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December 12, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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One of the best aspects about being a market participant is that, for the most part, you make the rules. Trading can be geared to suit your own individual tastes in terms of risk-taking, goals, and timeframe. You make the call.
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"QUICK LIST"
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Stock 12/12 12/12 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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RYZB 25.06 1.43 26.02 3.57/1.79 3.34
XRAY 31.92 0.25 32.44 2.07/1.04 1.56
XMTR 24.31 -0.37 25.03 23.28 1.75/0.88 2.88
SMTC 20.48 -0.14 20.99 19.61 1.38/0.69 1.4
AEHR 25.24 -0.52 26.1 23.77 2.33/1.17 2.78
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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Stocks ended the Tuesday session higher after the release of the November consumer price index (CPI) inflation report, aligning closely with expectations. Market leadership exhibited a broad spectrum, with growth sectors like information technology performing well alongside cyclical sectors such as materials and financials. However, the energy sector notably underperformed, declining over 1% on the day and over 12% in the past three months due to lower oil prices. Treasury yields remained relatively steady, with the 10-year closing around 4.2% and the 2-year around 4.7%. Oracle shares faced a significant drop of over 12% following its earnings report, with market focus shifting to slower-than-expected cloud-services growth. Oil prices closed notably lower, falling below $69 per barrel and experiencing a decline of over 20% in the past three months. The November inflation report reflected figures largely in line with expectations. Headline CPI inflation dipped to 3.1% year-over-year, slightly below the prior reading of 3.2% and the lowest increase since June. Core CPI, excluding food and energy, held steady at 4% year-over-year, aligning with consensus expectations. On a month-over-month basis, core CPI edged up to 0.3%, compared to the prior month's 0.2%. The index for shelter was a significant contributor to the month-over-month rise, increasing by 0.4% and marking a 6.5% year-over-year increase. Despite a slow moderation in shelter prices, the year-over-year reading was the lowest since August 2022. Timely indicators of rents and home prices also showed declines from their 2022 peaks, indicating potential further moderation for shelter prices in the coming months. This inflation report is anticipated to support the Fed's decision to maintain policy rates at the upcoming FOMC meeting, with Chair Powell likely emphasizing the need for additional progress before declaring victory over inflation. Market attention is now directed toward the upcoming FOMC meeting, where the Fed's interest-rate announcement and the final Summary of Economic Projections (SEP) for 2023 will be released. In the September projections, the median expectation for the fed funds rate at the end of 2024 was 5.1%, implying a 0.25% rate cut from the current rate. However, futures markets have priced in approximately 100 basis points (1%) of rate cuts in 2024, potentially starting as early as March. While there's a credible case for the Fed to halt rate hikes, the prevailing view is that it will maintain current policy rates until later in 2024. Powell is expected to underscore that it would be premature to declare victory over inflation currently and reiterate the willingness to keep rates higher for an extended period to prevent financial conditions from getting ahead of anticipated easier monetary policy. Dec 11, 2023 Dec 12, 2023
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Dow 36,404.93 157.06 36,577.94 173.01
Nasdaq 14,432.49 28.51 14,533.40 100.91
S&P 500 4,622.44 18.07 4,643.70 21.26
NYSE Volume 333 3.89B
NYSE Advancers 607 1,303
NYSE Decliners 429 1,521
Nasdaq Volume 0 5.06B
Nasdaq Advancers 737 1,956
Nasdaq Decliners 514 2,444
New Highs/Lows
12/05 12/06 12/07 12/08 12/11 12/12
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NYSE New Highs 103 136 62 101 44 144
NYSE New Lows 19 28 35 19 10 45
Nasdaq New Highs 89 137 101 145 0 218
Nasdaq New Lows 74 107 122 108 1 188
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TRADER'S TIP:
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TRADER'S TIP: "Moving Average Rainbows" Place a variety of moving averages on your chart, and watch how they crossover each other and fan out into a "rainbow." The patterns that are drawn as the trend unfolds will indicate the strength of a reversal. Try a 13, 22, and 50 period Exponential Moving Average first to see how it works. This combination has shown to be effective under a wide range of conditions. Take notice of any similarities in the rainbows that have occurred historically, with particular attention to the way the rainbow takes shape after bouncing from support or resistance. This is a helpful tool to avoid head fakes, and determine true trend reversals in almost any time frame. **************************
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/ S&P 500 - 4643.70 December 12, 2023 52-Week High: 4643.93 52-Week Low: 3764.49 Daily Trend: UP Weekly trend: UP Weekly Pivot Levels Resistance 3: 4712.15 Resistance 2: 4649.42 Resistance 1: 4626.89 Pivot: 4586.70 Support 1: 4564.17 Support 2: 4523.97 Support 3: 4461.24 https://www.prorightline.com/rlch/121223SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, DEC. 11 None scheduled TUESDAY, DEC. 12 8:30 am Consumer price index Nov. 8:30 am Core CPI Nov. 8:30 am CPI year over year 8:30 am Core CPI year over year 2:00 pm Monthly U.S. federal budget Nov. WEDNESDAY, DEC. 13 8:30 am Producer price index Nov. 8"30 am Core PPI Nov. 8:30 am PPI year over year 8:30 am Core PPI year over year 2:00 pm FOMC interest-rate decision 2:30 pm Fed Chairman Jerome Powell press conference THURSDAY, DEC. 14 8:30 am Initial jobless claims Dec. 8:30 am Import price index Nov. 8:30 am Import price index minus fuel Nov. 8:30 am U.S. retail sales Nov. 8:30 am Retail sales minus autos Nov. 10:00 am Business inventories Nov. FRIDAY, DEC. 15 8:30 am Empire State manufacturing survey Dec. 9:15 am Industrial production Nov. 9:15 am Capacity utilization Nov. 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: "Charts Reveal Emotions" A stock price chart is an expression of trader and investor emotions, with fear and greed at opposite poles. Fear is generally a much stronger emotion than greed, and the reason that markets tend to go down faster than they go up. ***********************************
STOCKS COVERED IN THIS ISSUE
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HEALTHCARE SECTOR RayzeBio, Inc. (RYZB: Healthcare/Biotechnology) - BULLISH BOUNCE. Some people hear of a stock that's performing nicely and then buy it without any regard for timing the entry. This approach usually leaves money on the table, money that could just as well be added to profits. The Bullish Bounce setup provides a well timed entry and reduces exposure to risk by placing both the entry trigger and exit stop near the bottom of the bounce. We have an opportunity to use this approach with RYZB which met our setup criteria on Tuesday. The BUY trigger for this trade is at 26.02, and the trailing stop is sized at 3.57. Resize the stop to 1.79 upon collecting a 3.34 point gain. RYZB closed Tuesday at 25.06. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.502B. Optionable. DENTSPLY SIRONA Inc. (XRAY: Healthcare/Medical Instruments & Supplies) - BULLISH BOUNCE. Entering a position in the early stages of a bounce is great way to get on board an up-trending stock. The "Bullish Bounce" setup identifies probable candidates by evaluating the trading action that takes place near support levels. XRAY's behavior on Tuesday could very well be a sign that a new bounce is underway. Place a BUY trigger at 32.44. In the event your trigger is met, also place a 2.07 trailing stop which can be trimmed down to 1.04 when you have a 1.56 profit. XRAY closed Tuesday at 31.92. Earnings Report Date: Feb 26, 2024. Beta: 0.98. Market-Cap: 6.763B. Optionable. INDUSTRIALS SECTOR Xometry, Inc. (XMTR: Industrials/Specialty Industrial Machinery) - SQUEEZE PLAY. XMTR 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 25.03 and a SELL short entry at 23.28. Once your trade is filled, enter a 1.75 trailing stop. Tighten it to 0.88 after a 2.88 gain. XMTR closed on Tuesday at 24.31. Earnings Report Date: Feb 28, 2024. Beta: 0.77. Market-Cap: 1.169B. Optionable. TECHNOLOGY SECTOR Semtech Corporation (SMTC: Technology/Semiconductors) - SQUEEZE PLAY. The ticker for Tuesday's session shows SMTC 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 20.99 and a SELL short trigger at 19.61. When SMTC 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 1.38 trailing stop. Upon reaching a 1.4 profit, resize the stop to 0.69. Earnings Report Date: N/A. Beta: 1.72. Market-Cap: 1.317B. Optionable. Aehr Test Systems (AEHR: Technology/Semiconductor Equipment & Materials) - SQUEEZE PLAY. Tuesday's trading session left AEHR 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 26.1 and your SELL short trigger at 23.77. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 2.33 trailing stop. Once you have a 2.78 profit, reduce the stop to 1.17. Earnings Report Date: Jan 03, 2024. Beta: 1.99. Market-Cap: 726.894M. 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/ ======================================================================
Best of luck and have a Great Week!
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