Notes From The Editor

The Market: Embracing Uncertainty

While many traders seek analysts' directional forecasts and opinionated market commentary, seasoned professionals often avoid fortune-telling. Instead, they let the market determine their course of action, whether to go long or short.

A strategic approach involves setting up trades ready to be triggered in both upward and downward markets. In this method, long trades activate when the market rises, and short trades trigger when it falls. This "two-way" approach stands in stark contrast to the common investor practice of relying on predictions about market movements. Importantly, it proves more effective than the "one-way" method, where all decisions hinge on forecasts.

As humans, we possess a natural curiosity about the future, often seeking authoritative figures for predictions. In the realm of stocks, the habit of asking someone to forecast market directions is widespread. However, a more effective approach might involve searching for solid trade setups in both directions and letting the market reveal its intentions.

Trade wisely,

Thomas Sutton, Editor

Quick List

    
Stock     12/07     12/07      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

MNSO      21.00     -0.13     21.66      20.1        1.56/0.78      2.74
PLCE      22.69      0.20     23.75     21.89        1.86/0.93      3.44
BYON      22.81      0.10     23.62     21.65        1.97/0.99      2.02
HOLI      22.79      0.23     23.13                  1.29/0.65      0.88
CSIQ      22.06      0.26     22.81     21.07        1.74/0.87      2.16

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

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Market Summary

Following a modest decline on Wednesday, stocks rebounded on Thursday, breaking a three-day losing streak for the S&P 500. Notably, the communication services sector stood out, surging over 3% driven by enthusiasm around Alphabet's announcement of its new artificial intelligence model. Both Argus and Bank of America provided US stock market gain forecasts for 2024. Argus envisions potential 8-12% appreciation in the S&P 500 next year, while BofA has a specific $5,000 target for year-end 2024, anticipating broader leadership than the top-heavy gains seen this year. BofA also expects index gains while projecting the average stock to remain about 13% below its post-COVID highs.

By mid-morning, indices were testing resistance levels, and breadth favored advancers by over 2:1. Health Care was the sole S&P sector ETF in the red, while Communications and Consumer Discretionary led on the upside.

In notable data on Thursday, the Fannie Mae Home Purchase Sentiment Index dipped by 0.6 points in November, with only 14% of consumers perceiving now as a good time to buy a home, marking a survey low. The AAII weekly survey showed a decline in bulls from 48.8% to 47.3%, while bears rose from 19.6% to 27.4%, suggesting more investors anticipate Fed cuts sooner rather than later.

Building on BofA's comments, they highlighted that even if the top seven stocks from 2023 flatline and the forward multiples on the rest of the market also flatline at an average 15x, BofA's EPS growth forecast would still result in an S&P 500 index value of $5,100. Also, gasoline prices in the US have dipped to a national average of $3.20 per gallon, the lowest level of the year, potentially putting money in consumers' pockets for holiday spending.

Heading into the final hour of trading, US equities slightly retreated from their daily highs. The absence of bad news seemed to be perceived as good news, and even a bit of bad news was viewed positively by Fed watchers. Breadth remained better than 2:1 in favor of advancers. From a sector perspective, Energy (XLE, -0.84%) and Utilities (XLU, -0.05%) joined Health Care (XLV, -0.07%) in negative territory. Communications (XLC, +2.15%), Technology (XLK, +1.24%), and Consumer Discretionary (XLY, +0.68%) led the gainers. Large caps outperformed small caps, with SPY +0.78% versus IWM +0.55%.

                        Dec 6, 2023            Dec 7, 2023    
                  --------------------   --------------------
Dow                 36,054.43   -70.13     36,117.38    62.95
Nasdaq              14,146.71   -83.20     14,339.99   193.28
S&P 500              4,549.34   -17.84      4,585.59    36.25

NYSE Volume                      4.26B                  3.82B
NYSE Advancers                   1,396                  1,909
NYSE Decliners                   1,448                    949

Nasdaq Volume                    5.18B                  5.71B
Nasdaq Advancers                 2,026                  2,637
Nasdaq Decliners                 2,249                  1,651

                                 New Highs/Lows

                   11/30  12/01  12/04  12/05  12/06  12/07
                 --------------------------------------------
NYSE New Highs       118    179    157    103    136     62
NYSE New Lows         24     16     15     19     28     35
Nasdaq New Highs      96    168    166     89    137    101
Nasdaq New Lows      127     99     78     74    107    122
   

TRADER'S TIP: "Whipping the Sea"

"You have to analyze your behavior in the market instead of acting out your feelings. We get angry at the market, we become afraid of it, we develop silly superstitions. All the while, the market keeps cycling through its rallies and declines like an ocean going through its storms and calm periods. Mark Douglas writes in The Disciplined Trader that in the market, "There is no beginning, middle, or end - only what you create in your own mind. Rarely do any of us grow up learning to operate in an arena that allows for complete freedom of creative expression, with no external structure to restrict it in any way."

We try to cajole or manipulate the market, acting like the ancient emperor Xerxes, who ordered his soldiers to horsewhip the sea for sinking his fleet. Most of us are not aware how manipulative we are, how we bargain, how we act out our feelings in the market. Most of us consider ourselves the center of the universe and expect every person or group to be either good or bad to us. This does not work in the market which is completely impersonal."

~ Dr. Alex Elder, trader and author of "Trading For A Living"

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 - 4585.59 December 7, 2023

52-Week High: 4607.07
52-Week Low: 3764.49
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3134.64
Resistance 2: 3090.22
Resistance 1: 1545.11
Pivot: 3045.80
Support 1: 1500.69
Support 2: 3001.38
Support 3: 2956.96

NASDAQ Composite - 14339.99 December 7, 2023

52-Week High: 14446.55
52-Week Low: 10207.47
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 10059.72
Resistance 2: 9765.13
Resistance 1: 4882.56
Pivot: 9470.54
Support 1: 4587.97
Support 2: 9175.95
Support 3: 8881.36
        
Dow Industrials - 36117.38 December 7, 2023

52-Week High: 36292.58
52-Week Low: 31429.82
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 24664.60
Resistance 2: 24382.87
Resistance 1: 12191.43
Pivot: 24101.14
Support 1: 11909.70
Support 2: 23819.41
Support 3: 23537.68
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

MONDAY, DEC. 4					
10:00 am	Factory orders			


TUESDAY, Dec. 5					
9:45 am	S&P U.S. services PMI	
10:00 am	ISM services	Nov.		
10:00 am	Job openings	Oct.
		
WEDNESDAY, Dec. 6					
8:15 am	ADP employment	
8:30 am	U.S. productivity (revision)	Q3		
8:30 am	U.S. trade deficit	Oct.		

THURSDAY, Dec. 7					
8:30 am	Initial jobless claims	12/2		
10:00 am	Wholesale inventories	Oct.		
3:00 pm	Consumer credit	Oct.		

FRIDAY, Dec. 8					
10:00 am	Consumer sentiment (prelim)	Dec.		
8:30 am	U.S. employment report	Nov..		
8:30 am	U.S. unemployment rate	Nov.		
8:30 am	U.S. hourly wages	Nov.		
8:30 am	Hourly wages year over year	
		
For a chart of typical Up or Down market reactions to specific major US economic reports 
go to:  Economic Indicator Effects

TRADER'S TIP: "Trading Discipline... What Exactly is it?"

In trading, discipline simply means that we always perform a basic group of essential actions every time we put on a trade - no exceptions. The reason we do this? Because research and experience has taught us that certain tactics or "rules" give us a statistical edge over the market. When we consistently use these simple rules over an extended period of time, we are much more successful than when we don't use them, or only use them when we "remember" to.

Stocks Covered in This Issue

CONSUMER CYCLICAL SECTOR

MINISO Group Holding Limited (MNSO: Consumer Cyclical/Specialty Retail) - SQUEEZE PLAY. Trader indecision has put MNSO 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 21.66 and a SELL short entry at 20.1. Now it's up to MNSO to show us which entry will be filled. Once the trade is underway place a 1.56 trailing stop, which can be tightened to 0.78 after you achieve a 2.74 profit. MNSO closed on Thursday at 21.00. Earnings Report Date: Feb 26, 2024. Beta: 0.33. Market-Cap: 6.634B. Optionable.

The Children's Place, Inc. (PLCE: Consumer Cyclical/Apparel Retail) - SQUEEZE PLAY. In certain stocks a tightly constricted price range is a sign that neither bulls nor bears are confident of winning in the near term. This often means that the side that gives up first causes a quick move in the opposite direction. In these fear dominated skirmishes, opposing traders always benefit from the retreat. In the Squeeze Play setup you can actually play both sides of the inevitable surge. PLCE traders reached this state of stand-off on Thursday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 23.75 and a SELL short trigger at 21.89. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.86 which can be tightened to 0.93 on a 3.44 gain. PLCE closed Thursday at 22.69. Earnings Report Date: N/A. Beta: 2.12. Market-Cap: 283.11M. Optionable.

Beyond, Inc. (BYON: Consumer Cyclical/Internet Retail) - SQUEEZE PLAY. BYON traders on both sides of the fence are now locked in a head-to-head shootout. Thursday's price range was the narrowest in over a week, as neither Bears or Bulls have been able to clearly gain the upper hand. This gives us an opportunity to catch the next directional move with little risk of loss. To do this we'll place both a long and a short trigger with a BUY at 23.62 and a SELL short trigger at 21.65. When one of the orders is filled, cancel the remaining order and enter a 1.97 trailing stop. When you've reached a 2.02 paper profit, tighten the stop to 0.99. BYON closed at 22.81 on Thursday. Earnings Report Date: Feb 20, 2024. Beta: 3.63. Market-Cap: N/A. Optionable.

INDUSTRIALS SECTOR

Hollysys Automation Technologies Ltd. (HOLI: Industrials/Electrical Equipment & Parts) - BULLISH BOUNCE. If you are looking for another bouncer with profits in mind, HOLI 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 22.79, plan to buy shares at 23.13 and use a 1.29 trailing stop. Tighten the stop to 0.65 on a 0.88 gain. Earnings Report Date: Feb 13, 2024. Beta: 0.62. Market-Cap: 1.414B. Optionable.

TECHNOLOGY SECTOR

Canadian Solar Inc. (CSIQ: Technology/Solar) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in CSIQ's narrowest trading range of the past seven sessions. With neither group able to take complete control on Thursday, 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 22.81 and a SELL order at 21.07. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.74 trailing stop. Tighten the stop to 0.87 once you have a 2.16 gain. CSIQ closed Thursday at 22.06. Earnings Report Date: N/A. Beta: 1.44. Market-Cap: 1.426B. 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.

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