Notes From The Editor

The Market Goes Up, The Market Goes Down ... Part II

Stock trading is much more rewarding when you view it as a means of self-improvement rather than just a way to earn money. It makes sense when you think about it. Money is a result of learning to trade well, and the process of learning to trade well requires us to improve on a number of important levels.

This means we have to change the way we think and act.

Most traders would agree that making the changes necessary to be a successful stock trader is desirable. However, just because something is "desirable" doesn't mean we're willing to make the effort necessary to change the way we feel about it.

For instance, the majority of people are of the opinion that a Bull market is the only market where profits can be made. Bull equals good, and bear equals bad ... right?

Wrong. While the rest of the world may view the markets this way, you already know it isn't true for traders who have learned how to take advantage of both up and down trends. And though there are plenty of reasons why the majority of investors prefer bull markets, many of these "reasons" are simply one-dimensional beliefs that limit opportunity.

The process of moving beyond our trading limitations involves becoming aware of the false assumptions and bias we each have. Once we become conscious of the mental and emotional limits that exist inside of us, we can go about the business of upgrading our perspectives.

Learning how to view market action as neither good nor bad begins with paying attention to your feelings. Notice and accept how you feel when the market goes up, and when it goes down. Then remind yourself that you can choose to perceive market movement any way you want to.

When the market goes down, focus on the fact that a down market presents just as much opportunity as an up market. Be persistent. It can take months to replace limiting beliefs with new and more effective ones. Realize that although all of us have been taught that "down" is our enemy, "down" is actually is just as much our ally as "up."

The trend really is your friend ... even when the trend is down. It takes practice to accept all price movement as opportunity, yet this is a necessary step toward bringing about the changes in thinking that produce consistent success.

Trade well,

- Thomas Sutton, Editor

Quick List

    
Stock     08/27     08/27      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

SDGR      20.61     -0.24     21.07     19.75        1.32/0.66       2.6
AMSC      20.51     -0.48     21.34     19.73        1.61/0.81      3.96
PLTR      30.84     -0.01     31.53                  2.07/1.04      3.24
APH       66.52     -0.14     67.64                  4.08/2.04       4.4
RUN       20.82     -0.33     21.25     19.61        1.64/0.82      2.98

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

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Market Summary

Equity markets showed little movement on Tuesday as investors awaited earnings reports from major tech companies NVIDIA and Salesforce scheduled for Wednesday. Both the S&P 500 and NASDAQ saw modest gains, while the Dow remained near unchanged levels. In terms of sector performance, technology and financials led the S&P 500, while the energy sector lagged due to a decline in oil prices.

On the economic front, The Conference Board's Consumer Confidence Index for August came in at 103.3, surpassing expectations of 100. Additionally, average consumer inflation expectations for the next 12 months fell to 4.9%, marking the lowest level since March 2020. Bond yields remained relatively stable, with the 10-year yield at approximately 3.83% and the 2-year yield around 3.90%. After a sharp increase the previous day, oil prices declined on Tuesday, with crude oil falling to under $76 per barrel.

This week continues to focus on corporate earnings, with technology giants NVIDIA and Salesforce set to report their results after the market close on Wednesday. Analysts expect NVIDIA to post earnings per share of $0.65, representing a substantial year-over-year growth of about 140%, while Salesforce is anticipated to see an 11% increase in earnings per share. Given that technology constitutes nearly one-third of the S&P 500, the results from these companies could influence market trends for the rest of the week.

Overall, second-quarter earnings have been strong, with around 96% of S&P 500 companies having reported, and 79% of these surpassing earnings expectations. S&P 500 earnings per share are projected to grow by 10.8% year-over-year in the second quarter, marking the highest growth rate since the fourth quarter of 2021.

Despite high valuations relative to historical averages, continued economic growth, robust labor productivity gains, and anticipated Fed rate cuts should support ongoing corporate profit growth and equity market strength.

TRADER'S TIP: "The Market is Out of Control!!"

Many traders subconsciously try to control the markets by placing too much emphasis on their trade entries. This is usually an attempt to force the market to do their bidding by requiring it to meet a long list of criteria before they get in. However, once in, the market will always do whatever it wants. This is why we emphasize trade management. Keep losses small and let winners grow. The market is literally out of anyone's control! As a result, success in stocks has a lot more to do with exits than entries.

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".

Market Calendar

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

TRADER'S TIP: "Price Action Near Support And Resistance"

It pays to keep an eye on support and resitance lines. One of the best low-risk buy signals takes place when price dips below a significant support line, then comes back up and closes above it. In the same fashion, an excellent shorting opportunity is provided when price rises marginally above a clear resistance line, then reverses to close below it.

Stocks Covered in This Issue

HEALTHCARE SECTOR

Schrodinger, Inc. (SDGR: Healthcare/Health Information Services) - SQUEEZE PLAY. Tuesday's trading action forced SDGR'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 SDGR 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 21.07 if SDGR moves higher, and place your order to SELL short at 19.75 if price declines to that level. As usual follow your entry with a trailing stop, 1.32 should be sufficient. Reduce your stop to 0.66 on a 2.6 gain. SDGR closed Tuesday at 20.61. Earnings Report Date: Oct 30, 2024. Beta: 1.51. Market-Cap: 1.501B. Optionable.

INDUSTRIALS SECTOR

American Superconductor Corporation (AMSC: Industrials/Specialty Industrial Machinery) - SQUEEZE PLAY. A look at AMSC's daily chart shows what a price squeeze is all about. The constricted high-low daily trading range has produced a setup similar to a tightly coiled spring. Expect price to move sharply soon, with the direction yet to be determined. Let the upcoming market action resolve whether you will buy shares or sell short. To capture a move either way, place a BUY trigger at 21.34 and a SELL short trigger at 19.73. Once AMSC shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.61 and tighten to 0.81 on a 3.96 gain. AMSC closed Tuesday at 20.51. Earnings Report Date: Oct 30, 2024. Beta: 2.17. Market-Cap: 785.638M. Optionable.

TECHNOLOGY SECTOR

Palantir Technologies Inc. (PLTR: Technology/Software - Infrastructure) - BULLISH BOUNCE. This trader-friendly setup turns repetitive stock behavior into real profits. Based on the tendency for up-trending stocks to drop briefly and then resume the up-trend, the Bullish Bounce places traders into excellent stocks when conditions are primed for more skyward movement. PLTR's current price action near moving average support signals a potential BUY entry at 31.53, followed by a 2.07 trailing stop which can be tightened to 1.04 upon earning 3.24. PLTR closed Tuesday at 30.84. Earnings Report Date: Oct 31, 2024. Beta: 2.70. Market-Cap: 69.065B. Optionable.

Amphenol Corporation (APH: Technology/Electronic Components) - BULLISH BOUNCE. Among other strengths, the Bullish Bounce protects traders from buying a stock "at the top" of its current cycle. The entry into this setup always takes place in upward-moving stocks that have retreated a bit under normal conditions. Now sitting at 66.52, APH is on our radar for a BUY entry at 67.64. If you purchase shares of APH, be sure to also place a trailing stop of 4.08. Snug it up to 2.04 on a 4.4 gain. Earnings Report Date: Oct 23, 2024. Beta: 1.26. Market-Cap: 80.109B. Optionable.

Sunrun Inc. (RUN: Technology/Solar) - SQUEEZE PLAY. RUN is caught in a dilemma. The stock's compressed price range on Tuesday 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. RUN is now at 20.82. We can capture price action either way by placing a BUY trigger at 21.25 and a SELL short trigger at 19.61. Once RUN 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 1.64. When you acquire a 2.98 profit, tighten the stop to 0.82. Earnings Report Date: Oct 30, 2024. Beta: 2.61. Market-Cap: 4.654B. 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.

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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