August 31, 2023 - The RightLine Report
Notes From The Editor
"Price Momentum" is a term often employed to refer to a trading approach centered on stocks that are exhibiting strong movement in one direction along with high trading volume. This strategy, commonly known as momentum trading, places limited emphasis, if any, on evaluating a company's fundamentals. Traders who adhere to this method are aware that stocks demonstrating clear trends are more likely to sustain their trajectory compared to stocks that lack such trends.
It's safe to say that many of us engage in momentum trading to some extent. Those who grasp the concept of price momentum and adhere to the adage "the trend is your friend" would likely concur. However, momentum trading is just one among several strategies at our disposal for generating profit.
As an illustration, just as the momentum play hinges on the sound trading principles of momentum and trend, the Squeeze Play strategy is rooted in the principle of volatility expansion. Volatility tends to alternate between phases of contraction and expansion in a repetitive manner. When the contraction phase ends and the expansion phase ensues, it's generally reasonable to anticipate that the expansion will persist long enough to capitalize on the resulting price movement.
Successful traders may have differing opinions on selecting the best stocks or choosing entry techniques. Nonetheless, most, if not all, prosperous traders adopt methodologies underpinned by effective risk management.
Regardless of the terminology used, a consistently lucrative trading approach is indeed a commendable one. Some investors might look down upon others, asserting that their method is the sole effective approach. This is an area where it's important to maintain an open-minded perspective. Holding biases against various types of investing and trading could lead us to overlook potentially profitable strategies that often derive from solid market principles.
Wishing you successful trading,
Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 08/31 08/31 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
PLCE 26.51 0.36 26.93 24.98 1.95/0.98 3
GNLX 24.18 -0.71 25.63 23.29 2.34/1.17 5
TWST 21.99 0.31 22.57 21.01 1.56/0.78 2.66
RYTM 26.01 -0.03 26.73 25 1.73/0.87 2.88
CSIQ 28.01 -0.28 27.14 1.96/0.98 1.86
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
Thursday saw a mixed performance in US equities as investors welcomed a moderate update on inflation, all the while preparing for a potentially impactful jobs report scheduled for Friday, just before the start of a three-day weekend. Among the indices, the Nasdaq Composite (COMP) stood out, edging up to reach a four-week high. Concurrently, Treasury yields, which had surged towards the end of July, receded to near three-week lows.
The month of August proved to be a bit of a roller coaster for the equities markets as investors grappled with a variety of factors including earnings reports, concerns regarding inflation, interest rates, and the resurgence of Treasury yields. At a certain point, the S&P 500 Index (SPX) had slipped by as much as 5.5% from its late July peak. However, it has since rebounded as certain potential sources of concern have evolved.
In the early hours of Thursday, government data revealed that the Personal Consumption Expenditure (PCE) index increased by 0.2% in July compared to the previous month, a pace consistent with June's rate and in line with analyst expectations. The core rate, which excludes food and energy prices, mirrored this increase. The PCE index serves as the Federal Reserve's favored gauge of inflation. Notably, this moderation occurred despite a notable rise in household spending during the same month.
This recent PCE data adds to a string of recent figures, including softer-than-anticipated job numbers and consumer confidence metrics earlier in the week. These numbers collectively suggest that the economy is cooling down after the remarkable inflation surge experienced last summer.
Investors are growing increasingly convinced that the Federal Reserve's campaign of interest rate hikes aimed at curbing inflation might be reaching its conclusion. The next item on the horizon is the Labor Department's upcoming nonfarm payrolls report for August, scheduled for release on Friday.
Aug 30, 2023 Aug 31, 2023
-------------------- --------------------
Dow 34,890.24 37.57 34,721.91 -168.33
Nasdaq 14,019.31 75.55 14,034.97 15.66
S&P 500 4,514.87 17.24 4,507.66 -7.21
NYSE Volume 3.07B 4B
NYSE Advancers 1,747 1,375
NYSE Decliners 1,120 1,526
Nasdaq Volume 4.38B 4.61B
Nasdaq Advancers 2,390 1,917
Nasdaq Decliners 1,919 2,428
New Highs/Lows
08/24 08/25 08/28 08/29 08/30 08/31
--------------------------------------------
NYSE New Highs 32 25 50 65 98 78
NYSE New Lows 75 66 22 25 18 20
Nasdaq New Highs 46 33 69 69 83 90
Nasdaq New Lows 227 212 176 130 81 104
Stocks Covered Today Stock Splits
TRADER'S TIP: "Positive Returns"
In one sense risk can be defined as the events or conditions that discourage traders - so much that they sometimes abandon strategies that have the potential to produce high returns. This is the main reason to use Risk Control. With a planned risk management strategy, situations and events that discourage others have little or no negative effect on you. This means while others are giving up, you remain focused on learning and earning, while protecting your capital. Over time, you become skillful at trading the markets and enjoy the positive returns others have abandoned.
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 - 4507.66 August 31, 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 - 14034.97 August 31, 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 - 34721.91 August 31, 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: "Make Strength Your Ally"
Only a few traders have the financial strength to move individual low- volume stock prices in the direction they prefer, and no one is capable of consistently moving the entire market. Since this is the case, the best thing we can do is learn to identify and align our positions with the dominant side. Regardless of whether we trade 5-minute bars or weekly charts, whenever the balance shifts within our chosen time frame, we should always realign with the side of strength.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
The Children's Place, Inc. (PLCE: Consumer Cyclical/Apparel Retail) - SQUEEZE PLAY. Traders are feeling the pressure as PLCE's intra-day price range on Thursday 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 26.93 and a SELL short entry at 24.98. PLCE's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.95 trailing stop. Tighten it to 0.98 after you get a 3 gain. PLCE closed Thursday at 26.51. Earnings Report Date: Nov 15, 2023. Beta: 2.18. Market-Cap: 330.76M. Optionable.
HEALTHCARE SECTOR
Genelux Corporation (GNLX: Healthcare/Biotechnology) - SQUEEZE PLAY. Thursday's trading session left GNLX in a very narrow price range after buyers and sellers fought to a near stalemate. Both sides are looking for some traction, and a breakout either way could provide a nice gain in the short term. To get aboard, set your BUY trigger at 25.63 and your SELL short trigger at 23.29. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 2.34 trailing stop. Once you have a 5 profit, reduce the stop to 1.17. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 633.103M. Not Optionable.
Twist Bioscience Corporation (TWST: Healthcare/Diagnostics & Research) - SQUEEZE PLAY. TWST 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 22.57 and a SELL short entry at 21.01. Once your trade is filled, enter a 1.56 trailing stop. Tighten it to 0.78 after a 2.66 gain. TWST closed on Thursday at 21.99. Earnings Report Date: Nov 16, 2023. Beta: 1.25. Market-Cap: 1.262B. Optionable.
Rhythm Pharmaceuticals, Inc. (RYTM: Healthcare/Biotechnology) - SQUEEZE PLAY. Thursday's narrow price range has created a potentially profitable setup in RYTM, 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 26.73 and a SELL short entry at 25. Let RYTM's price action determine your long or short entry. Once the order is filled, place a 1.73 trailing stop, and tighten it to 0.87 upon getting a 2.88 gain. RYTM closed Thursday at 26.01. Earnings Report Date: Nov 06, 2023. Beta: 1.69. Market-Cap: 1.533B. Optionable.
TECHNOLOGY SECTOR
Canadian Solar Inc. (CSIQ: Technology/Solar) - BEARISH U-TURN. The weight of CSIQ's declining weekly trend was lightened recently when shares began to move upward. However, like a swimmer against the tide CSIQ encountered strong resistance on Thursday. Price action indicates a likely return to the previous downtrend, so plan to short CSIQ upon reaching our SELL trigger at 27.14. Set a 1.96 trailing stop which can be tightened to 0.98 after you have a 1.86 gain. CSIQ ended the latest session at 28.01. Earnings Report Date: N/A. Beta: 1.37. Market-Cap: 1.811B. 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.
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