Notes From The Editor

Writer Sydney Harris says, "An idealist believes the short run doesn't count. A cynic believes the long run doesn't matter. A realist believes that what is done or left undone in the short run determines the long run."

Mr. Harris must have spent some time observing the stock market, for his statement just about sums up the different personality types on Wall Street. Hope springs eternal and so does cynicism, yet there doesn't seem to be an over-supply of realism.

Most investors I've met prefer wishful thinking to reality, and I know quite a few traders who appear to be motivated mainly by skepticism. But realistic market players are a unique group, and undoubtedly the most successful.

Success in the stock market calls for more than just good trading tactics - it requires a winning attitude. This isn't the same thing as blind optimism or overzealous cheerleading. Winners consistently approach the market with realistic expectations. Once adopted, this attitude instills confidence in your trading abilities. You know that the market can deliver windfall profits, but you don't let excessive exhuberance keep you from carefully controlling risk.

You also know that "losing" is a regular aspect of trading the markets, yet you don't let fear and anxiety dominate your feelings. You successfully leverage your trades when you are convinced there is sufficient evidence to do it.

At the heart of your winning attitude is awareness. Not just of the stock market and how it operates, but awareness that courage is a choice you can always make, no matter how challenged you may feel at the moment.

Trading successfully isn't rocket science, though it does take commitment. Just as you would review your trades and learn from them, take the time to review your attitudes, and adjust them to reflect a realistic winning attitude.

Attitude management is an acquired skill, just like every other aspect of trading and investing. And remember, a wish seldom changes anything, but a decision changes everything. I've found that when I decide I want to do something, I usually do it.

Trade well!

~ Thomas Sutton, Editor

Note: The markets will be closed on Monday December 25th in honor of Christmas. RightLine will be closed on Friday the 22nd through Monday the 25th, Christmas Day. The next Report will be published on Tuesday December 26th. From all of us at RightLine, we wish you a very Merry Christmas!

Quick List

    
Stock     12/21     12/21      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

AMX       18.70      0.32     19.04                  1.16/0.58       0.7
SRDX      36.32      0.72     37.41                  2.73/1.37      2.26
VRDN      21.37      0.94     21.76     20.33        1.43/0.72       1.9
DNLI      21.56      0.38      22.1     20.37        1.73/0.87      1.72
SMTC      22.25      1.25     22.55     20.91        1.64/0.82      1.64

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.

Market Summary

Following a significant decline on Wednesday, stocks resumed their upward trajectory on Thursday, with the S&P 500 concluding the day with a gain of over 0.9%. Since its recent lows on October 27, the S&P 500 is on track for a 15% increase.

A noteworthy contributor to the recent surge in both stocks and bonds has been the substantial decrease in Treasury yields. The 10-year Treasury yield, which reached its peak in mid-October at around 5%, has since dropped by over 1% to approximately 3.89%. This decline in yields mirrors the more favorable inflation trends observed in recent months, coupled with the Federal Reserve's indications of a potential shift towards rate cuts in 2024. The decline in bond yields has bolstered a comprehensive stock rally, encompassing both growth and value sectors, along with an uptick in investment-grade bonds, which have seen a nearly 10% increase since mid-October.

Inflation metrics persist in indicating a downward trend. Investors absorbed updated third-quarter GDP data on Thursday, encompassing revisions to growth, consumption, and inflation metrics. The GDP growth for the third quarter was revised lower to an annualized rate of 4.9%, down from the prior reading of 5.2%, and consumption also experienced a decrease from 3.6% to 3.1%. Notably, the GDP price index was revised from 3.6% to 3.3%, and the core index shifted from 2.3% to 2.0%. These figures align with other inflation data, including CPI and PPI inflation, indicating an ongoing moderation in inflation across both goods and services. In the view of many analysts, inflation is likely to continue moderating, driven in part by an ongoing relaxation in shelter and rent inflation, as well as a slowdown in wage gains, supporting lower services inflation.

Looking ahead to 2024, investors, already enjoying substantial market gains, are likely contemplating portfolio positioning for the upcoming year. Two noteworthy themes for 2024 emerge. First, the potential diminishing status of cash as king, with a pause in the unprecedented flows into CDs and money market funds seen in 2023, providing opportunities for core asset classes. Second, the possibility that lagging asset classes of 2023, such as cyclical and value sectors, as well as mid-cap and small-cap stocks, may experience a resurgence in leadership in 2024. Given the trends of improved inflation, a potential Federal Reserve pivot to rate cuts, and lower bond yields, opportunities appear to be emerging in both stocks and bonds in 2024.

                        Dec 20, 2023           Dec 21, 2023   
                  --------------------   --------------------
Dow                 37,082.00  -475.92     37,404.35   322.35
Nasdaq              14,777.94  -225.28     14,963.87   185.92
S&P 500              4,698.35   -70.02      4,746.75    48.40

NYSE Volume                      4.21B                  3.45B
NYSE Advancers                     658                  2,295
NYSE Decliners                   2,198                    550

Nasdaq Volume                    6.32B                  5.49B
Nasdaq Advancers                 1,302                  3,167
Nasdaq Decliners                 3,015                  1,125

                                 New Highs/Lows

                   12/14  12/15  12/18  12/19  12/20  12/21
                 --------------------------------------------
NYSE New Highs       379    196    134    235    224     92
NYSE New Lows         10     13     13     14     21     20
Nasdaq New Highs     465    251    119    377    353    124
Nasdaq New Lows       83    108     62    105    114     87
   

TRADER'S TIP: "Selling & Shorting"

"It is one thing to take profits on a long position but quite another to go short. Shorting requires a much higher level of proof that the trend has turned. When your indicators tell you that a stock is too high, there is nothing wrong with taking profits. You need to set much more exacting parameters for shorting, making sure that a stock has in fact turned down, permitting you to short. Use the same approach at the bottoms - decide in advance what price action will confirm an upside trend reversal, permitting you to buy."

~ Alex Elder, Trader and Author

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 - 4746.75 December 21, 2023

52-Week High: 4768.69
52-Week Low: 3764.49
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3279.69
Resistance 2: 3219.35
Resistance 1: 1609.67
Pivot: 3159.01
Support 1: 1549.33
Support 2: 3098.67
Support 3: 3038.33

NASDAQ Composite - 14963.87 December 21, 2023

52-Week High: 15003.81
52-Week Low: 10207.47
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 10279.77
Resistance 2: 10113.43
Resistance 1: 5056.71
Pivot: 9947.09
Support 1: 4890.37
Support 2: 9780.75
Support 3: 9614.41
        
Dow Industrials - 37404.35 December 21, 2023

52-Week High: 37562.83
52-Week Low: 31429.82
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 25768.18
Resistance 2: 25332.40
Resistance 1: 12666.20
Pivot: 24896.62
Support 1: 12230.42
Support 2: 24460.84
Support 3: 24025.06
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

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

TRADER'S TIP: "Drawing Trend Lines - The Basics"

Every trader and investor should learn to recognize and identify price trends within their chosen time frame. This is a relatively simple - yet very valuable - skill used to confirm the direction that an individual stock or market is moving. While overall price movement on a chart may seem obvious to some, even market strategists at major brokerages and trading institutions use trend lines to help determine exactly when a current trend is in play.

In a nutshell, a trend line is simply a straight line that connects a series of highs or lows on a price chart. Learning to draw trend lines isn't complicated at all, and most charting software includes a trend line tool that makes learning this skill even easier. Look at a price chart in any time frame and notice the high points across the top. Then imagine that the highs are peaks of a mountain range that you are viewing from a distance. Starting on the left side, draw a straight line across the top of the peaks so that only the two highest peaks are connected.

Is the line moving up? Or is it moving down? If the line is up, then the mountain peaks are in an up-trend from left to right. If the line is headed down, then the trend is down. As with most skills, drawing a trend line isn't always so simple. Some traders prefer to use opening or closing prices instead of highs, while others will use any of these to find the best "fit." Regardless of your preferred method, taking the first steps towards learning to recognize a trend isn't difficult at all.

Stocks Covered in This Issue

COMMUNICATION SERVICES SECTOR

America Movil, (AMX: Communication Services/Telecom Services) - BULLISH BOUNCE. If you are looking for another bouncer with profits in mind, AMX fits the bill. Shares have been in retreat-mode lately, but now this stock is in the process of bouncing from support. Currently priced at 18.70, plan to buy shares at 19.04 and use a 1.16 trailing stop. Tighten the stop to 0.58 on a 0.7 gain. Earnings Report Date: N/A. Beta: 0.32. Market-Cap: 58.47B. Optionable.

HEALTHCARE SECTOR

Surmodics, Inc. (SRDX: Healthcare/Medical Devices) - BULLISH BOUNCE. SRDX has charted an upward weekly trend until recently when sellers showed up to push prices lower. On Thursday the selling ran into solid support. A potential bounce up from this level should attract buyers and likely return SRDX to the previously established uptrend. The Bullish Bounce set-up is the basis for our BUY entry, so be ready to go long on a rise to our trigger at 37.41. Set a trailing stop of 2.73, tightening to 1.37 on a 2.26 profit. SRDX closed at 36.32 on Thursday. Earnings Report Date: Feb 05, 2024. Beta: 1.15. Market-Cap: 516.972M. Optionable.

Viridian Therapeutics, Inc. (VRDN: Healthcare/Biotechnology) - SQUEEZE PLAY. The ticker for Thursday's session shows VRDN 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 21.76 and a SELL short trigger at 20.33. When VRDN 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 1.43 trailing stop. Upon reaching a 1.9 profit, resize the stop to 0.72. Earnings Report Date: Mar 06, 2024. Beta: 1.05. Market-Cap: 1.124B. Optionable.

Denali Therapeutics Inc. (DNLI: Healthcare/Biotechnology) - SQUEEZE PLAY. Thursday's trading session left DNLI 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 22.1 and your SELL short trigger at 20.37. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.73 trailing stop. Once you have a 1.72 profit, reduce the stop to 0.87. Earnings Report Date: Feb 26, 2024. Beta: 1.11. Market-Cap: 2.98B. Optionable.

TECHNOLOGY SECTOR

Semtech Corporation (SMTC: Technology/Semiconductors) - SQUEEZE PLAY. SMTC 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 22.55 and a SELL short entry at 20.91. Once your trade is filled, enter a 1.64 trailing stop. Tighten it to 0.82 after a 1.64 gain. SMTC closed on Thursday at 22.25. Earnings Report Date: N/A. Beta: 1.72. Market-Cap: 1.43B. 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.

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

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