August 29, 2023 - The RightLine Report
Notes From The Editor
At RightLine we take pride in consistently bringing you trade set-ups with a high potential for profits. Many of these plays are designed to capture a short-term movement that comes after a stock has established a directional trend.
This may come as surprise to many traders, who have had it engrained in their heads that they must correctly call a stock's top or bottom in order to be profitable. Part of this tendency can be chalked up to simple human nature - the desire to jump in at the best possible time. But more so than that, stock media and analysts are to blame.
This group is obsessed with calling tops and bottoms. Any given day, you can turn on the TV and hear an equity analyst refer to a skyrocketing equity as "toppy" or an entire sector as "deeply oversold and ready to bounce." With so many predictions flying around, some are bound to be right - especially given enough time. As the saying goes, even a broken clock is right two times a day.
When looking for a top or bottom, it's crucial to wait for confirmation before taking a position. This could come in the form of a violated trendline or moving average. Fading the trend without any indications of a reversal is akin to walking onto a busy train track with a blindfold on.
While we sometimes feature set-ups on stocks that have recently established a relative top or bottom, these trend-reversing plays typically include technical elements such as support/resistance levels that are impacting price action. Simply jumping in the way of a stock that has strong momentum, with the thinking that "it can't go any higher/drop any further," is something to be completely avoided. Focus instead on grabbing a healthy chunk of a stock's movement after a trend has been established.
Here's to profits,
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 08/30 08/30 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
CMT 27.51 0.05 27.9 26.06 1.84/0.92 2.26
CTRN 23.15 0.13 23.56 1.77/0.89 1.7
BBW 26.40 0.34 26.95 25.13 1.82/0.91 1.3
TRUP 30.59 0.00 31.35 29.12 2.23/1.12 4.8
CEG 105.54 0.16 107.56 5.92/2.96 4.18
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
Following a substantial gain on Monday, equities surged again on Tuesday, buoyed by fresh labor market data that fostered optimism about potential reduced Fed intervention. Global equities, led by Asian markets, trended higher. Chinese stocks received a boost from anticipated government stimulus aimed at addressing the country's economic slowdown. In other areas, oil and gold prices rose, bonds rallied, and the cyclical sectors largely drove sector leadership, contributing to a positive sentiment on Tuesday's trading.
The highlight of the day was the latest assessment of job openings, offering insight into the employment landscape. Job openings declined to 8.8 million, marking the lowest level since March 2021. Despite this seemingly negative data, equities rallied and interest rates dropped.This interpretation suggests that a softer labor market might discourage additional Fed rate hikes, aiding the fight against inflation.
On another note, recent home price data indicated a housing market benefiting from a strong consumer while grappling with the impact of high mortgage rates. The S&P/Case-Shiller home price index revealed that home prices in June decreased by 1.2% compared to the previous year, but rose by 0.9% versus the previous month. This indicates a moderation from 2022 when demand and prices were elevated. The month-over-month rise implies two key aspects: 1) limited housing supply supporting prices, and 2) signs of revived housing demand compared to the slowdown witnessed toward the end of 2022. The month-over-month figure, although positive, was lower than the previous month's, and with the knowledge of August's rate increase, we anticipate further softness in housing demand in the upcoming months. While the year-over-year decline aids the broader inflation trend, we expect home and rent prices to remain a challenge in addressing falling inflation.
Ten-year Treasury rates retreated to around 4.1%, significantly down from the recent peak near 4.35% last week. This surge from mid-July was due to positive economic indicators boosting interest rates. The economy's resilience heightened the likelihood of the Fed maintaining its restrictive policy approach.
Our view is that the Fed will pause during its September meeting. Nevertheless, markets currently suggest a 50/50 probability of another rate hike before the year concludes. While we expect the Fed's tightening campaign to end soon, investor focus will likely shift from rate hikes to the duration of maintaining these rates. This is crucial for inflation's return to acceptable levels. Our anticipation is for continued inflation moderation, although at a pace different from last year.
Aug 28, 2023 Aug 29, 2023
-------------------- --------------------
Dow 34,559.98 213.08 34,852.67 292.69
Nasdaq 13,705.13 114.48 13,943.76 238.63
S&P 500 4,433.31 27.60 4,497.63 64.32
NYSE Volume 2.96B 3.36B
NYSE Advancers 2,140 2,416
NYSE Decliners 762 528
Nasdaq Volume 3.67B 4.76B
Nasdaq Advancers 2,624 3,114
Nasdaq Decliners 1,624 1,195
New Highs/Lows
08/22 08/23 08/24 08/25 08/28 08/29
--------------------------------------------
NYSE New Highs 37 43 32 25 50 65
NYSE New Lows 81 62 75 66 22 25
Nasdaq New Highs 43 57 46 33 69 69
Nasdaq New Lows 242 167 227 212 176 130
Stocks Covered Today Stock Splits
TRADER'S TIP: "Reverse Stock Splits"
In a final attempt to keep from getting dropped by a major stock exchange, many companies will resort to a "Reverse Stock Split" - the stock market's version of a Hail Mary football pass! Announcement of a reverse split often serves as a warning to sell or short the stock. Up to 75% of all stocks end up trading lower after the board of directors declares a reverse split.
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".
S&P 500 - 4497.63 August 29, 2023
52-Week High: 4607.07
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4610.78
Resistance 2: 4508.77
Resistance 1: 4457.24
Pivot: 4406.76
Support 1: 4355.23
Support 2: 4304.75
Support 3: 4202.74
NASDAQ Composite - 13943.76 August 29, 2023
52-Week High: 14446.55
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 14601.84
Resistance 2: 14092.74
Resistance 1: 13841.69
Pivot: 13583.64
Support 1: 13332.59
Support 2: 13074.54
Support 3: 12565.44
Dow Industrials - 34852.67 August 29, 2023
52-Week High: 35679.13
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 35687.85
Resistance 2: 35022.39
Resistance 1: 34684.64
Pivot: 34356.93
Support 1: 34019.18
Support 2: 33691.47
Support 3: 33026.01
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, August 28, 2023: 28-Aug None scheduled Tuesday, August 29, 2023: 29-Aug 9:00 am S&P Case-Shiller home price index 29-Aug 10:00 am Job openings 29-Aug 10:00 am Consumer confidence Wednesday, August 30, 2023: 30-Aug 8:15 am ADP employment 30-Aug 8:30 am GDP (revision) 30-Aug 8:30 am Advanced U.S. trade balance in goods 30-Aug 8:30 am Advanced retail inventories 30-Aug 8:30 am Advanced wholesale inventories 30-Aug 10:00 am Pending home sales Thursday, August 31, 2023: 31-Aug 8:30 am Initial jobless claims 31-Aug 8:30 am Personal income (nominal) 31-Aug 8:30 am Personal spending (nominal) 31-Aug 8:30 am PCE index 31-Aug 8:30 am Core PCE index 31-Aug 8:30 am PCE (year-over-year) 31-Aug 8:30 am Core PCE (year-over-year) 31-Aug 9:45 am Chicago Business Barometer 31-Aug 10:00 am Friday, September 01, 2023: 01-Sep 8:30 am U.S. nonfarm payroll 01-Sep 8:30 am U.S. unemployment rate 01-Sep 8:30 am U.S. hourly wages 01-Sep 8:30 am Hourly wages year over year 01-Sep 10:00 am ISM manufacturing 01-Sep 10:00 am Construction spending 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: "Where's the Beta?"
Sometimes we list a stock's Beta as "N/A" or Non Applicable. Beta is a measure of a stock's volatility measured against the average S&P stock over the last 5 years when available, and not less than 2.5 years. If a company has not existed for 2.5 years, it has not yet earned "the right" to have a Beta. If two companies with 100-year histories merge, the new company will not receive a Beta until the combined entity has existed for 2.5 years.
Stocks Covered in This Issue
BASIC MATERIALS SECTOR
Core Molding Technologies, Inc. (CMT: Basic Materials/Specialty Chemicals) - SQUEEZE PLAY. CMT shareholders know what it feels like to be squeezed. Tuesday's slim price range reveals uncertainty on both sides of the table, a situation which often resolves itself by either Bears or Bulls quickly gaining a clear advantage. The question is "who will win?" Near-term market action tell us whether we should sell short or we should buy shares instead. CMT closed Tuesday at 27.51. The plan is to enter in the right direction by placing a BUY trigger at 27.9 and a SELL short trigger at 26.06. Once CMT establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.84. After you've collected a 2.26 profit, tighten the stop to 0.92. Earnings Report Date: Nov 06, 2023. Beta: 1.84. Market-Cap: 236.67M. Not Optionable.
CONSUMER CYCLICAL SECTOR
Citi Trends, Inc. (CTRN: Consumer Cyclical/Apparel Retail) - BULLISH BOUNCE. Another bullish bouncer, CTRN appears ready to resume trading in an uptrend after recent selling forced the stock lower for several days. Tuesday's positive price action near Moving Average support says it's time to BUY shares if CTRN reaches our entry trigger set at 23.56. Also place a 1.77 trailing stop which can be narrowed to 0.89 when you reach a 1.7 profit. CTRN closed Tuesday at 23.15. Earnings Report Date: Nov 27, 2023. Beta: 2.35. Market-Cap: 192.444M. Optionable.
Build-A-Bear Workshop, Inc. (BBW: Consumer Cyclical/Specialty Retail) - SQUEEZE PLAY. Sometimes when Bulls and Bears face off in the market arena for a typical day-long battle, there is no clear winner. This is evident when the daily price range contracts to an unusually narrow state. BBW found itself in this condition on Tuesday when neither buyers or sellers were able to push ahead. This setup provides traders a chance to hop on board the next breakout - whether it's to the upside or down - with little risk of loss. To do this place a BUY order at 26.95 and a SELL short trigger at 25.13. When BBW moves outside of Tuesday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 1.82 trailing stop. After you've got a 1.3 profit, tighten the stop to 0.91. BBW closed at 26.40 on Tuesday. Earnings Report Date: Nov 27, 2023. Beta: 1.95. Market-Cap: 383.513M. Optionable.
FINANCIAL SERVICES SECTOR
Trupanion, Inc. (TRUP: Financial Services/Insurance-Specialty) - SQUEEZE PLAY. The ticker for Tuesday's session shows TRUP is now stuck in a tight price band. With the cyclical contraction and expansion nature of volatility in force, we should see a new period of price expansion in the days ahead. To improve the odds of catching the next directional wave, place a BUY trigger at 31.35 and a SELL short trigger at 29.12. When TRUP starts moving out of its narrow range, your order will be triggered. Once you're in the trade, cancel the opposing trigger and set a 2.23 trailing stop. Upon reaching a 4.8 profit, resize the stop to 1.12. Earnings Report Date: Nov 01, 2023. Beta: 1.69. Market-Cap: 1.266B. Optionable.
UTILITIES SECTOR
Constellation Energy Corporation (CEG: Utilities/Utilities-Renewable) - BULLISH BOUNCE. Positive price behavior near moving average support on Tuesday qualifies CEG for a Bullish Bounce setup. After several sessions of declining prices, CEG should soon begin trading in step with its established weekly uptrend. Tell your broker to BUY shares if CEG moves up to our entry trigger set at 107.56. You can also enter a 5.92 trailing stop, to be replaced with a 2.96 trailing stop when you obtain a 4.18 profit. CEG closed Tuesday at 105.54. Earnings Report Date: Nov 08, 2023. Beta: N/A. Market-Cap: 34.238B. 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.
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
Click Here To Unsubscribe