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August 24, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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What About the Bear?
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"QUICK LIST"
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Stock 08/24 08/24 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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IEP 20.02 -0.76 21.1 19.27 1.83/0.92 2.7
BKU 25.76 0.52 26.23 24.32 1.91/0.96 2.48
IDYA 28.07 -0.04 28.77 26.73 2.04/1.02 2.1
ACAD 28.40 -0.24 29.19 27.4 1.79/0.9 1.56
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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Stocks ended the day in negative territory on Thursday, reversing their earlier gains. This shift comes after NVIDIA released its strong earnings report Wednesday after the market closed. Despite high pre-quarter expectations, NVIDIA's second-quarter revenue surpassed consensus estimates by 20%, and its earnings per share for the same period were nearly 30% higher than anticipated, largely driven by robust artificial intelligence (AI) data-center performance. In the global arena, Asian markets closed higher, with Japan's Nikkei seeing a near 1% increase, while European markets experienced mixed outcomes. After a slight decline in the previous session, Treasury yields climbed, and oil prices finished slightly higher. All eyes are on the upcoming Fed Jackson Hole meeting, where Fed Chair Jerome Powell will discuss the US economic outlook and share his latest perspectives on the need for additional monetary tightening to control inflation. We anticipate Powell will likely keep the Fed's options open and emphasize the importance of data-driven decisions. However, the recent improvement in inflation might support a case for no further interest-rate hikes. Initial jobless claims were lower than anticipated, highlighting the ongoing strength of the labor market. Although continuing jobless claims were slightly above expectations, they showed a decline from the previous week. The labor market has remained a strong foundation for the economy, supporting robust consumer activity and driving economic growth in recent months. While still historically tight, the labor market in the USA has exhibited signs of gradual softening, which we expect to continue throughout the rest of the year as the effects of higher interest rates impact the economy. Second-quarter earnings have outperformed predictions. Almost 95% of the S&P 500 companies have reported and the results have generally surpassed expectations. However, year-over-year earnings growth is on track to decrease for the third consecutive quarter. Current market projections indicate a rebound to modestly positive earnings growth in the third and fourth quarters of this year, with double-digit growth anticipated in 2024. The combination of declining inflation and resilient consumer spending provides a backdrop that we believe could bolster corporate profits in the coming months. Aug 23, 2023 Aug 24, 2023
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Dow 34,472.98 184.15 34,099.42 -373.56
Nasdaq 13,721.03 215.16 13,463.97 -257.06
S&P 500 4,436.01 48.46 4,376.31 -59.70
NYSE Volume 3.84B 3.74B
NYSE Advancers 2,288 728
NYSE Decliners 662 2,175
Nasdaq Volume 4.14B 4.4B
Nasdaq Advancers 2,885 1,207
Nasdaq Decliners 1,423 3,131
New Highs/Lows
08/17 08/18 08/21 08/22 08/23 08/24
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NYSE New Highs 19 16 31 37 43 32
NYSE New Lows 88 92 87 81 62 75
Nasdaq New Highs 30 32 44 43 57 46
Nasdaq New Lows 291 263 215 242 167 227
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TRADER'S TIP:
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TRADER'S TIP: "Sunny Days" Researchers at Ohio State and the University of Michigan found a positive correlation between the weather and the stock markets around the globe between 1982 and 1997. Specifically, the stock markets in 26 countries went up more than average when it was sunny in the cities where the markets were located, and declined more than average when it was cloudy. **************************
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/ S&P 500 - 4376.31 August 24, 2023 52-Week High: 4607.07 52-Week Low: 3491.58 Daily Trend: UP Weekly trend: UP Weekly Pivot Levels Resistance 3: 4708.48 Resistance 2: 4553.46 Resistance 1: 4461.58 Pivot: 4398.45 Support 1: 4306.57 Support 2: 4243.43 Support 3: 4088.41 https://www.prorightline.com/rlch/082423SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Wednesday, August 23, 2023: 23-Aug 9:45 am S&P flash U.S. services PMI 23-Aug 9:45 am S&P flash U.S. manufacturing PMI 23-Aug 10:00 am New home sales Thursday, August 24, 2023: 24-Aug 8:30 am Initial jobless claims 24-Aug 8:30 am Durable-goods orders 24-Aug 8:30 am Durable-goods minus transportation Friday, August 25, 2023: 25-Aug 10:00 am U Mich consumer sentiment, final 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: "Setting a Profit Target" When projecting the potential risk vs. reward for a trade, you will want to establish a profit target. While there are numerous ways to determine a profit objective, or "target," one of the best methods is to use a previous price peak as the general area where you will set your target. This becomes your potential reward, while the initial stop level is your risk. As a rule of thumb you should only enter trades with a minimum 1- to-2 risk/reward ratio - ideally you want trades with a 1-to-3 or higher risk/reward ratio. ***********************************
STOCKS COVERED IN THIS ISSUE
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ENERGY SECTOR Icahn Enterprises L.P. (IEP: Energy/Oil & Gas Refining & Marketing) - SQUEEZE PLAY. Thursday's trading action forced IEP'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 IEP 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 21.1 if IEP moves higher, and place your order to SELL short at 19.27 if price declines to that level. As usual follow your entry with a trailing stop, 1.83 should be sufficient. Reduce your stop to 0.92 on a 2.7 gain. IEP closed Thursday at 20.02. Earnings Report Date: Nov 01, 2023. Beta: 0.83. Market-Cap: 7.877B. Optionable. FINANCIAL SERVICES SECTOR BankUnited, Inc. (BKU: Financial Services/Banks-Regional) - SQUEEZE PLAY. BKU is caught in a dilemma. The stock's compressed price range on Thursday 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. BKU is now at 25.76. We can capture price action either way by placing a BUY trigger at 26.23 and a SELL short trigger at 24.32. Once BKU 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 1.91. When you acquire a 2.48 profit, tighten the stop to 0.96. Earnings Report Date: Oct 18, 2023. Beta: 1.24. Market-Cap: 1.917B. Optionable. HEALTHCARE SECTOR IDEAYA Biosciences, Inc. (IDYA: Healthcare/Biotechnology) - 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 IDYA. A move to the upside will trigger our BUY entry at 28.77, while a drop to 26.73 will trigger our SELL short entry. Follow your position with a 2.04 trailing stop. Tighten the stop to 1.02 once you have a 2.1 gain. IDYA closed Thursday at 28.07. Earnings Report Date: Nov 06, 2023. Beta: 0.80. Market-Cap: 1.616B. Optionable. ACADIA Pharmaceuticals Inc. (ACAD: 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 ACAD's case we will enter a BUY should it reach the 29.19 level, or a SELL short trade if it drops to 27.4. As usual a trailing stop is essential, 1.79 which should be tightened to 0.9 on a 1.56 gain. ACAD closed Thursday at 28.40. Earnings Report Date: Oct 31, 2023. Beta: 0.54. Market-Cap: 4.65B. 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/ ======================================================================
Best of luck and have a Great Week!
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DISCLAIMER
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. |