April 23, 2024 - The RightLine Report
Notes From The Editor
Are you a morning person? While at first glance that question might not seem to have much to do with the market, it's actually an important factor in many traders' daily workload.
If you're anything like me, you'd rather stay in bed well past sunrise and wake up just in time for an early lunch. Alas, the demands of the market mean that committed short-term traders need to be ready to roll by the 9:00 EST opening bell. For those in the Mountain or West Coast regions, that's quite an early rise.
The specific way you prepare for the market has a lot to do with your ability to function in the morning. Game-planning for the next session is a crucial step; without the tension and intensity of a "live" market, it's much easier to sit back and analyze from an unbiased and relaxed perspective.
A large amount of this game-planning can be carried out in the afternoon or evening before the next trading day. Once a routine is established, this can easily be taken care of in 10-15 minutes.
The first thing I like to do is check out a news site for a list of the next day's quarterly announcements. This is especially important during earnings season, when there are dozens of reports every day. Make a note of any major companies that are announcing; they might have a big impact on their sector, or even the overall market.
The second step is to run through a list of possible trades that you might have identified earlier in the week. Scan through the applicable charts, noting which ones are nearing possible entry points. Also be sure to filter out potential set-ups that have upcoming earnings announcements. Promising technicals can often be affected by a strong reaction to earnings.
With that chart-reading out of the way, you're free to take some additional time the following morning to kick your brain into gear - or better yet, get a little extra sleep!
Traders who roll out of bed in time to conduct morning research have the advantage of being able to incorporate early developments and events into their preparation. In the half-hour before the opening bell, news is flying fast and furious. Some of those major earnings reports might have already been released, causing a reaction in pre-market trading. Economic reports also play a big role in the first few hours of market action.
In the near future we'll take a look at other timing issues, including market tendencies during different times of the day. Becoming familiar with these loose patterns takes some of the guesswork out of determining the market's direction. 'Til then...
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 04/23 04/23 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
CRIS 15.01 0.16 15.21 1.04/0.52 2.6
INSP 233.93 8.71 237.62 18.89/9.45 2.6
AKRO 21.00 0.21 21.51 20.11 1.4/0.7 2.6
FWRD 24.00 0.45 24.49 22.51 1.98/0.99 2.6
KIDS 30.63 0.43 31.31 29.2 2.11/1.06 2.6
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
Equity markets closed higher on Tuesday, as corporate earnings and economic growth took center stage. Most sectors of the S&P 500 ended the day in positive territory, with communication services and technology leading the gains. The market sentiment leaned towards risk-on, with small-cap stocks outperforming and rising by over 1.7%.
Investors reacted positively to a softer-than-expected S&P Global Purchasing Managers' Index (PMI) reading, indicating that USeconomic activity continued to expand in April, albeit at a slower pace than the previous month. While softer economic growth may not seem ideal, the market interpreted this data as potentially leading to lower inflation and potential rate cuts from the Fed.
Treasury yields closed lower, with the 10-year yield around 4.60% and the 2-year yield around 4.92%. In the commodity space, oil prices ended the day higher, reaching just above $83 per barrel.
Corporate earnings will take the spotlight this week, with four members of the Magnificent 7 scheduled to report. Tesla will kick off the earnings season for the group, followed by Meta, Alphabet, and Microsoft later in the week. So far, approximately 20% of the companies in the S&P 500 have reported first-quarter earnings, with estimates suggesting flat year-over-year growth for the quarter.
Expectations are particularly high for sectors such as information technology, communication services, consumer discretionary, and utilities, all of which are expected to see double-digit earnings growth in the first quarter. Looking ahead to the full year, projections are just over 10% year-over-year earnings growth for the S&P 500, compared to flat growth in 2023. In our view, robust corporate profit growth will be crucial for maintaining strength in the equity market throughout the year.
Apr 22, 2024 Apr 23, 2024
-------------------- --------------------
Dow 38,116.89 130.49 38,503.69 263.71
Nasdaq 15,451.31 169.30 15,696.64 245.33
S&P 500 5,010.60 43.37 5,070.55 59.95
NYSE Volume 3.95B 3.62B
NYSE Advancers 2,066 2,339
NYSE Decliners 730 485
Nasdaq Volume 4.66B 4.95B
Nasdaq Advancers 2,680 3,046
Nasdaq Decliners 1,501 1,138
New Highs/Lows
04/16 04/17 04/18 04/19 04/22 04/23
--------------------------------------------
NYSE New Highs 9 12 12 13 29 64
NYSE New Lows 118 62 58 38 44 15
Nasdaq New Highs 29 25 21 34 42 59
Nasdaq New Lows 361 241 239 209 188 87
Stocks Covered Today Stock Splits
TRADER'S TIP: "Up or Down?"
It doesn't matter which way the market goes as long as long as we keep our opinions about direction from blinding us to the opportunity at hand. Traders can increase profitability in all market conditions by following a few time proven guidelines:
1) Locate the trend, and trade in harmony with it. This dramatically shifts the odds of winning into your favor.
2) Never risk more than 2% on any one trade.
3) Use stops to protect against unplanned losses.
4) Be confident, but keep your ego in check. Respect your emotions; yet don't let them prevent you from following your trading plan while you are in a trade.
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 22 None scheduled TUESDAY, APRIL 23 9:45 am S&P flash U.S. services PMI 9:45 am S&P flash U.S. manufacturing PMI 10:00 am New home sales WEDNESDAY, APRIL 24 8:30 am Durable-goods orders March 8:30 am Durable-goods minus transportation THURSDAY, APRIL 25 8:30 am GDP 8:30 am Initial jobless claims 8:30 am Advanced U.S. trade balance in goods 8:30 am Advanced retail inventories % 8:30 am Advanced wholesale inventories 10:00 am Pending home sales FRIDAY, APRIL 26 8:30 am Personal income 8:30 am Personal spending 8:30 am PCE index] 8:30 am Core PCE index 8:30 am PCE (year-over-year) 8:30 am Core PCE (year-over-year) 10:00 am Consumer sentiment (final) 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: "Three Possibilities"
As traders and investors we've learned not to spend too much time speculating on market direction, but to focus on careful planning and trade management. It's far better to prepare and have a specific plan ready for any possible price action than to become so devoted to our expectations that we fail to plan for the opposite of what we expect to happen.
The market, and our chosen stocks can really only do three simple things that affect price; (1) move up, (2) move down, or (3) stay the same. Unless our trading plan includes specific instructions on what we will do in the event any one of these three scenarios occur, the plan is incomplete.
Stocks Covered in This Issue
N/A SECTOR
Curis, Inc. (CRIS: N/A/N/A) - BULLISH BOUNCE. Up-trending stocks like CRIS have a tendency to bounce their way skyward rather than travel higher in a straight line. After touching down to a moving average support level on Tuesday, CRIS is poised to lift off again. To take advantage of this setup, prepare to BUY shares at 15.21 if positive price action occurs. As always, follow your entry with a trailing stop. A 1.04 trailer should work well with CRIS. Tighten it to 0.52 on a 2.6 gainer. Earnings Report Date: May 2, 2024. Beta: 3.76. Market-Cap: . Not Optionable.
Inspire Medical Systems, Inc. (INSP: N/A/N/A) - BULLISH BOUNCE. If you are looking for another bouncer with profits in mind, INSP fits the bill. Shares have been in retreat-mode lately, but now this stock is in the process of bouncing from support. Currently priced at 233.93, plan to buy shares at 237.62 and use a 18.89 trailing stop. Tighten the stop to 9.45 on a 2.6 gain. Earnings Report Date: May 7, 2024. Beta: 1.40. Market-Cap: . Not Optionable.
Akero Therapeutics, Inc. (AKRO: N/A/N/A) - 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 AKRO's case we will enter a BUY should it reach the 21.51 level, or a SELL short trade if it drops to 20.11. As usual a trailing stop is essential, 1.4 which should be tightened to 0.7 on a 2.6 gain. AKRO closed Tuesday at 21.00. Earnings Report Date: May 13, 2024. Beta: -0.38. Market-Cap: . Not Optionable.
Forward Air Corporation (FWRD: N/A/N/A) - SQUEEZE PLAY. Trader indecision has put FWRD 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 24.49 and a SELL short entry at 22.51. Now it's up to FWRD to show us which entry will be filled. Once the trade is underway place a 1.98 trailing stop, which can be tightened to 0.99 after you achieve a 2.6 profit. FWRD closed on Tuesday at 24.00. Earnings Report Date: Apr 29, 2024. Beta: 0.99. Market-Cap: . Not Optionable.
OrthoPediatrics Corp. (KIDS: N/A/N/A) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in KIDS's narrowest trading range of the past seven sessions. With neither group able to take complete control on Tuesday, 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 31.31 and a SELL order at 29.2. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.11 trailing stop. Tighten the stop to 1.06 once you have a 2.6 gain. KIDS closed Tuesday at 30.63. Earnings Report Date: May 6, 2024. Beta: 1.18. Market-Cap: . Not 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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