February 20, 2024 - The RightLine Report 

 
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                      NOTES FROM THE EDITOR
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Some investors consider the idea of using support and resistance levels to trade stocks a bit odd. This point of view is easy to understand, especially in a world where the financial news banter heavily influences the crowd perspective. However, by taking a closer look at what actually takes place in the "real world," it's easy to understand how the price and volume action on a chart reveals more information than most folks would ever imagine.

Start with the concept that sooner or later all news and fundamentals are reflected in a stock's price. The changes that occur in a company's financial picture don't normally happen overnight. Key employees of the firm are usually the first to know when changes are underway that may impact the company stock - their stock. Although SEC regulations do govern what insiders can say and do with the information they obtain, the fact remains that we are all human, and humans love to talk!

What starts out as innocent chatter among employees soon spreads to those beyond the company's inner circle. The news then quickly makes its way to friends and acquaintances. They in turn share it with others. As more and more people learn about the changing prospects of a company, they either buy or sell the stock, and the chart begins to signal that something significant could be taking place.

Serious chart readers recognize the signs of change, and then dig into the fundamentals and other aspects of the company to find out if an opportunity exists to profit from the situation. This group includes the much talked about "smart money." These deep pockets soon recognize what is going on and take action. Due to the size involved, the buying or selling can't be easily hidden. It invariably shows up on the charts.

Eventually the price action draws chart patterns that provide powerful clues about where the stock is headed. While it may seem slightly peculiar, there is nothing new about any of this - technical analysts have known about the process for many decades.

Bottom Line: Those of us who use charts as part of our trading strategy simply follow along with the smart money. Although charts do contain a predictive element, the real power comes from the low risk entries available at key support and resistance levels. Understanding how price tends to respond at these decisive crossroads gives us an advantage. The lines in the sand provide boundaries that emit relatively clear exit signals when crossed, and at the same time offer ideal locations to place safety stops.

Trade well!

- Thomas Sutton 

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                           "QUICK LIST"
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Stock     02/20     02/20      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

GPRE      22.75     -0.29     23.27     21.84        1.43/0.72      1.58
CABA      22.70     -0.16     23.41     21.62         1.79/0.9         3
QTRX      26.07     -0.13     26.58     24.91        1.67/0.84      1.86
CSIQ      22.84     -0.10     23.25     21.64        1.61/0.81      2.34
CWCO      30.17     -0.17               29.01        2.16/1.08       2.3


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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Traders returned from a three-day weekend and pushed major US equity benchmarks lower on Tuesday, with the Nasdaq Composite (COMP) hitting a two-week low due to significant declines in semiconductor companies ahead of Nvidia's (NVDA) highly anticipated quarterly earnings report on Wednesday.

Despite a strong performance by member Walmart (WMT), whose shares surged 3.2% after reporting better-than-expected quarterly earnings, the Dow Jones Industrial Average also fell. Other notable developments included Discover Financial (DFS), which saw its stock price soar over 12% after agreeing to be acquired by Capital One (COF) for $35.3 billion in an all-stock deal. Capital One's stock rose approximately 0.1% in response to the news.

Walmart (WMT) made headlines with its announcement of acquiring Vizio (VZIO), signaling its foray into the television industry. Both Walmart and Home Depot (HD) reported earnings Tuesday, with Walmart's stock showing a slight uptick in premarket trading while Home Depot's shares saw a decline.

The major stock indexes opened in negative territory, extending losses from Friday's weak close that ended a five-week winning streak. Concerns over consumer and wholesale inflation readings dampened market sentiment, resulting in a decrease in Treasury yields while S&P 500 volatility surged, indicating heightened uncertainty.

Minutes from the January Federal Open Market Committee (FOMC) meeting, scheduled for Wednesday, may appear somewhat outdated, reflecting opinions formed before last week's unexpectedly high consumer and producer price data. These reports contributed to a rise in Treasury yields to their highest levels in two months, with both the Consumer Price Index (CPI) and Producer Price Index (PPI) surpassing expectations.

Despite a plethora of forthcoming data before the March 19-20 FOMC meeting, hopes for any rate cuts before June took a hit last week with the release of the PPI report, shedding light on the challenges along the path to achieving 2% inflation.


                       Feb 19, 2024           Feb 20, 2024   
                  --------------------   --------------------
Dow                    Closed        0     38,563.80   -64.19
Nasdaq                 Closed        0     15,630.78  -144.87
S&P 500                Closed        0      4,975.51   -30.06

NYSE Volume                          0                  4.05B
NYSE Advancers                       0                  1,147
NYSE Decliners                       0                  1,686

Nasdaq Volume                        0                  5.62B
Nasdaq Advancers                     0                  1,493
Nasdaq Decliners                     0                  2,813

                                 New Highs/Lows

                   02/13  02/14  02/15  02/16  02/19  02/20
                 --------------------------------------------
NYSE New Highs        39    104    217    198      0    119
NYSE New Lows         48     35     14     15      0     25
Nasdaq New Highs      43    109    251    225      0    112
Nasdaq New Lows      122     77     66     64      0     96

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                              TRADER'S TIP:  
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TRADER'S TIP: "Earnings Conference Calls"

Since the SEC implemented the Fair Disclosure laws, most companies have begun allowing individual shareholders to listen in on earnings conference calls that were previously limited to analysts only. If you are tracking a stock as it approaches its scheduled earnings announcement, always look for the related conference call and mark it on your calendar.

The behavior of the stock during the call can telegraph early reaction to management's explanation of earnings related events. If you can't find any mention of the call, give the firm's Investor Relations department a ring and ask when or if a call will be held. 
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                         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/ 
https://www.prorightline.com/rlch/022024SPX.jpg





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                             MARKET CALENDAR
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--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/ 
 
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                              TRADER'S TIP: 
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TRADER'S TIP: "Earnings: Holding Through or Getting Back In"

It's no secret that we believe in avoiding undue risk. Because earnings reports often end up surprising traders, we often suggest closing out positions before the company announces earnings. However, if a stock is moving in a solid trend (long or short) and earnings estimates support that trend, experienced traders will often elect to drastically reduce the number of shares in their position and hold them through the earnings announcement.

In some cases traders jump back into the trade after the company reports better than expected earnings. This can be profitable at times, but don't chase the stock. If it has jumped more than 5% beyond your exit point, you're probably better off waiting for price to pull back to a moving average support level. 

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                      STOCKS COVERED IN THIS ISSUE    
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BASIC MATERIALS SECTOR

Green Plains Inc. (GPRE: Basic Materials/Chemicals) - SQUEEZE PLAY. One interesting trait of price volatility is that it cycles back and forth through periods of expansion and contraction. Stocks that have recently seen their daily price range shift from an average or wide range to an extremely contracted state are ideal candidates for expansive price moves. In many cases the next move is relatively fast and covers a sizable amount of territory. To take advantage of these trades we use both a BUY and a SELL entry. This allows us to enter in whichever direction the breakout takes. In GPRE's case we will enter a BUY should it reach the 23.27 level, or a SELL short trade if it drops to 21.84. As usual a trailing stop is essential, 1.43 which should be tightened to 0.72 on a 1.58 gain. GPRE closed Tuesday at 22.75. Earnings Report Date: May 02, 2024. Beta: 1.62. Market-Cap: 1.462B. Optionable.

HEALTHCARE SECTOR

Cabaletta Bio, Inc. (CABA: Healthcare/Biotechnology) - SQUEEZE PLAY. When a stock's daily price range contracts to an unusually low point, you can safely assume that in most cases a breakout from that range will result in a nice price move. To capture a portion of this potential movement we have set both a long and a short entry into CABA. A move to the upside will trigger our BUY entry at 23.41, while a drop to 21.62 will trigger our SELL short entry. Follow your position with a 1.79 trailing stop. Tighten the stop to 0.9 once you have a 3 gain. CABA closed Tuesday at 22.70. Earnings Report Date: Mar 14, 2024. Beta: 2.47. Market-Cap: 972.681M. Optionable.

Quanterix Corporation (QTRX: Healthcare/Medical Devices) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in QTRX's narrowest trading range of the past seven sessions. With neither group able to take complete control on Tuesday, 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 26.58 and a SELL order at 24.91. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.67 trailing stop. Tighten the stop to 0.84 once you have a 1.86 gain. QTRX closed Tuesday at 26.07. Earnings Report Date: Feb 27, 2024. Beta: 1.32. Market-Cap: 986.22M. Optionable.

TECHNOLOGY SECTOR

Canadian Solar Inc. (CSIQ: Technology/Solar) - SQUEEZE PLAY. Trader indecision has put CSIQ 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 23.25 and a SELL short entry at 21.64. Now it's up to CSIQ to show us which entry will be filled. Once the trade is underway place a 1.61 trailing stop, which can be tightened to 0.81 after you achieve a 2.34 profit. CSIQ closed on Tuesday at 22.84. Earnings Report Date: N/A. Beta: 1.29. Market-Cap: 1.477B. Optionable.

UTILITIES SECTOR

Consolidated Water Co. Ltd. (CWCO: Utilities/Utilities - Regulated Water) - BEARISH U-TURN. CWCO's chronic decline over the past weeks was relieved by a recent upward bounce that has boosted hope for weary shareholders. Unfortunately for them, Tuesday's price action near moving average support indicates the bullish rebound may be over. If this turns out to be the case, short-sellers can enter a SELL position at 29.01. Control risk with a 2.16 stop that can be resized to 1.08 on a gain of 2.3. CWCO closed at 30.17 on Tuesday. Earnings Report Date: Mar 28, 2024. Beta: 0.12. Market-Cap: 475.102M. 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/ 

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                           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/ 
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Best of luck and have a Great Week!
 
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