April 10, 2024 - The RightLine Report
Notes From The Editor
We've all experienced bad days in the stock market. Yes, I know we should learn from them, yet it still feels lousy to lose money. Entering a new trade only to see it immediately head in the wrong direction can be more of a burning experience than a learning experience.
It helps to remember that we're really just playing an odds game. Sometimes trades go our way and sometimes they don't. By maintaining a sufficient edge and keeping our losses to a minimum, we steadily ratchet our profits higher. Winners grow when we use reasonable stop placement that allows for normal daily price fluctuations. As these profitable trades grow, we watch for any losers to appear and quickly eliminate them.
The market is always in constant motion. We have to anticipate the possible impact of price movement on our stocks and be ready to take action at the appropriate time. It really doesn't matter when that moment arrives if we are prepared and willing to follow through when the time comes.
Take as much time as you need to plan what you will do in response to what the market does. Decide what action you will take if prices go up, or if they go down. Don't generalize, be specific.
Decide early in the game just how far price can go before you will definitely do something - like adjusting a trailing stop, or exiting a position to either take profits or prevent losses.
The details of managing positions can in large part be answered by asking two simple questions - "What and When." As far as these two are concerned, the specifics do matter.
Instead of approximating or waiting to decide what to do when you get there, determine your exit strategy in advance. When using a trailing stop method to lock in gains, make certain that you know exactly when to adjust the trailing stop.
Remember the saying "The trend is your friend?" The words "What & When" can also be added to your list of best and closest friends.
Trade well,
- Thomas Sutton, Editor
Note: This mid-week edition of the RightLine Report is available because unforeseen issues prevented us from publishing our usual Tuesday edition. We apologize for any inconvenience and appreciate your understanding.
Stocks Covered Today Stock Splits
Quick List
Stock 04/10 04/10 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
FL 22.71 -0.63 23.33 21.75 1.58/0.79 1.88
IMNM 20.33 -0.15 20.7 19.03 1.67/0.84 3.94
CSTL 20.43 -1.11 21.1 19.65 1.45/0.73 2.08
ALAR 22.09 -1.61 23.82 20.58 3.24/1.62 4.52
MXL 22.14 -1.23 23.16 21.3 1.86/0.93 1.52
The "Quick List" provides a brief summary of each stock write-up and should be taken in the context of the related write-up presented in the "Stocks Covered in This Issue" section of this Report.
Be sure to read "How To Use The RightLine Quick List" and always use the RightLine Risk Control Calculator before entering any position.
For more on controlling risk go to the RightLine Risk Control System
For a glossary of terms unique to The RightLine Report go to: Glossary
Questions? Send us an email using our Contact Form.
Stocks Covered Today Stock Splits
Market Summary
Stocks took a sharp nosedive on Wednesday in response to unexpectedly high inflation data, narrowly averting what could have been just its seventh 1% decline in the last five months for the S&P 500. Since last fall, equities have enjoyed a strong rally fueled by optimism surrounding potential Fed rate cuts. However, Wednesday's firm CPI reading has dampened that enthusiasm, likely removing the possibility of a rate cut at the June meeting and postponing expectations for rate cuts in 2024.
Bond yields surged in response, with the 10-year Treasury yield surpassing 4.5% for the first time since last November, as the bond market recalibrates its outlook on monetary policy.
While the stock market's knee-jerk reaction lower is understandable given the recent rally and sensitivity to Fed rate expectations, we view this as a short-term setback rather than the start of a more serious downturn. It's worth noting that the S&P 500 is still up over 8% in 2024 and has surged more than 25% since October.
Apr 3, 2024 Apr 4, 2024
-------------------- --------------------
Dow 39,127.14 -43.10 38,596.98 -530.16
Nasdaq 16,277.46 37.01 16,049.08 -228.38
S&P 500 5,211.49 5.68 5,147.21 -64.28
NYSE Volume 3.71B 4.08B
NYSE Advancers 1,668 975
NYSE Decliners 1,143 1,836
Nasdaq Volume 5.18B 5.38B
Nasdaq Advancers 2,332 1,586
Nasdaq Decliners 1,879 2,666
New Highs/Lows
03/28 03/28 04/01 04/02 04/03 04/04
--------------------------------------------
NYSE New Highs 370 369 186 101 169 224
NYSE New Lows 12 12 23 38 36 16
Nasdaq New Highs 269 277 170 70 115 170
Nasdaq New Lows 50 49 81 134 127 100
Stocks Covered Today Stock Splits
TRADER'S TIP: "Under and Over"
While it's easy to under-estimate how long it takes to learn how to trade well, it's almost impossible to OVER-estimate the value of the lessons learned along the way. Remember that there's no such thing as a bad experience - so long as you learn from it and assign it a high value.
The Technical Analyst
For help with this chart, be sure to read "Understanding The Importance Of Support And Resistance"
and "Improve Your Trading With Moving Averages".
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, APRIL 8 1 pm Chicago Fed President Austan Goolsbee radio interview None scheduled TUESDAY, APRIL 9 6:00 am NFIB optimism index March WEDNESDAY, APRIL 10 8:30 am Consumer price index March 8:30 am Core CPI March 8:30 am CPI year over year 8:30 am Core CPI year over year 8:45 am Fed Gov. Michelle Bowman speaks 10:00 am Wholesale inventories March 12:45 pm Chicago Fed President Austan Goolsbee speaks 2:00 pm Minutes of Fed's March FOMC meeting 2:00 pm Monthly U.S. federal budget March THURSDAY, APRIL 11 8:30 am Initial jobless claims 8:30 am Producer price index March 8:30 am Core PPI March 8:30 am PPI year over year 8:30 am Core PPI year over year 8:45 am Fed Gov. Michelle Bowman speaks 12:00 pm Boston Fed President Susan Collins speaks 12:45 pm Chicago Fed President Austan Goolsbee speaks 1:30 pm Atlanta Fed President Raphael Bostic speaks FRIDAY, APRIL 12 8:30 am Import price index March 8:30 am Import price index minus fuel March 10:00 am Consumer sentiment (prelim) April 2:30 pm Atlanta Fed President Raphael Bostic speaks 3:30 pm San Francisco Fed President Mary Daly speaks For a chart of typical Up or Down market reactions to specific major US economic reports go to: Economic Indicator Effects
Stocks Covered Today Stock Splits
TRADER'S TIP: "Concentrate on Execution"
"The last thing you should have to worry about during market hours is where the market is going, and whether to be long or short. Your strategy will tell you all of this. You should not be concerned about the news, or even if you are making or losing money. You should not be concerned with analyzing the market, always reserve this for when the market is closed.
The only thing you should be doing during market hours is concentrating on effectively executing your strategy. If you can't execute your strategy effectively, there really is no point in trading. There are two sides to trading, strategy development and trading execution. During market hours is when you should concentrate on execution and nothing else."
~ Charlie Wright, Veteran Trader and Hedge Fund Manager
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
Foot Locker, Inc. (FL: Consumer Cyclical/Apparel Retail) - SQUEEZE PLAY. FL traders on both sides of the fence are now locked in a head-to-head shootout. Wednesday's price range was the narrowest in over a week, as neither Bears or Bulls have been able to clearly gain the upper hand. This gives us an opportunity to catch the next directional move with little risk of loss. To do this we'll place both a long and a short trigger with a BUY at 23.33 and a SELL short trigger at 21.75. When one of the orders is filled, cancel the remaining order and enter a 1.58 trailing stop. When you've reached a 1.88 paper profit, tighten the stop to 0.79. FL closed at 22.71 on Wednesday. Earnings Report Date: May 17, 2024. Beta: 1.43. Market-Cap: 2.146B. Optionable.
HEALTHCARE SECTOR
Immunome, Inc. (IMNM: Healthcare/Biotechnology) - SQUEEZE PLAY. One interesting trait of price volatility is that it cycles back and forth through periods of expansion and contraction. Stocks that have recently seen their daily price range shift from an average or wide range to an extremely contracted state are ideal candidates for expansive price moves. In many cases the next move is relatively fast and covers a sizable amount of territory. To take advantage of these trades we use both a BUY and a SELL entry. This allows us to enter in whichever direction the breakout takes. In IMNM's case we will enter a BUY should it reach the 20.7 level, or a SELL short trade if it drops to 19.03. As usual a trailing stop is essential, 1.67 which should be tightened to 0.84 on a 3.94 gain. IMNM closed Wednesday at 20.33. Earnings Report Date: May 03, 2024. Beta: 1.68. Market-Cap: 1.206B. Optionable.
Castle Biosciences, Inc. (CSTL: Healthcare/Diagnostics & Research) - SQUEEZE PLAY. Trader indecision has put CSTL squarely in the center of a Bull versus Bear standoff. This tight spot should soon give way to a clear winner in the short-term, and we want to be in position for the move. To do that we've set a BUY entry at 21.1 and a SELL short entry at 19.65. Now it's up to CSTL to show us which entry will be filled. Once the trade is underway place a 1.45 trailing stop, which can be tightened to 0.73 after you achieve a 2.08 profit. CSTL closed on Wednesday at 20.43. Earnings Report Date: May 01, 2024. Beta: 0.90. Market-Cap: 560.804M. Optionable.
TECHNOLOGY SECTOR
Alarum Technologies Ltd. (ALAR: Technology/Software - Infrastructure) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in ALAR's narrowest trading range of the past seven sessions. With neither group able to take complete control on Wednesday, the stock's short term destiny is up for grabs. You can capitalize on this unusually tight condition by placing both a BUY order at 23.82 and a SELL order at 20.58. Regardless of which order is triggered, cancel the other one and follow your entry with a 3.24 trailing stop. Tighten the stop to 1.62 once you have a 4.52 gain. ALAR closed Wednesday at 22.09. Earnings Report Date: N/A. Beta: 0.10. Market-Cap: 141.197M. Not Optionable.
MaxLinear, Inc. (MXL: Technology/Semiconductors) - SQUEEZE PLAY. In certain stocks a tightly constricted price range is a sign that neither bulls nor bears are confident of winning in the near term. This often means that the side that gives up first causes a quick move in the opposite direction. In these fear dominated skirmishes, opposing traders always benefit from the retreat. In the Squeeze Play setup you can actually play both sides of the inevitable surge. MXL traders reached this state of stand-off on Wednesday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 23.16 and a SELL short trigger at 21.3. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.86 which can be tightened to 0.93 on a 1.52 gain. MXL closed Wednesday at 22.14. Earnings Report Date: Apr 24, 2024. Beta: 1.99. Market-Cap: 1.814B. Optionable.
IMPORTANT: Before entering any positions, always use the Risk Control System to determine the level of acceptable risk and the maximum number of shares to buy. Use Gap Adjusted Entries to reset the Entry Price for stocks that gap beyond recommended entry levels.
Stocks Covered Today Stock Splits
Stock Splits
Below are the stocks that have announced splits and have recently executed or will execute soon. There is generally a return to normal price behavior in the weeks following a split announcement in what we call a "Dormancy Phase." As the stock nears its split execution date (Effective Date) it often moves into the "Pre-Split Run" stage where quick and sometimes dramatic gains can occur.
Announce Eff. Split
Company Name (Symbol) Date Date Ratio Options
---------------- ------- -------- ------- ------ -------
NOTE: The number of stock split announcments goes up during Bull markets,
and goes down during Bear market cycles. There are currently no upcoming
stock splits that meet RightLine's proprietary criteria for split ratio,
trading volume and price action.
Split details are also available online at the RightLine Online Stock Split Calendar. For a detailed look at the different stages of a Stock Split, Click Here.
A simple yet powerful tool, the Risk Control Calculator helps you manage risk by recommending a maximum number of shares to purchase. Available in the RightLine Member's Area.
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