February 22, 2024 - The RightLine Report 

 
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                      NOTES FROM THE EDITOR
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One of the most oft-repeated pieces of stock market advice is to "trade what you see, not what you think." This axiom seems to suggest two things: don't trade on emotion, and base your decisions on observations rather than expectations. After several losing trades, I learned early in my trading career that these words should be taken to heart.

Keeping emotions in check is especially important in strong Bull or Bear markets. Greed, hope, and fear are contagious and can spread like wildfire when the crowd reaches extremes. Take the dot-com boom just before Y2K, when tech stocks were climbing into the stratosphere.

Back then, traders would rush in with buy orders based on the simple expectation of higher prices. Neither the fundamentals (which showed extremely high valuations) nor the technicals (which were blatantly overbought) played a role in their decisions. The cycle of frenzied buying finally spun out of control, and traders who ignored signs of a market downturn suffered major hits to their accounts.

The same dynamic is repeated every day on a smaller scale. I've seen this first-hand on many occasions, watching stocks poised to break out. Typically when they finally cross over resistance, many traders will jump onboard on the expectation of an upward surge. However, the overall technical picture doesn't always support this outlook; volume can be weak on the breakout, the oscillators may already be overbought, and the stock can lag behind the broader market. Within a few minutes the upward spike can reverse into a "head-fake" pullback, and traders who buy the breakout may end up holding losing positions.

The beauty of technical analysis is that it forces you to trade based on what is happening. If certain conditions aren't met, the order is never placed. But with the "trade what you see" approach, is there any room for instinct and "gut-feeling"? You bet!

Webster's defines "intuition" as "instinctive knowing, without the use of rational processes." Trading involves interpreting countless pieces of information. Things like relative strength, oscillator movement, price action, and market news all factor into buy/sell decisions. The gut-feeling that sometimes arises when making a trading decision can be thought of as your brain's overall reaction after processing all that information.

Sometimes a trade set-up looks good but just doesn't "feel right." When this happens, double check to see that you're using a solid risk management strategy that includes position sizing and stop placement. This will ensure that the gut-feeling doesn't stem from a fear of taking an unacceptable loss. If the instinct still remains, it may be your subconscious mind telling you that there's something amiss with the set-up.

When in doubt, go with your gut! The great thing about the market is that there's always another trading opportunity just around the bend.

Kent Barton
Senior Analyst 


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                           "QUICK LIST"
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Stock     02/22     02/22      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

CVGW      28.02     -0.16     28.55     26.82        1.73/0.87      2.78
IMNM      23.25      1.23     24.18                  2.65/1.33      3.58
ALKS      28.91     -0.27     29.65     27.72        1.93/0.97      1.26
NET       99.47      4.38    101.24                    6.8/3.4      6.56
NVEI      23.95      0.60     24.47     23.02        1.45/0.73      2.12


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 stocks surged at the opening bell on Thursday, particularly technology-related shares, following Nvidia's (NVDA) impressive earnings beat and raised outlook. This momentum carried throughout the day, propelling the S&P 500 Index and Dow Jones Industrial Average to new record highs. Similar record highs were seen in Europe's Stoxx 600 and Japan's Nikkei 225, contributing to a global rally in the stock markets.

On Wednesday, markets showed some weakness after the release of minutes from the FOMC meeting on January 30-31, indicating a consensus among participants to delay rate cuts, although there were no indications of rate hikes being considered. Despite concerns over less-than-anticipated rate cuts, investor enthusiasm for tech-related stocks overshadowed these worries on Thursday, driving stock prices higher throughout the day, particularly in the technology sector, with the Nasdaq 100 rising by 3% and the Nasdaq surpassing 16,000, ending near its peak.

Trader sentiment has turned bullish according to the latest Charles Schwab Trader Sentiment Survey, with over half of respondents reporting a bullish outlook on the US stock market, the highest level since the survey's inception in 2021. Additionally, nearly half of traders believe it's a favorable time to invest in equities, while optimism regarding the economy has also increased, with nearly half of traders expecting the US to avoid a recession in 2024.

Amidst the excitement over NVDA's results, there was a significant event that went somewhat unnoticed: the US cyber watchdog agency CISA is collaborating with AT&T to investigate a disruption in calls, text messages, and emergency services in major cities on Thursday, raising concerns about a possible cyber security attack.

The magnitude of Nvidia's growth is underscored by its latest jump in share price, which has propelled its market capitalization to surpass the size of the Canadian economy. Nvidia's market capitalization now stands at $1.925 trillion, trailing only AAPL and MSFT in size, highlighting its remarkable expansion in the market.


                       Feb 21, 2024           Feb 22, 2024   
                  --------------------   --------------------
Dow                 38,611.85    48.05     39,027.43   415.19
Nasdaq              15,580.87   -49.91     16,041.62   460.75
S&P 500              4,981.84     6.33      5,084.70   102.90

NYSE Volume                       3.8B                  4.06B
NYSE Advancers                   1,423                  1,736
NYSE Decliners                   1,391                  1,082

Nasdaq Volume                    4.87B                  5.67B
Nasdaq Advancers                 1,541                  2,311
Nasdaq Decliners                 2,672                  1,937

                                 New Highs/Lows

                   02/15  02/16  02/19  02/20  02/21  02/22
                 --------------------------------------------
NYSE New Highs       217    198      0    119     96    227
NYSE New Lows         14     15      0     25     32     41
Nasdaq New Highs     251    225      0    112     59    247
Nasdaq New Lows       66     64      0     96    115    112

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                              TRADER'S TIP:  
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TRADER'S TIP: "Human Sentiment: A Strange Animal"

As helpful as sentiment surveys may appear on the surface, they are basically just a collection of opinions that often show little correlation with actual market movement. Some "contrarians" use the results as technical indicators. They are convinced that it's a bad thing when too many of the folks surveyed are Bulls, and a good thing when too many of those surveyed are Bears.

While this may be an oversimplification of how sentiment indicators are supposed to work, one thing is for certain - extreme bullish or bearish sentiment can last for a very long time without the expected contrary consequences in the market place. Though market sentiment surveys may have some value in a general sense, we have yet to see them seriously applied in a specific trading strategy. Of course this is our "opinion." If you know of a proven way to use sentiment reports successfully in short term trading, please let us know. 

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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/022224SPX.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: "The Perfect Indicator"

Most experienced traders have their favorite indicator, yet they will readily admit that there is no "Holy Grail." Instead of searching for the perfect indicator, choose several that you can become comfortable with, and learn to interpret the conflicting signals. 


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                      STOCKS COVERED IN THIS ISSUE    
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CONSUMER DEFENSIVE SECTOR

Calavo Growers, Inc. (CVGW: Consumer Defensive/Food Distribution) - SQUEEZE PLAY. CVGW 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 28.55 and a SELL short trigger at 26.82. When one of the orders is filled, cancel the remaining order and enter a 1.73 trailing stop. When you've reached a 2.78 paper profit, tighten the stop to 0.87. CVGW closed at 28.02 on Thursday. Earnings Report Date: Mar 04, 2024. Beta: 0.63. Market-Cap: 498.717M. Optionable.

HEALTHCARE SECTOR

Immunome, Inc. (IMNM: Healthcare/Biotechnology) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Thursday IMNM seemed intent on initiating a rebound. With moving average support nearby, IMNM is at a logical place for Bulls to regroup and extend the familiar uptrend that shareholders have become accustomed to. On continued buying, plan on taking long entries with a BUY at 24.18. Manage risk with a 2.65 stop. Tighten your stop to 1.33 when you have a 3.58 profit. IMNM ended the day at 23.25. Earnings Report Date: Mar 14, 2024. Beta: 1.56. Market-Cap: 1.329B. Optionable.

Alkermes plc (ALKS: Healthcare/Drug Manufacturers - Specialty & Generic) - SQUEEZE PLAY. Sometimes when Bulls and Bears face off in the market arena for a typical day-long battle, there is no clear winner. This is evident when the daily price range contracts to an unusually narrow state. ALKS found itself in this condition on Thursday when neither buyers or sellers were able to push ahead. This setup provides traders a chance to hop on board the next breakout - whether it's to the upside or down - with little risk of loss. To do this place a BUY order at 29.65 and a SELL short trigger at 27.72. When ALKS moves outside of Thursday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 1.93 trailing stop. After you've got a 1.26 profit, tighten the stop to 0.97. ALKS closed at 28.91 on Thursday. Earnings Report Date: N/A. Beta: 0.52. Market-Cap: 4.827B. Optionable.

TECHNOLOGY SECTOR

Cloudflare, Inc. (NET: Technology/Software - Infrastructure) - BULLISH BOUNCE. Here is another example of a stock in an established uptrend that has recently experienced a counter-trend drop. The sliding price action has now found support near a moving average zone, bouncing upward during Thursday's session to close at 99.47. Anticipate the rebound to continue, and be ready to buy NET at 101.24. Follow your entry with a trailing stop of 6.8 which can be tightened to 3.4 on a 6.56 profit. Earnings Report Date: Apr 25, 2024. Beta: 1.09. Market-Cap: 33.574B. Optionable.

Nuvei Corporation (NVEI: Technology/Software - Infrastructure) - 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. NVEI 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 24.47 and a SELL short trigger at 23.02. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.45 which can be tightened to 0.73 on a 2.12 gain. NVEI closed Thursday at 23.95. Earnings Report Date: Mar 06, 2024. Beta: 3.30. Market-Cap: 3.328B. 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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