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April 6, 2024 - The RightLine Report
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NOTES FROM THE EDITOR
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Venture far enough into the wild world of Wall Street, and you'll run into a unique breed of trader - the system trader. These aren't ordinary market participants. In fact, some might say they've got more in common with those crusading Knights from Monty Python's "Holy Grail" movie. The "grail" in this case is an automated trading system that can consistently squeeze profits out of the market.
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"QUICK LIST"
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Stock 04/05 04/05 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
KSS 25.50 -0.19 26.19 24.6 1.59/0.8 2.52
UPST 24.66 -0.44 25.69 23.8 1.89/0.95 3.08
BCYC 22.73 0.11 23.32 1.75/0.88 2.98
BCYC 22.73 0.11 23.32 21.57 1.75/0.88 2.98
HASI 26.58 0.03 27.08 1.71/0.86 1.8
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" at https://prorightline.com/index.php/rightline-report-quick-list/. In addition,always use the RightLine Risk Calculator before entering any position. For access to the Risk Calculator, go to https://prorightline.com/index.php/risk-calculator/. To learn more about controlling risk go to the RightLine Risk Control System at https://prorightline.com/index.php/rightline-risk-control-system/ For a glossary of terms unique to The RightLine Report go to: https://prorightline.com/index.php/glossary/ Questions? Send us an email using our contact form at: https://prorightline.com/index.php/contact-us/
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MARKET SUMMARY
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Just a day after major US indices experienced one of the toughest sessions of 2024 due to cautious Fed Bank remarks, economic indicators, and geopolitical concerns, nearly all of the loss was wiped away on Friday. Despite further Fed caution, particularly from Dallas Fed President Lorie Logan regarding the timing of rate cuts, and an exceptionally strong monthly jobs report for March, which reduced the likelihood of imminent rate cuts, the market continued its upward trajectory. The S&P 500 and Nasdaq are once again approaching record highs, while the Dow Jones Industrial Average snapped its four-day losing streak. However, U.S. equities closed the week with declines ahead of pivotal inflation data next Tuesday (March CPI). The robust job data has likely complicated the Fed's decision-making regarding interest rate cuts, as the economy shows no signs of slowing down, particularly in the job sector, with strong payroll figures, a decline in unemployment, and robust wage growth. Further cautious remarks came from Fed Dallas President Logan, who emphasized this morning that there is currently no urgency for the Fed to implement rate cuts, citing higher risks associated with cutting rates prematurely. Federal Reserve Governor Michelle Bowman also added to the cautious tone on Friday, suggesting that interest rates may need to rise to control inflation, contrary to the expected rate cuts by both officials and the market. Nonetheless, investors remained optimistic as stocks surged throughout the morning into the afternoon. Meanwhile, the upcoming earnings season looms, with major banks JPM, Citi and WFC scheduled to report next Friday morning. Initial jobless claims for the week rose to 221,000, slightly above consensus expectations and the highest reading since late January. While this doesn't signal a material deterioration in the labor market, it aligns with our view of emerging softness in the labor market as we progress. However, initial claims remain low by historical standards, and the four-week average is 3% lower than a year ago. Moreover, continuing claims declined for the week, reaching their lowest level in nearly two months, indicating that workers on the sidelines aren't experiencing a significant worsening in finding new employment. These readings set the stage for Friday's critical March employment report, expected to reveal approximately 200,000 new nonfarm payrolls and a slight decrease in the unemployment rate. Thursday On The Week
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Dow 38,596.98 -530.16 -1227.17 -3.08%
Nasdaq 16,049.08 -228.38 -341.22 -2.08%
S&P 500 5,147.21 -64.28 -111.55 -2.12%
NYSE Volume 4.08B
NYSE Advancers 975
NYSE Decliners 1,836
Nasdaq Volume 5.38B
Nasdaq Advancers 1,586
Nasdaq Decliners 2,666
New Highs/Lows
03/28 03/28 04/01 04/02 04/03 04/04
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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
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TRADER'S TIP:
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TRADER'S TIP: "Selling Short" "It takes real knowledge and market know-how as well as lots of courage to sell, and particularly to sell short, because you will make many mistakes. However, I don't see how anyone could really do well in the market and protect assets if they don't learn how, when, and why stocks should be sold." ~ William J. O'Neil, author and trader **************************
THE TECHNICAL ANALYST
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This section contains important technical data for the three major market averages -- the S&P 500, the Nasdaq Comp Index, and the Dow Industrial Average. For guidance on how to use this information, go to: https://prorightline.com/index.php/technical-analyst-section-rightline-report/ https://www.prorightline.com/rlch/040524SPX.jpg--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" at this link: https://prorightline.com/index.php/economic-indicator-effects/
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TRADER'S TIP:
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TRADER'S TIP: "Hurry, Hurry, Step Right Up!" Don't pay much attention to all the hype from brokerage analysts or the business media. Brokerage firms usually have more than just a casual interest in stocks they tout, and many times so does the media. ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR Kohl's Corporation (KSS: Consumer Cyclical/Department Stores) - SQUEEZE PLAY. When a stock's daily price range contracts to an unusually low point, you can safely assume that in most cases a breakout from that range will result in a nice price move. To capture a portion of this potential movement we have set both a long and a short entry into KSS. A move to the upside will trigger our BUY entry at 26.19, while a drop to 24.6 will trigger our SELL short entry. Follow your position with a 1.59 trailing stop. Tighten the stop to 0.8 once you have a 2.52 gain. KSS closed Friday at 25.50. Earnings Report Date: May 22, 2024. Beta: 2.01. Market-Cap: 2.828B. Optionable. FINANCIAL SERVICES SECTOR Upstart Holdings, Inc. (UPST: Financial Services/Credit Services) - SQUEEZE PLAY. UPST is caught in a dilemma. The stock's compressed price range on Friday has resulted in a condition comparable to a wound up rubber band. We anticipate that this undecided equity will take off soon, but with the direction still in question we'll let upcoming market action tell us whether to buy shares or sell short. UPST is now at 24.66. We can capture price action either way by placing a BUY trigger at 25.69 and a SELL short trigger at 23.8. Once UPST reveals its direction, enter your triggered order and disregard the other one. As soon as your position is in place, follow up with a trailing stop of 1.89. When you acquire a 3.08 profit, tighten the stop to 0.95. Earnings Report Date: May 07, 2024. Beta: 1.96. Market-Cap: 2.131B. Optionable. HEALTHCARE SECTOR Bicycle Therapeutics plc (BCYC: Healthcare/Biotechnology) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Friday BCYC seemed intent on initiating a rebound. With moving average support nearby, BCYC is at a logical place for Bulls to regroup and extend the familiar uptrend that shareholders have become accustomed to. On continued buying, plan on taking long entries with a BUY at 23.32. Manage risk with a 1.75 stop. Tighten your stop to 0.88 when you have a 2.98 profit. BCYC ended the day at 22.73. Earnings Report Date: May 02, 2024. Beta: 0.89. Market-Cap: 861.019M. Optionable. Bicycle Therapeutics plc (BCYC: Healthcare/Biotechnology) - SQUEEZE PLAY. Friday's trading action forced BCYC's daily price range into an abnormally narrow state. This translates into opportunity; for the cyclical nature of price volatility is to shrink extensively, then swell rapidly as shares move in one direction or another. Instead of trying to predict the direction BCYC will take when price volatility begins to increase, we'll set both a BUY (long) and a SELL (short) trigger to get us into the right trade. Be ready to BUY shares at 23.32 if BCYC moves higher, and place your order to SELL short at 21.57 if price declines to that level. As usual follow your entry with a trailing stop, 1.75 should be sufficient. Reduce your stop to 0.88 on a 2.98 gain. BCYC closed Friday at 22.73. Earnings Report Date: May 02, 2024. Beta: 0.89. Market-Cap: 861.019M. Optionable. REAL ESTATE SECTOR Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI: Real Estate/REIT - Specialty) - BULLISH BOUNCE. Here is another example of a stock in an established uptrend that has recently experienced a counter-trend drop. The sliding price action has now found support near a moving average zone, bouncing upward during Friday's session to close at 26.58. Anticipate the rebound to continue, and be ready to buy HASI at 27.08. Follow your entry with a trailing stop of 1.71 which can be tightened to 0.86 on a 1.8 profit. Earnings Report Date: May 02, 2024. Beta: 1.84. Market-Cap: 3.021B. Optionable. IMPORTANT: Before entering any recommended positions, always use the RightLine "Risk Control System" to determine the level of acceptable risk and the maximum number of shares to buy. Link: https://prorightline.com/index.php/rightline-risk-control-system/ Use "Gap Adjusted Entries" to reset the Entry Price for stocks that gap beyond recommended entry levels. Link: https://prorightline.com/index.php/gap-adjusted-entries-increase-profits/ ***********************************
STOCK SPLIT SUMMARY
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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 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. For a closer look at the different stages of a Stock Split go to: https://prorightline.com/index.php/trading-stock-splits-stages/ **********************************
TRADER'S CORNER
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"Trading the Stochastics Indicator" I used to think only price bars could predict the future. I started as a novice, experimenting with every indicator in the book. I could never get the markets to match my mathematics, so I finally gave up and became a pattern reader. In fact, my early writings are so pattern-centric they appear intolerant of all other trading techniques. I've had a change of heart in recent years because of a tool that's saved my neck on a ton of trades -- the overused and underappreciated stochastics. What exactly is the stochastics oscillator? It may seem like a simple question, but the answer isn't. The term describes a mathematical process that has an infinite progression of random variables. Let's dumb it down a bit. Stochastics measures how a market closes each price bar relative to its range over time. This is urgent information for all types of traders. Scalpers use it to read the tempo as money flows through their one-minute charts. Investors use it to identify cycles as weekly stochastics alter the balance of power. But this valuable tool won't give up its secrets easily, and it requires thoughtful interpretation. See chart - https://prorightline.com/rlr/TCpetm041203.gif The settings you choose don't matter because stochastics print valid patterns with any set of inputs. Different settings will emit different levels of "noise" in the subsequent output. For example, notice how the five-, 13- and 21-day settings on the PetsMart chart affect crossovers at key turning points. The approach here is to match your inputs with your trading style. For example, daytraders capitalize on subtle shifts in market direction and will benefit from short-term settings. On the other hand, long-term settings help position traders avoid false signals. See chart - https://prorightline.com/rlr/TCdis041203.gif Many traders get fooled when stochastics flip to an extreme because they look for a reversal instead of trend continuation. Ironically, the most dynamic price movement often takes place right after these levels are breached. So how do you avoid bad signals and use stochastics for its intended purpose? Look at the unique patterns. The stochastics middle ground tells you the trend is your friend. Watch when the fast line pulls away from the slow line in this zone. This reveals increasing momentum in the direction of the short-term trend.How can you use this information? Look to buy on the dip (rising) or sell on the bounce (falling) as long as the indicator doesn't roll over. One effective variation of this pattern is a 1-2-3 move where the indicator thrusts out of one extreme, pulls back a little and then thrusts again. See chart - https://prorightline.com/rlr/TCes02z041203.gif Take advantage of the price surge when stochastics break into an overbought or oversold level. Watch for the fast line to thrust away from the slow line right here. This tiny signal often corresponds with a final burst of buying or selling before a market reverses or goes flat. See chart - https://prorightline.com/rlr/TCko041203.gif Stand aside when stochastics flat line across the top or bottom of the indicator plot, but act quickly when they start breaking in the other direction. This Mesa reversal signal is often timed perfectly with the break of a key support or resistance level. One problem is you can't tell how far a move might carry from the indicator alone. Look at the price pattern to find natural targets for the subsequent swing. See chart - https://prorightline.com/rlr/TCamzn041203.gif My favorite oscillator patterns are double-tops and double-bottoms. As with price bars, I look for a lower second high to signal a top, and a higher second low to signal a bottom. Be patient when this pattern develops and let the lines drop away from extreme levels to confirm the signal. This pattern is similar to the Mesa reversal described above, but with one key difference -- it often triggers more follow-through on the subsequent pivot because it reflects more underlying divergence. ********** This special guest article was written by Alan Farley, author of "The Master Swing Trader." ======================================================================
Best of luck and have a Great Week!
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The RightLine Report is an information service for investors and traders. It is not a solicitation nor a recommendation or offer to buy or sell securities. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. The publishers of The RightLine Report are not brokers or financial advisors, and are not acting in any way to influence the purchase or sale of any security. Stock picks, entry points and exit points should be considered an information resource to assist the trader in developing a trading plan and it is the sole responsibility of the reader to conduct his or her own due diligence before executing a trade. Trading securities should be considered speculative with a high degree of volatility and risk. The publishers of The RightLine Report recommend that anyone trading securities should do so with caution, exercise prudent trading discipline and have a personal risk management strategy in place before doing so. It is possible at this or some subsequent date, the publishers and staff of The Pro Right Line Corp. may own, buy or sell securities presented. The Pro Right Line Corp. is not a financial advisory service. Its publishers, owners or investors, are not liable for any losses or damages, monetary or otherwise, that result from the content of The RightLine Report. Past RightLine Report performance may not be indicative of future performance. All subscriptions and/or use of the RightLine.net website are subject to RightLine's "Terms of Use" and "Subscriber Terms & Conditions" which are posted at www.rightline.net. Any REDISTRIBUTION of the above information, without The RightLine's written consent, is STRICTLY PROHIBITED. Copyright / The Pro Right Line Corporation - All Rights Reserved To Unsubscribe, send an email to cs@prorightline.com or call 1-312-248-4241. |