The bullish results for my scans are thinning quite a bit. Today, the Diamond Scan produced 10 results while the Diamond Dog Scan produced 135. The market is weak and, consequently, the pockets of strength tend to be in the defensive sectors. For today's piece, I have three Utilities stocks and two Financials. These are stocks I found interesting; below, I will explain why. That's the goal of this report: teaching you how to analyze stock charts while presenting watchlist candidates. Thanks to all of you that have emailed comments about this new report!
Welcome to "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. 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 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 and losing some ground. The PMO is falling on the SPX and recently triggered a SELL signal on the NDX.
Market Environment: It is important to consider the "odds" for success. Here are the current percentages on the Silver and Golden Cross Indexes, which began to rise again after today's action:
- Silver Cross: 70% SPX ITTM Buy Signals
- Golden Cross: 66% SPX LTTM Buy Signals
I decided to take results from two scans today, the Diamond Scan and my Bullish EMA - Mid-Range SCTR Scan.
American Electric Power Co Inc (AEP) - Earnings: 10/23 - 10/28
Here, we have a nice rising trend with a recent breakout from the short-term top earlier this month. Today, price pulled back to the breakout point, which is what I like to see before entering a position on a breakout. The PMO is not overbought and price is rising with OBV the way it should.
Principal Financial Group (PFG) - Earnings: 10/24/19
Right off the bat, I'll tell you I don't like the PMO curling over like it is. However, this is a result of the pullback after the big rally this month. We now have a nice bull flag, with a flagpole height around $7 or so. If we see a breakout from the flag, we'll add that to calculate the minimum upside target. In this case it would be around $64.
Public Services Co New Mexico (PNM) - Earnings: 11/1/19
We had a nice breakout today from a bullish ascending triangle. The PMO just recently triggered a BUY signal. The OBV is rising and has room to move up further, which should push price higher.
Portland General Electric Co (POR) - Earnings: 10/24 - 10/28
This stock has been in a nice rising trend channel for some time and I don't see any reason why it would break down now. The PMO just gave us a BUY signal and price is in the middle of the trend channel. The one thing I don't like is how the OBV broke out to a new high from its top at the beginning of September, yet price is still well below the corresponding price top. Price should follow volume, but, even with the hefty accumulation we see in volume, price isn't challenging the previous top.
Royal Bank of Canada (RY) - Earnings: N/A
I always like to see a breakout followed by a pullback to the breakout point. RY has been on a big run. The PMO is getting overbought, so this might require some consolidation since it has been moving mostly straight up. Certainly an interesting watchlist candidate.
Full Disclosure: I do not own any of the stocks above and I am not planning on purchasing any at this time. I'm currently about 60% in cash. There are fewer and fewer bullish scan results. I'd prefer to wait until the tide is rising not falling.
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:
DecisionPoint Shared ChartList and DecisionPoint Chart Gallery
Price Momentum Oscillator (PMO)
Swenlin Trading Oscillators (STO-B and STO-V)
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