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December 16, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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Getting Started: Trading the Indexes (Part II)
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"QUICK LIST"
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Stock 12/15 12/15 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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FG 44.24 -1.71 46.72 3.97/1.99 3.1
RILY 20.45 0.01 21.54 19.01 2.53/1.27 5.12
IRON 58.72 0.47 59.91 4.85/2.43 4.86
ANTX 20.70 0.27 21.26 19.42 1.84/0.92 2.86
CHKP 146.02 1.22 148.45 7.85/3.93 4.52
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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American equities showed minimal changes on Friday, concluding a week marked by solid gains and extending the S&P 500's winning streak to seven weeks. Notably, small-cap stocks stood out, surging more than 5% for the week and approximately 11% in December. This leadership is being fueled by an increasingly optimistic economic outlook, with markets anticipating less restrictive Federal Reserve policies. Friday's sector performance mirrored a balanced sentiment, with varied leadership between cyclical and defensive industries. While interest rates remained stable on the day, there was a decline throughout the week, pushing the 10-year yield as low as 3.9%, its lowest since July. Recent manufacturing reports present a mixed picture of the economy. Market enthusiasm centers around the idea of a soft landing, although the path forward may involve some fluctuations. November's industrial production, while falling short of consensus estimates, marked an improvement from the previous month. Manufacturing output increased, indicating growth for the fourth time in the last five months after declines during the summer. This aligns with the concept of a "rolling recession," where different sectors of the economy contract and recover at desynchronized intervals. Despite some slowdown in manufacturing and capital investment over the past year, signs of improvement in these areas are encouraging, potentially offsetting a moderation in consumer spending growth in the first half of 2024 and leading to a more gradual overall GDP moderation. Consumer behavior holds significant weight in the economic narrative for 2024. Upcoming holiday spending will serve as a crucial indicator of consumer health. In this context, the recent quarterly results from Costco, beating earnings estimates and highlighting strong sales, particularly in discretionary categories like televisions and appliances, provide positive signals. The trajectory of the economy in the coming year hinges on household spending. While some deceleration in GDP growth is expected as consumers adjust to slower wage growth, diminished savings, and increased borrowing costs, the robust labor market is anticipated to provide essential support to prevent a significant downturn. Friday On The Week
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Dow 37,305.16 56.81 +1057.29 2.92%
Nasdaq 14,813.92 52.36 +409.95 2.85%
S&P 500 4,719.19 -0.36 +114.82 2.49%
NYSE Volume 8.52B
NYSE Advancers 908
NYSE Decliners 1,950
Nasdaq Volume 8.58B
Nasdaq Advancers 1,708
Nasdaq Decliners 2,599
New Highs/Lows
12/08 12/11 12/12 12/13 12/14 12/15
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NYSE New Highs 101 44 144 261 379 196
NYSE New Lows 19 10 45 26 10 13
Nasdaq New Highs 145 0 218 353 465 251
Nasdaq New Lows 108 1 188 171 83 108
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TRADER'S TIP:
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TRADER'S TIP: "That Extra Something . . ." The ability to relax emotionally and mentally when trading is usually associated with bull markets. And while we all love bullish market conditions, it's best to connect our positive emotions about trading to something more reliable than just upward market movement. Knowing that we can engage the stock market profitably in any environment provides that "something." Belief, confidence, or whatever you want call it, the conviction that comes from experience and preparation is far more powerful than any bull. Why? Because bull markets don't last forever. What they give, the bear usually takes back - both in dollars and peace of mind. However, bears can't take away your money OR your confidence when it is based on sound trading principles and a realistic belief in your ability to be successful. This is true regardless of the current market trend. **************************
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 - 4719.19 December 15, 2023 52-Week High: 4738.57 52-Week Low: 3764.49 Daily Trend: UP Weekly trend: UP Weekly Pivot Levels Resistance 3: 4974.07 Resistance 2: 4828.89 Resistance 1: 4774.04 Pivot: 4683.71 Support 1: 4628.86 Support 2: 4538.53 Support 3: 4393.35 https://www.prorightline.com/rlch/121523SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, DEC. 18 10:00 am Home builder confidence index Dec. TUESDAY, DEC. 19 8:30 am Housing starts Nov. 8:30 am Building permits Nov. WEDNESDAY, DEC. 20 8:30 am U.S. current account Q3 10:00 am Existing home sales Nov. THURSDAY, DEC. 21 8:30 am Initial jobless claims Dec. 8:30 am GDP (revision) Q3 8:30 am Philadelphia Fed manufacturing survey Dec. 10:00 am U.S. leading economic indicators Nov. FRIDAY, DEC. 22 8:30 am Durable-goods orders Nov. 8:30 am Durable-goods minus transportation Nov. 8:30 am Personal income Nov. 8:30 am Personal spending Nov. 8:30 am PCE index] Nov. 8:30 am Core PCE index Nov. 8:30 am PCE (year-over-year) 8:30 am Core PCE (year-over-year) 10:00 am New home sales Nov. 10:00 am Consumer sentiment (final) Dec. 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: "90% Winners = Big Losses" Most people want to be right on every trade or investment. Because of this "need to be right," traders tend to choose trading systems with the highest level of wins vs. losses. Unfortunately, the losses in these systems are often quite large and produce negative results overall. ***********************************
STOCKS COVERED IN THIS ISSUE
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FINANCIAL SERVICES SECTOR F&G Annuities & Life, Inc. (FG: Financial Services/Insurance - Life) - NEW HIGH DIP. The best stocks move steadily higher in a two-steps-forward and one-step-back series of repetitive new highs. FG reached a new 52-week high a few days ago and has since retreated into Friday's encounter with moving average support. A bounce appears to be in the making, so prepare to pick up a few shares should FG move up to our BUY trigger at 46.72. Post a 3.97 trailing stop which should be tightened to 1.99 after gaining 3.1. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 5.552B. Optionable. B. Riley Financial, Inc. (RILY: Financial Services/Financial Conglomerates) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in RILY's narrowest trading range of the past seven sessions. With neither group able to take complete control on Friday, the stock's short term destiny is up for grabs. You can capitalize on this unusually tight condition by placing both a BUY order at 21.54 and a SELL order at 19.01. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.53 trailing stop. Tighten the stop to 1.27 once you have a 5.12 gain. RILY closed Friday at 20.45. Earnings Report Date: Feb 20, 2024. Beta: 1.62. Market-Cap: 660.913M. Optionable. HEALTHCARE SECTOR Disc Medicine, Inc. (IRON: Healthcare/Biotechnology) - NEW HIGH DIP. The price momentum required to set a new high doesn't usually disappear over night. Traders can capitalize on this fact by entering positions when stocks making new highs pull back to a support level, then follow the pullback with signs of bouncing higher. IRON meets the setup criteria, so get ready to BUY into this outstanding performer at 59.91. Enter a trailing stop of 4.85 when your order is filled, then tighten it to 2.43 on a 4.86 gain. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.439B. Optionable. AN2 Therapeutics, Inc. (ANTX: Healthcare/Biotechnology) - SQUEEZE PLAY. Trader indecision has put ANTX squarely in the center of a Bull versus Bear standoff. This tight spot should soon give way to a clear winner in the short-term, and we want to be in position for the move. To do that we've set a BUY entry at 21.26 and a SELL short entry at 19.42. Now it's up to ANTX to show us which entry will be filled. Once the trade is underway place a 1.84 trailing stop, which can be tightened to 0.92 after you achieve a 2.86 profit. ANTX closed on Friday at 20.70. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 615.647M. Not Optionable. TECHNOLOGY SECTOR Check Point Software Technologies Ltd. (CHKP: Technology/Software - Infrastructure) - 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. CHKP is now showing strength, so plan to BUY shares when this winner reaches our trigger at 148.45. Follow your position with a 7.85 trailing stop, which you can tighten to 3.93 when you have gained 4.52 points. CHKP last closed at 146.02. Earnings Report Date: Feb 12, 2024. Beta: N/A. Market-Cap: 17.554B. 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/ **********************************
TRADER'S CORNER
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"15 Ways To Trade Moving Averages" Reading a chart without moving averages is like baking a cake without butter or eggs. Those simple lines above or below current price tell many tales, and their uses in market interpretation are unparalleled. Simply stated, they're the most valuable indicators in technical analysis. You can trade without moving averages, but you do so at your own risk. After all, these lines represent median levels where your competition will make important buying or selling decisions. So it makes sense to predict what they're going to do before the fact, rather than afterward. Here are 15 ways you can manage opportunity through moving averages: 1. The 20-day moving average commonly marks the short-term trend, the 50-day moving average the intermediate trend, and the 200-day moving average the long-term trend of the market. 2. These three settings represent natural boundaries for price pullbacks. Two forces empower those averages: First, they define levels where profit- and loss-taking should ebb following strong price movement. Second, their common recognition draws a crowd that perpetrates a self-fulfilling event whenever price approaches. 3. Moving averages generate false signals during range-bound markets because they're trend-following indicators that measure upward or downward momentum. They lose their power in any environment that shows a slow rate of price change. 4. The characteristic of moving averages changes as they flatten and roll over. The turn of an average toward horizontal signifies a loss of momentum for that time frame. This increases the odds that price will cross the average with relative ease. When a set of averages flatline and draw close to one another, price often swivels back and forth across the axis in a noisy pattern. 5. Moving averages emit continuous signals because they're plotted right on top of price. Their relative correlation with price development changes with each bar. They also exhibit active convergence-divergence relationships with all other forms of support and resistance. 6. Use exponential moving averages, or EMAs, for longer time frames but shift down to simple moving averages, or SMAs, for shorter ones. EMAs apply more weight to recent price change, while SMAs view each data point equally. 7. Short-term SMAs let traders spy on other market participants. The public uses simple moving average settings because they don't understand EMAs. Good intraday signals rely more on how the competition thinks than the technicals of the moment. 8. Place five-, eight- and 13-bar SMAs on intraday charts to measure short-term trend strength. In strong moves, the averages will line up and point in the same direction. But they flip over one at a time at highs and lows, until price finally surges through in the other direction. 9. Price location in relation to the 200-day moving average determines Long-term investor psychology. Bulls live above the 200-day moving average, while bears live below it. Sellers eat up rallies below this line in the sand, while buyers come to the rescue above it. 10. When the 50-day moving average pierces the 200-day moving average in either direction, it predicts a substantial shift in buying and selling behavior. The 50-day moving average rising above the 200-day moving average is called a Golden Cross, while the bearish piercing is called a Death Cross. 11. It's harder for price to break above a declining moving average than a rising moving average. Conversely, it's harder for price to drop through a rising moving average than a declining moving average. 12. Moving averages set to different time frames reveal trend velocity through their relationships with each other. Measure this with a classic Moving Average-Convergence-Divergence (MACD) indicator, or apply multiple averages to your charts and watch how they spread or contract over different time. 13. Place a 60-day volume moving average across green and red volume histograms in the lower chart pane to identify when specific sessions draw unexpected interest. The slope of the average also identifies hidden buying and selling pressure. 14. Don't use long-term moving averages to make short-term predictions because they force important data to lag current events. A trend may already be mature and nearing its end by the time a specific moving average issues a buy or sell signal. 15. Support and resistance mechanics develop between moving averages as they flip and roll. Look for one average to bounce on the other average, rather than break through it immediately. After a crossover finally takes place, that level becomes support or resistance for future price movement. ************** This special guest article was written by Alan Farley, author of "The Master Swing Trader." ======================================================================
Best of luck and have a Great Week!
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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 To Unsubscribe, send an email to cs@prorightline.com or call 1-312-248-4241. |