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August 24, 2024 - The RightLine Report
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NOTES FROM THE EDITOR
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Getting to Break-Even
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"QUICK LIST"
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Stock 08/23 08/23 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
GME 22.21 0.09 22.92 21.52 1.4/0.7 2.34
BLFS 25.30 0.85 25.76 2.24/1.12 2.76
TYRA 22.06 0.29 22.66 20.98 1.68/0.84 2.96
ELVN 23.00 0.10 23.44 22.01 1.43/0.72 3.46
MRCY 37.49 0.59 38.42 2.53/1.27 2.5
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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After a dip on Thursday, stock markets bounced back on Friday, with all three major US indexes gaining over 1%. This rebound followed a speech by Fed Chair Jerome Powell at the Jackson Hole Symposium, where he suggested that "the time has come for policy to adjust." Markets now expect the Fed to initiate its rate-cutting cycle at the September 18 FOMC meeting. This uptick in stocks comes after a notable rally following a sharp market decline on August 5. Since then, the S&P 500 has risen by over 8%, while the Nasdaq, heavily weighted with technology stocks, has rebounded by more than 10%. Although both indexes remain below their July all-time highs, they are still up by over 17% year-to-date. The VIX volatility index, known as Wall Street's "fear gauge," has also eased. After spiking to 65 on August 5th, the highest level since 2020, the VIX has returned to around 16, in line with its annual average. Recent better-than-expected inflation and economic data have contributed to market stability and bolstered expectations for an impending rate cut by the Federal Reserve. As anticipated, Jerome Powell used his speech at the Jackson Hole Symposium to signal that the time has arrived for the Fed to begin lowering the federal funds rate. While he did not specify the magnitude or pace of the cuts, Powell highlighted a moderation in inflation and a softening labor market. He expressed increased confidence that inflation is on a trajectory toward 2%. With both inflation and the labor market showing signs that warrant less restrictive monetary policy, we expect the Fed to reduce the federal funds rate by 0.25% in September from its current range of 5.25% - 5.5%, with potentially two to three additional cuts in 2024. The recent market rally since the August 5 sell-off may not continue in a straight line, but we believe the foundations of the bull market are still solid. The economy is slowing but not in freefall, inflation is easing, and the Fed is preparing to cut rates. In this environment, we suggest using market volatility as an opportunity to diversify, rebalance, and acquire quality investments at favorable prices. ***********************************
TRADER'S TIP:
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TRADER'S TIP: "Sizzlin' Outside? Stay Cool!" Has the stock market and the summer heat got your emotions running hot? Chill out, and remember that though we have no control over what the market does, we do have complete control over how we respond to it. Getting angry when the market doesn't co-operate with our wishes doesn't change price action, yet the emotional stress from anger has the potential to cloud our judgment and cause us to make unwise decisions. To avoid this sort of reaction, we can accept the fact that the market is not trying to hurt us, and for that matter is not even aware that we exist. Our reaction won't change the market, but it WILL determine whether we ultimately win or lose money in the business of trading. Stay cool, and when things get too warm, relax by the pool! **************************
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/082324SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, Aug. 26 8:30 am Durable-goods orders 8:30 am Durable-goods minus transportation 2:00 pm San Francisco Fed President Daly TV interview TUESDAY, Aug. 27 9:00 am S&P Case-Shiller home price index 10:00 am Consumer confidence WEDNESDAY, Aug. 28 6:00 pm Atlanta Fed President Raphael Bostic speech THURSDAY, Aug. 29 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 8:30 am GDP (2nd revision) 10:00 am Pending home sales 3:30 pm Atlanta Fed President Raphael Bostic speech FRIDAY, Aug. 30 8:30 am Personal income (nominal) 8:30 am Personal spending (nominal) 8:30 am PCE index] 8:30 am PCE (year-over-year) 8:30 am Core PCE index 8:30 am Core PCE (year-over-year) 9:45 am Chicago Business Barometer (PMI) 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" 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: "For Dessert? Profit Pie" Entering "long" positions just above support, and "short" positions just below resistance delivers a larger slice of the potential profit "pie" when the trade is favorable, and quick, small losses when it isn't. ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR GameStop Corp. (GME: Consumer Cyclical/Specialty Retail) - SQUEEZE PLAY. Traders are feeling the pressure as GME's intra-day price range on Friday shrunk to the narrowest spread in over a week. The tension between buyers and sellers should provide enough pent-up engergy for a breakout move in the days ahead, so get ready to trade with the new trend. To achieve that, place a BUY entry at 22.92 and a SELL short entry at 21.52. GME's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.4 trailing stop. Tighten it to 0.7 after you get a 2.34 gain. GME closed Friday at 22.21. Earnings Report Date: Sep 4, 2024. Beta: -0.06. Market-Cap: 9.466B. Optionable. HEALTHCARE SECTOR BioLife Solutions, Inc. (BLFS: Healthcare/Medical Instruments & Supplies) - BULLISH BOUNCE. If you are looking for another bouncer with profits in mind, BLFS 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 25.30, plan to buy shares at 25.76 and use a 2.24 trailing stop. Tighten the stop to 1.12 on a 2.76 gain. Earnings Report Date: Nov 7, 2024. Beta: 1.85. Market-Cap: 1.167B. Optionable. Tyra Biosciences, Inc. (TYRA: Healthcare/Biotechnology) - SQUEEZE PLAY. TYRA is stuck in a Bull/Bear deadlock. Fortunately for traders this impasse should be resolved soon, with one side or the other taking control. We want to be positioned for a potential quick move up or down, so get ready to catch this train with a BUY entry at 22.66 and a SELL short entry at 20.98. Once your trade is filled, enter a 1.68 trailing stop. Tighten it to 0.84 after a 2.96 gain. TYRA closed on Friday at 22.06. Earnings Report Date: N/A. Beta: 1.02. Market-Cap: 1.165B. Optionable. Enliven Therapeutics, Inc. (ELVN: Healthcare/Biotechnology) - SQUEEZE PLAY. Friday's narrow price range has created a potentially profitable setup in ELVN, as sellers and buyers find themselves in a near tie for control of price direction. The next short-term trend could go either way, so prepare for a move out of the draw within the next day or so. Set a BUY entry at 23.44 and a SELL short entry at 22.01. Let ELVN's price action determine your long or short entry. Once the order is filled, place a 1.43 trailing stop, and tighten it to 0.72 upon getting a 3.46 gain. ELVN closed Friday at 23.00. Earnings Report Date: Nov 7, 2024. Beta: --. Market-Cap: 1.086B. Optionable. INDUSTRIALS SECTOR Mercury Systems, Inc. (MRCY: Industrials/Aerospace & Defense) - BULLISH BOUNCE. MRCY has charted an upward weekly trend until recently when sellers showed up to push prices lower. On Friday the selling ran into solid support. A potential bounce up from this level should attract buyers and likely return MRCY to the previously established uptrend. The Bullish Bounce set-up is the basis for our BUY entry, so be ready to go long on a rise to our trigger at 38.42. Set a trailing stop of 2.53, tightening to 1.27 on a 2.5 profit. MRCY closed at 37.49 on Friday. Earnings Report Date: Nov 5, 2024. Beta: 0.68. Market-Cap: 2.227B. 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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"How To Draft A Trading Plan" "Plan Your Trade and Trade Your Plan" is a mantra that we repeat on a regular basis. Why? Because we have found that traders who carefully plan each trade have a much better chance of winning in the stock market than those who don't. In fact, properly planning a trade can literally be the difference between making money and losing money. A successful Trading Plan doesn't have to be complicated. Many traders draft their trading plans in a notebook or on index cards, while others use word processors and spreadsheets. Regardless of the method you choose, every trading plan must contain certain components to be effective. But before we get into the "essentials," let's take a quick look at a few dynamics behind "Planning Your Trade." Before drafting a plan of action, traders will want to decide what style of trading they prefer. A broad generalization of "buy and sell stocks" doesn't work - the criteria needs to be specific. Successful traders make money in different ways, but each has a well-defined method. On the other hand, a losing trader's plan is always vague and ambiguous. In trading, it pays to be precise, so decide what you like to do and build your plan around that style. Don't worry about getting locked in to a certain approach; you can always change it later as you gain experience. You can even draft more than one plan if you enjoy different types of trading. The best plans include a set of solid rules that never get broken, and a few elastic rules that allow for real-time decisions to be made when managing live trades. Our judgment improves as we gain experience, so it's good to allow some flexibility in less critical areas of your plan. At the same time, maintain unyielding rules in the more sensitive parts - such as Risk Control. Okay, now let's layout the essential ingredients to include in your personal trading plan. ~ Determine Your Time Frame The type of trading you prefer usually defines the time frame. Short term traders who enjoy a fast paced style won't find much action in weekly or monthly time frames, while less active traders generally find that the extremely short time horizons require too much time at the computer. Decide which style best suits your personality, and then select the corresponding time frame. It's usually a good idea to start by spending a few minutes each day. Begin by managing the trades using daily charts, then see if you want to shorten or lengthen the time frame. The RightLine Report offers a variety of stocks in different time frames. Due to the way these stocks are selected and the type of exit strategy used, most of the picks will work for traders who plan to hold positions anywhere from a few hours to a few weeks. ~ Locate The Best Stocks to Trade Choose a method to determine which stocks to trade. If you are experienced in the markets you probably already have a number of ideas and sources. To make it easier for our subscribers, the Right Line Report presents a wide variety of good stock choices in every issue. They are based on an assortment of trading strategies and tactics that take advantage of predictable market behaviors. You may also want to develop your own new methods for locating stocks. The educational section on our website at www.rightline.net presents numerous market concepts to help traders understand the nature of price movement, identify trends in every time frame, and choose the tools needed to capture profits. ~ Determine Entry Points This can be a challenge, for there are almost as many different ways to determine entries, as there are stocks. Again, in an effort to make it easier for our subscribers, the Right Line Report presents specific entry points for every stock in each issue. The exact level to buy or sell short is based on a wide range of technical factors used by our analysts to reduce risk and optimize the potential gain. If you choose to select your own entry points, we provide a large assortment of articles to assist you in developing your own personal methods. ~ Use An Intelligent Method to Select the Number of Shares to Trade Very few traders and investors realize the importance of balanced "Position Sizing." Most make the mistake of ignoring the size of their trading account when taking on new positions. As a result, many unknowingly join the ranks of high-risk over-traders, and soon find themselves in big trouble. Don't worry, it's easy to avoid when you have the RightLine Risk Manager to help! This simple tool is free to subscribers, but if you prefer to do the math yourself, here are the basics: "Never risk more than 2% of your trading capital in a single trade or more than 6% of your capital at a time. For example, if you have $100,000 in your trading account, the most you should be willing to risk is $2,000. Before buying a stock, review the chart to locate the best place to put a stop loss order. If you determine that the stock requires 5-points to keep you in the trade while it is trending up, the maximum number of shares that you can afford is 400. ($2,000 maximum risk divided by 5-points = 400 shares.)" You can see that although doing the calculation isn't terribly hard, the Risk Manager makes the job a whole lot easier! ~ Manage Risk With Stops You may already know, but a "stop" is an order to buy at a price above or sell at a price below the current market price. Stops, or stop orders, are used to protect our capital and lock in profits. Placing stops is easy, but locating the best place to put them can be quite challenging. To assist traders with stop placement, every stock entry in the RightLine Report includes a suggested stop level. And of course, we offer plenty of help on our website for anyone who wants to learn more about managing risk with stops. ~ Determine Your Exit Strategy After you've entered a position in a stock and it starts moving, then what? Traders have a lot of different choices when it comes to exiting trades, and the method used can make a world of difference. Some traders routinely use "trailing" stops as their exit strategy of choice, while others choose to exit when the stock hits a certain price, or breaks through a support level, or approaches a resistance level. Other traders will choose to exit based on intra-day swings or expected news releases. Some traders sell half when their target is met and let the other half ride with a trailing stop. Others sell to recover all invested capital, and only keep the stock earned with profits - essentially called free stock. This one is a wealth builder, but results in a lot of positions to manage. When making a trading plan, remember to plan not only for the upside, but the downside too. The exit strategy is one of the most important parts of any trading plan, and it is fundamental for traders to select an exit plan before entering a trade. Trade Planning is one of the most important skills that a trader can learn. Make it your strength and you will be well on your way to trading successfully. ======================================================================
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. |