal ball.
Happy Charting! - Erin
erinh@stockcharts.com
Helpful DecisionPoint Links:
DecisionPoint Shared ChartList and
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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