|
February 17, 2024 - The RightLine Report
**********************************
NOTES FROM THE EDITOR
**********************************
"You can't beat the market" is a common stock trading myth. Most people are convinced it is practically impossible for individual traders to earn more than the stock market in general. Financial advisors and index fund salesmen will even tell you that you can't trust anyone who claims otherwise.
***********************************
"QUICK LIST"
***********************************
Stock 02/16 02/16 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
LOVE 24.11 -0.50 24.84 22.85 1.99/1 1.78
BKU 27.27 -0.28 27.95 26 1.95/0.98 2.34
KURA 20.62 0.11 20.91 1.45/0.73 2.98
DYN 22.91 -0.69 23.86 22.17 1.69/0.85 3.3
SPR 30.17 -0.10 30.71 29 1.71/0.86 2.76
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/
*****************************
MARKET SUMMARY
*****************************
Equities experienced a slight setback on Friday following the release of the producer price index, which surpassed expectations, driving bond yields and the dollar higher. This monthly uptick in inflation for both consumers and producers in January is lowering expectations for rate cuts, with markets now pricing in three cuts by the end of the year, down from the six cuts expected two months ago. This adjustment in expectations is pushing the 2 and 10 year Treasury yields to their highest levels since December. While all US indexes closed lower, international markets had a positive session, buoyed by encouraging spending data from the UK and China. Notably, natural gas prices rebounded after hitting their lowest levels in over three years on Thursday. The producer price index (PPI), which measures prices received by producers of domestic goods and services, increased by 0.3% for the month and 0.9% from a year earlier, both surpassing expectations. The core PPI, excluding volatile food and energy categories, rose by 0.5% from the previous month and 2% from a year ago, also exceeding expectations*. Similar to Tuesday's CPI report, Friday's PPI suggests that reaching the Fed's 2% inflation target might take longer than anticipated. Consequently, the Fed is not expected to rush into rate cuts, as indicated by Atlanta Fed President Bostic late Thursday. However, it's still likely that inflation will continue to moderate in the coming months, allowing the Fed to potentially implement its first rate cut, possibly in June. Softening wage growth, rising productivity, and slowing consumer inflation expectations support this outlook. Additionally, we anticipate further disinflation in the housing sector, as indicated by real-time data on rents and housing prices. Friday On The Week
-------------------- --------------------
Dow 38,627.99 -145.13 -43.7 -0.11%
Nasdaq 15,775.65 -130.52 -215.01 -1.34%
S&P 500 5,005.57 -24.16 -21.04 -0.42%
NYSE Volume 3.84B
NYSE Advancers 934
NYSE Decliners 1,875
Nasdaq Volume 5.23B
Nasdaq Advancers 1,607
Nasdaq Decliners 2,621
New Highs/Lows
02/09 02/12 02/13 02/14 02/15 02/16
--------------------------------------------
NYSE New Highs 188 263 39 104 217 198
NYSE New Lows 20 12 48 35 14 15
Nasdaq New Highs 300 346 43 109 251 225
Nasdaq New Lows 84 55 122 77 66 64
***********************************
TRADER'S TIP:
***********************************
TRADER'S TIP: "Remember This . . ." One brief but very important rule - never let a short-term loser turn into a long-term investment. It's usually a losing game. **************************
THE TECHNICAL ANALYST
**************************
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/ https://www.prorightline.com/rlch/021624SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, FEB. 19 None scheduled, President's Day holiday TUESDAY, FEB. 20 10:00 am U.S. leading economic indicators WEDNESDAY, FEB. 21 8:00 am Atlanta Fed President Raphael Bostic delivers welcoming remarks 2:00 pm Minutes of Fed's January FOMC meeting THURSDAY, FEB. 22 8:30 am Initial jobless claims 9:45 am S&P flash U.S. services PMI 9:45 am S&P flash U.S. manufacturing PMI 10:00 am Existing home sales 5:00 pm Minneapolis Fed President Neel Kashkari speaks FRIDAY, FEB. 23 None scheduled 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/
***********************************
TRADER'S TIP:
***********************************
TRADER'S TIP: "Tax Deduction Reminder" Your subscription to the RightLine Report may be tax deductible as an investment expense under IRS Sections 67 and 212, to the extent that miscellaneous itemized deductions exceed 2% of your adjusted gross income. It is also fully tax deductible as a business expense by most corporations under Section 162 of the IRS Code. ***********************************
STOCKS COVERED IN THIS ISSUE
***********************************
CONSUMER CYCLICAL SECTOR The Lovesac Company (LOVE: Consumer Cyclical/Furnishings, Fixtures & Appliances) - SQUEEZE PLAY. A look at LOVE's daily chart shows what a price squeeze is all about. The constricted high-low daily trading range has produced a setup similar to a tightly coiled spring. Expect price to move sharply soon, with the direction yet to be determined. Let the upcoming market action resolve whether you will buy shares or sell short. To capture a move either way, place a BUY trigger at 24.84 and a SELL short trigger at 22.85. Once LOVE shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.99 and tighten to 1 on a 1.78 gain. LOVE closed Friday at 24.11. Earnings Report Date: Mar 26, 2024. Beta: 2.94. Market-Cap: 373.44M. Optionable. FINANCIAL SERVICES SECTOR BankUnited, Inc. (BKU: Financial Services/Banks - Regional) - SQUEEZE PLAY. Friday's trading action forced BKU's daily price range into an abnormally narrow state. This translates into opportunity; for the cyclical nature of price volatility is to shrink extensively, then swell rapidly as shares move in one direction or another. Instead of trying to predict the direction BKU will take when price volatility begins to increase, we'll set both a BUY (long) and a SELL (short) trigger to get us into the right trade. Be ready to BUY shares at 27.95 if BKU moves higher, and place your order to SELL short at 26 if price declines to that level. As usual follow your entry with a trailing stop, 1.95 should be sufficient. Reduce your stop to 0.98 on a 2.34 gain. BKU closed Friday at 27.27. Earnings Report Date: Apr 23, 2024. Beta: 1.37. Market-Cap: 2.028B. Optionable. HEALTHCARE SECTOR Kura Oncology, Inc. (KURA: Healthcare/Biotechnology) - BULLISH BOUNCE. The charts for KURA show that despite the downward pressure from sellers recently, the weekly uptrend is still going strong. Buyers showed up again on Friday, resulting in the early stages of a rebound that started near moving average support. The resulting Bullish Bounce set-up offers a potential entry point for a long play. Set your trigger to BUY shares at 20.91, and follow your entry with a trailing stop of 1.45. Tighten it to 0.73 when a 2.98 profit is reached. KURA ended the latest session at 20.62. Earnings Report Date: Feb 21, 2024. Beta: 0.85. Market-Cap: 1.57B. Optionable. Dyne Therapeutics, Inc. (DYN: Healthcare/Biotechnology) - SQUEEZE PLAY. Friday's narrow price range has created a potentially profitable setup in DYN, as sellers and buyers find themselves in a near tie for control of price direction. The next short-term trend could go either way, so prepare for a move out of the draw within the next day or so. Set a BUY entry at 23.86 and a SELL short entry at 22.17. Let DYN's price action determine your long or short entry. Once the order is filled, place a 1.69 trailing stop, and tighten it to 0.85 upon getting a 3.3 gain. DYN closed Friday at 22.91. Earnings Report Date: Feb 29, 2024. Beta: 0.88. Market-Cap: 1.858B. Optionable. INDUSTRIALS SECTOR Spirit AeroSystems Holdings, Inc. (SPR: Industrials/Aerospace & Defense) - SQUEEZE PLAY. SPR is caught in a dilemma. The stock's compressed price range on Friday has resulted in a condition comparable to a wound up rubber band. We anticipate that this undecided equity will take off soon, but with the direction still in question we'll let upcoming market action tell us whether to buy shares or sell short. SPR is now at 30.17. We can capture price action either way by placing a BUY trigger at 30.71 and a SELL short trigger at 29. Once SPR reveals its direction, enter your triggered order and disregard the other one. As soon as your position is in place, follow up with a trailing stop of 1.71. When you acquire a 2.76 profit, tighten the stop to 0.86. Earnings Report Date: May 01, 2024. Beta: 1.76. Market-Cap: 3.501B. 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
***********************************
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
**********************************
"Position Size Matters" by Alexander Elder, MD The owner of a stock-trading firm in a suburb of New York had asked me to run a psychological training group for his traders. The traders were shocked at the idea of a psychiatrist coming in and loudly insisted they 'weren't crazy.' The group got filled only after the manager told his worst performers they had to join or else. Our results were such that six weeks later we had a waiting list for the second group. The firm had it's own proprietary day-trading system, which worked well enough for the two top traders to make millions. Others trading the same system made less and quite a few lost money. We met once a week for two hours and focused on psychology and money management. In one of our first meetings a trader complained that he had lost money each day for the past 13 days. His manager confirmed that he was following the firm's system but could not make any money. I said that my hat was off for anyone who could lose for 13 days straight and have the intestinal fortitude to come in and trade the next morning. I then asked how many shares he traded, since the firm set a maximum for each trader. He was permitted to buy or sell 700 shares per trade, but voluntarily reduced it to 500 while on his losing streak. I told him to drop down to 100 shares until he had two profitable weeks during which he had more winning days than losing. Once he cleared that hurdle, he could go up to 200 shares. Then, after another 2-week profitable period, he could go up to 300 shares, and so on. He was allowed a 100 share increment after two weeks or profitable trading. If he had a single losing week, he'd have to drop back to the previous week's level until he had a new profitable 2-week period. In other words, he had to start small, go up in size slowly, and drop down fast in case of trouble. That trader loudly objected that 100 shares was not enough - he would not be able to make any money. I told him to stop kidding himself, since trading a bigger size only let him lose more money, and he agreed to my plan. When we met a week later he reported sheepishly that he had four profitable days out of five and was profitable overall. He made very little money because his trading size was so small, but for the first time in weeks he was ahead of the game. He continued to make money during the next week and then stepped up to 200 shares. In the next meeting he asked, 'Do you think it could be psychological?' - and the group roared. How come a man who lost money trading 500 shares made money trading 100? As the group pondered, I took a $10 bill out of my pocket and asked whether anyone would like to earn it by climbing on top our long narrow conference table and walking on it from one end to the other. Several hands went up. Well, said I, then let me offer $1,000 to anyone who'll come up with me to the roof of our 10-story office building and use a board as wide as the table to walk above the street to the roof of another 10-story building. No one volunteered. I started egging on the group - the board will be as wide and sturdy as the conference table, we'll do it a windless day, I'll pay $1,000 cash on the spot. Still no takers. Why? Both challenges involved walking a short distance on a two-foot wide board - but the size of the trade went up, both the reward and the risk. If you lost your balance on the conference table, you'd jump down a couple of feet and land on the carpet. If you lost your balance between two rooftops, you'd hit the asphalt 10 floors below. When the level of risk goes up, our ability to perform goes down. Beginners often make money on small trades. They become a little more experienced and confident, increase their trading size - and lose. Their system hasn't changed, but bigger size makes them stiffer and less nimble. Most beginners are in a hurry to make a killing, and guess who gets killed. Overtrading means trading a size that's too large for you. Some stockbrokers outside the US offer a 'shoulder' of 10:1, allowing you to buy $10 worth of stock for every $1 you deposit with the firm. Some currency houses offer a shoulder of 1:100. Overtrading generates big commissions in a hurry. Poor futures traders look for brokers with the lowest margin requirements. If the minimum margin in gold is $2,000, an eager beaver with $10,000 may buy five contracts. Each includes 100 oz of gold, making his account swing $500 for every $1 move in gold. His equity swings 5% for every $1 change! If gold goes against him, he is cooked. If it goes his way, that beginner will be convinced he's discovered a great new way of making money, continue to trade recklessly and bust out on the next trade. When a scuba diver puts on his tank and rolls off the side of the boat, clenching his mouthpiece, he has a device called an octopus attached to his air tank. It consists of several tubes, one leading to his mouthpiece, another to the flotation vest, and yet another to an instrument that shows how much air he has left in his tank. While enjoying the reef and the fish, he keeps glancing at the gauge to see how much air he has left. If it goes too low, he may not have enough to get back to the surface or else he may have to come up so fast his blood will boil. Scuba diving is a deadly sport for illiterates and hotheads. Putting on a trade is like diving for treasure. There are fortunes down on the ocean floor, there is gold between the rocks. As you scoop it up, remember to glance at your air gauge. Will you calculate how much gold you can afford to take without endangering your survival? The ocean floor is littered with the remains of divers who saw great opportunities. They reached for them without thinking whether they had enough air to return to the boat. A professional diver thinks about his air supply first. If he doesn't get any gold today, he'll go for it tomorrow. All he needs to do is survive and dive again. Beginners kill themselves by reaching for more than they can carry and running out of air. The lure of free gold on the ocean floor is too strong. Free gold! It reminds me of a Russian saying - "the only free thing is the cheese in a mousetrap." Greed is a common emotion, not limited to humans. There are tribes in Africa that catch monkeys by putting tidbits of food into jars with narrow necks, tied to stakes in the ground. A monkey wiggles its hand into a jar, grabs a tidbit, but cannot pull it out because only an open hand can go through the narrow neck. The monkey is still tugging at the bait with its fist stuck in the jar when the hunters come to pick it up it. Monkeys do themselves in because of their greed, grabbing and refusing to let go. Think of them when you feel tempted to put on a large trade with no stop. Simply knowing how to analyze markets will not make you a winner. A professional trader needs strong money management skills. All successful traders survive and prosper thanks to their discipline. The 2% Rule will keep you safe from the sharks, the 6% Rule from the piranhas. Then, if you have a halfway decent trading system, you'll be ahead of the game. ======================================================================
Best of luck and have a Great Week!
**********
If you prefer to receive this report in html with color and
graphics, or have any questions, send us an email using our contact
form at:https://prorightline.com/index.php/contact-us/
======================================================================
DISCLAIMER
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. |