August 6, 2024 - The RightLine Report
Notes From The Editor
Trading stocks successfully is in many ways based on repetitive events. For example, the constant fluctuations in price open windows of opportunity. It is within this never ending movement - whether up or down - that traders find profits.
One way to access these windows is to anticipate support and resistance levels where prices are most likely to either reverse or accelerate. These critical levels provide reasonably safe entry points. This is because entering positions near support or resistance zones delivers a larger slice of the profit pie when the trade is favorable, and a quick small loss when it isn't.
We often emphasize that before entering a trade you should carefully consider exactly what you will do and when you will do it once you are in the position. This thoughtful consideration is to be done in advance of entering a trade, and in fact is much more important than finding the "perfect" stock or entry.
When evaluating your "what" and "when" course-of-action, always include an exit plan for three possible scenarios. The first is to be used if the trade moves favorably, the second is used if the trade moves unfavorably, and the third is used if it doesn't move at all. Remember that your exit plan is in place BEFORE entering a trade. Pay attention to details and be sure to include the specific exit price when planning your stop-losses.
Also, when using the trailing stop method to lock in gains make certain that you know in advance the exact point you will adjust your trailing stop. Again, it's very important that you write down your exit plan specifics BEFORE you get in.
Here's to profits,
Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 08/06 08/06 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
NEM 47.60 0.57 48.82 3.7/1.85 2.14
ETD 30.47 -0.18 31.27 2.07/1.04 1.6
SLGN 49.08 0.68 50.31 3.37/1.69 1.52
ALAR 20.26 -1.14 21.79 19.4 2.39/1.2 7.3
PLAB 21.06 0.00 21.85 20.04 1.81/0.91 1.66
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
After three consecutive days of declines of 1% or more in the S&P 500, US stock markets stabilized on Tuesday, with the S&P 500 posting a gain of over 1%. All eleven sectors of the S&P 500 ended the day higher, led by real estate and financials, each advancing more than 1.4%. Overseas, Japan's Nikkei rebounded strongly, gaining over 10% after a 12% drop on Monday. The Japanese yen, which had strengthened against the U.S. dollar in the previous four sessions, was slightly weaker on Tuesday. This recent yen volatility has likely been influenced by institutional investors unwinding yen-based loans due to Japan's low interest rates. In the bond market, yields ticked up following a sharp decline last week, with the 10-year Treasury yield closing around 3.89% and the 2-year yield rising to 3.98%.
Recent concerns about economic growth, triggered by a softer-than-expected manufacturing report and a weak jobs report, led to a risk-off sentiment in the markets. However, it's important not to overreact to a single month's data, as the broader macroeconomic and fundamental backdrop remains relatively positive for several reasons. With signs of a softening labor market, markets now anticipate a roughly 65% chance of a 50-basis-point (0.5%) Fed interest rate cut at the September meeting and are pricing in about 100 basis points (1%) of rate cuts for 2024. The bond market has already adjusted, with the 2-year Treasury yield decreasing from over 4.5% in late July to around 4% today. Lower borrowing costs should benefit interest-rate sensitive sectors like manufacturing and housing, supporting overall economic growth.
Recent volatility was partly due to disappointing earnings reports from major tech companies like Intel and Amazon. Intel fell short of earnings expectations and announced a dividend suspension, while Amazon exceeded expectations but issued cautious forward guidance. Despite these individual setbacks, S&P 500 earnings are on track to grow over 11% for the second quarter, surpassing the 7.8% growth forecast at the start of July and improving from the 5.8% growth in the first quarter. For the full year, S&P 500 earnings are expected to grow by over 10%, which should support equity markets.
Aug 5, 2024 Aug 6, 2024
-------------------- --------------------
Dow 38,703.27 -1,033.99 38,997.66 294.39
Nasdaq 16,200.08 -576.08 16,366.85 166.77
S&P 500 5,186.33 -160.23 5,240.03 53.70
NYSE Volume 5.34B 4.7B
NYSE Advancers 207 2,131
NYSE Decliners 2,658 675
Nasdaq Volume 6.86B 5.92B
Nasdaq Advancers 595 2,774
Nasdaq Decliners 3,751 1,445
New Highs/Lows
07/30 07/31 08/01 08/02 08/05 08/06
--------------------------------------------
NYSE New Highs 218 369 208 158 42 49
NYSE New Lows 25 21 53 116 221 54
Nasdaq New Highs 176 284 107 111 90 44
Nasdaq New Lows 140 98 178 330 594 144
Stocks Covered Today Stock Splits
TRADER'S TIP: "What If I Had A Crystal Ball?"
You don't need a crystal ball if you prepare for each trade with the "what if" approach. Always remember to ask these questions before entering any position - "What will I do if price moves in my favor?" And "What will I do if price moves against me?" Most traders and investors never consider these questions at all, so simply writing down specific answers will put you way ahead of the game.
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".
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, Aug. 5 9:45 am S&P final U.S. services PMI 10:00 am ISM services July TUESDAY, Aug. 6 8:30 am U.S. trade deficit WEDNESDAY, Aug. 7 3:00 pm Consumer credit THURSDAY, Aug. 8 8:30 am Initial jobless claims 10:00 am Wholesale inventories 3:00 pm Richmond Fed President Tom Barkin speaks FRIDAY, Aug. 9 None scheduled 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: "Using The Gap Open Tactic When Selling Short"
The Gap Open Tactic works as well when we sell short as it does when we buy a stock. If the stock gaps down at the open, wait for it to take out its low of the first half-hour then enter 0.25 below that point.
For more on the Gap Open Tactic go to: http://www.rightline.net/education/gapopen.html.
Stocks Covered in This Issue
BASIC MATERIALS SECTOR
Newmont Corporation (NEM: Basic Materials/Gold) - NEW HIGH DIP. NEM's latest 52-week high and subsequent pullback has resulted in one of our favorite trade opportunities. An encounter with support on Tuesday sets the stage for a low-risk entry. Now watch for NEM to move up to our BUY trigger at 48.82. Once triggered, place your market order. When the order is filled, follow with a trailing stop of 3.7. Tighten the stop to 1.85 when you have a 2.14-point gain. NEM last closed at 47.60. Earnings Report Date: Oct 24, 2024. Beta: 0.49. Market-Cap: 54.618B. Optionable.
CONSUMER CYCLICAL SECTOR
Ethan Allen Interiors Inc. (ETD: Consumer Cyclical/Furnishings, Fixtures & Appliances) - NEW HIGH DIP. You know a stock is performing well when it sets a new 52-week high. Such is the case with ETD, which recently entered new-high territory before dipping lower the past few sessions. A rebound from Moving Average support on Tuesday indicates ETD may be ready to resume its upward climb. Now sitting at 30.47, a move to 31.27 will trigger a BUY entry. Place a 2.07 trailing stop after entering and tighten it to 1.04 once you've gained 1.6. Earnings Report Date: Oct 23, 2024. Beta: 1.29. Market-Cap: 774.301M. Optionable.
Silgan Holdings Inc. (SLGN: Consumer Cyclical/Packaging & Containers) - NEW HIGH DIP. For a stock, the ladder to the top has rungs made up of 52-week highs. Each step up is followed by profit taking that usually causes a temporary pullback. The New High Dip setup uses these dips for safe entries into strong stocks. SLGN is now showing strength, so plan to BUY shares when this winner reaches our trigger at 50.31. Follow your position with a 3.37 trailing stop, which you can tighten to 1.69 when you have gained 1.52 points. SLGN last closed at 49.08. Earnings Report Date: Oct 23, 2024. Beta: 0.67. Market-Cap: 5.241B. Optionable.
TECHNOLOGY SECTOR
Alarum Technologies Ltd. (ALAR: Technology/Software - Infrastructure) - SQUEEZE PLAY. The ticker for Tuesday's session shows ALAR 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 21.79 and a SELL short trigger at 19.4. When ALAR 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 2.39 trailing stop. Upon reaching a 7.3 profit, resize the stop to 1.2. Earnings Report Date: Aug 30, 2024. Beta: 0.10. Market-Cap: 139.117M. Optionable.
Photronics, Inc. (PLAB: Technology/Semiconductor Equipment & Materials) - SQUEEZE PLAY. Tuesday's trading session left PLAB 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 21.85 and your SELL short trigger at 20.04. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.81 trailing stop. Once you have a 1.66 profit, reduce the stop to 0.91. Earnings Report Date: Sep 4, 2024. Beta: 1.38. Market-Cap: 1.334B. 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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