February 29, 2024 - The RightLine Report
Notes From The Editor
The traditional broker/client relationship was transformed to a large degree by the internet, which now gives traders and investors direct control over their accounts. Taking out the middleman was a major development for active traders. High-profile scandals involving investment-banking relationships also helped rid the industry of some very blatant conflicts of interest.
But brokerages still thrive on commissions, even if they don't have a specific person dealing with every client. Anyone who tunes in to financial media is constantly bombarded with suggestions to trade, trade, and trade some more. One of my favorites is the commercial that makes it appear as though someone is trading from beyond the grave. Now that's commitment!
Lower commissions and the ability to buy or sell stocks with the click of a button have given traders an advantage they didn't have before. Unfortunately, it also widens the potential trap of over-trading.
Knowing when not to trade is just as important as knowing when to place an order. Those low commissions make it that much easier to justify a trade, even if the set-up is questionable. This can be problematic when a trader confronts a losing streak. It seems deceptively easy to make up lost ground when there's not much cost to entering an order.
To guard against this threat, many successful traders use a simple rule of thumb: temporarily walk away from the computer after a certain amount of losing trades. The market isn't going anywhere, and there's nothing wrong with stepping back and watching the action for a while. Observing as a neutral spectator rather than a participant, you also might notice things that you might've missed had you been actively trading.
Most traders occasionally deal with the feeling of being mentally overwhelmed. The brain must not only sort through a flood of information (price action, technical details, news stories, and so on), but also has to contend with human emotion. With so much going on, it's absolutely essential to clear your mind occasionally throughout the trading day: Take a lunch break. E-mail a friend. Take a nap.
Exercise is helpful as well. Some traders I know like to go for a walk during lunch, while others get in a full workout before the trading day starts. Whatever the approach, exercise is beneficial because it produces mood-lifting endorphins and helps you focus on something other than the market.
It all boils down to not letting the market control your actions. Today's low commissions and direct order placement make it all too easy to turn frustration into over-trading - but with a little self-control and relaxation, you'll have no trouble avoiding that common trap.
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 02/29 02/29 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
ONEW 26.01 0.50 26.54 25.02 1.52/0.76 2.62
INBK 31.17 -0.09 31.94 29.74 2.2/1.1 2.94
DNTH 24.75 0.64 25.43 23.28 2.15/1.08 4.24
TNDM 26.63 0.04 27.81 25.72 2.09/1.05 2.36
WOR 62.09 0.61 63.25 4.23/2.12 3.36
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.
Stocks Covered Today Stock Splits
Market Summary
Stocks surged higher on Thursday in response to a slew of economic data, including fresh insights into inflation. Moreover, news of lawmakers reaching an agreement to extend funding deadlines and prevent a government shutdown likely contributed to the positive market sentiment. While the bond market saw limited activity, longer-term Treasury yields remained relatively stable, while shorter-term rates declined, possibly reflecting the impact of Thursday's inflation data and its implications for the Fed's approach to rate cuts. Globally, equities ended the day with mixed results, and commodities mirrored this trend, with gold edging up while crude oil prices retreated despite expectations of extended production cuts from OPEC+.
The highlight of the day was the release of the personal consumption expenditures (PCE) data, providing insights into inflation trends. Although the consumer price index (CPI) usually garners more attention, core PCE is preferred by the Fed, making this data significant for the markets. Fortunately, the outcome was largely in line with expectations, easing concerns about unexpected spikes in inflation, as seen in the previous CPI report. Overall, the figures confirmed the ongoing trend of moderate inflation. January core PCE rose by 0.4% compared to the previous month and by 2.8% year-over-year, showing a slight decrease from December. Notably, the decline in goods prices offset the persistence in services prices over the past year. This supports the view that inflation will continue to trend downward this year, although some disruptions may occur along the way. While this latest PCE figure does not significantly alter the Fed's plans, it reinforces confidence in their ability to initiate rate cuts later in the year.
Additionally, Thursday's data provided fresh insights into the labor market, income, and spending, shedding light on consumer behavior. Despite a slight uptick to 215,000, weekly initial jobless claims remain near historic lows, suggesting healthy employment conditions. The personal income and spending report revealed a notable 1% increase in incomes in January compared to the previous month, although spending growth did not match this pace, rising by 0.2% month-over-month. However, it's important to note that the January income boost was influenced by an upward adjustment to Social Security payments, while spending growth moderated after December's robust holiday shopping season. Overall, this data suggests that while consumers remain in a favorable position, spending may taper off slightly compared to 2023. As labor market conditions soften and excess savings from last year are depleted, household consumption is expected to contribute less to economic growth this year.
Feb 28, 2024 Feb 29, 2024
-------------------- --------------------
Dow 38,949.02 -23.39 38,996.39 47.37
Nasdaq 15,947.74 -87.56 16,091.92 144.18
S&P 500 5,069.76 -8.42 5,096.27 26.51
NYSE Volume 3.79B 5.36B
NYSE Advancers 1,288 1,987
NYSE Decliners 1,541 851
Nasdaq Volume 5.59B 6.37B
Nasdaq Advancers 1,567 2,604
Nasdaq Decliners 2,708 1,661
New Highs/Lows
02/22 02/23 02/26 02/27 02/28 02/29
--------------------------------------------
NYSE New Highs 227 272 195 181 163 239
NYSE New Lows 41 37 38 22 34 23
Nasdaq New Highs 247 263 223 254 172 271
Nasdaq New Lows 112 137 90 63 96 80
Stocks Covered Today Stock Splits
TRADER'S TIP: "Let The Trade Come To You"
It rarely pays to chase a stock, so don't chase it - let the trade come to you. You have two options when you realize a move is already underway. Either forget the trade and look for another one, or wait for the price to move back to support or resistance THEN enter on the rebound. Waiting for a pullback usually provides a relatively low risk entry - because you can place a tight stop just beyond the support or resistance level. Remember - don't worry if you miss a trade, there is always another.
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".
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, FEB. 26 10:00 am New home sales TUESDAY, FEB. 27 8:30 am Durable-goods orders 8:30 am Durable-goods minus transportation 9:00 am S&P Case-Shiller home price index 10:00 am Consumer confidence WEDNESDAY, FEB. 28 8:30 am GDP (first revision) Q4 8:30 am Advanced U.S. trade balance in goods 8:30 am Advanced retail inventories 8:30 am Advanced wholesale inventories 12:00 pm Atlanta Fed President Raphael Bostic speaks THURSDAY, FEB. 29 8:30 am Initial jobless claims 8:30 am Personal income 8:30 am Personal spending 8:30 am PCE index 8:30 am Core PCE index 8:30 am PCE (year-over-year) 8:30 am Core PCE (year-over-year) 9:45 am Chicago Business Barometer (PMI) 10:00 am Pending home sales 10:50 am Atlanta Fed President Raphael Bostic speech 11:00 am Chicago Fed President Austan Goolsbee speaks 1:15 pm Cleveland Fed President Loretta Mester speaks 7:40 pm Kansas City Fed President Jeff Schmid speaks FRIDAY, MAR 1 9:45 am S&P U.S. manufacturing PMI 10:00 am ISM manufacturing 10:00 am Construction spending 10:00 am Consumer sentiment 10:15 am Dallas Fed President Lorie Logan speaks 10:15 am Fed Governor Chris Waller speaks 12:15 pm Atlanta Fed President Raphael Bostic speaks 1:30 pm San Francisco Fed President Mary Daly speaks For a chart of typical Up or Down market reactions to specific major US economic reports go to: Economic Indicator Effects
Stocks Covered Today Stock Splits
TRADER'S TIP: "Triangles and Time Frames"
Always check the next larger time frame when trying to determine if a triangle pattern is likely to lead to an upward breakout. For example, if you are trading a daily chart, refer to the weekly chart to see which way the trend is headed. If the larger trend is up, a triangle on the next lower time frame is more likely to break out higher.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
OneWater Marine Inc. (ONEW: Consumer Cyclical/Specialty Retail) - 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. ONEW 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 26.54 and a SELL short trigger at 25.02. When ONEW 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 1.52 trailing stop. After you've got a 2.62 profit, tighten the stop to 0.76. ONEW closed at 26.01 on Thursday. Earnings Report Date: May 02, 2024. Beta: 2.52. Market-Cap: 416.157M. Optionable.
FINANCIAL SERVICES SECTOR
First Internet Bancorp (INBK: Financial Services/Banks - Regional) - SQUEEZE PLAY. The ticker for Thursday's session shows INBK 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 31.94 and a SELL short trigger at 29.74. When INBK 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 2.2 trailing stop. Upon reaching a 2.94 profit, resize the stop to 1.1. Earnings Report Date: Apr 24, 2024. Beta: 0.74. Market-Cap: 269.448M. Optionable.
HEALTHCARE SECTOR
Dianthus Therapeutics, Inc. (DNTH: Healthcare/Biotechnology) - SQUEEZE PLAY. DNTH 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 25.43 and a SELL short trigger at 23.28. When one of the orders is filled, cancel the remaining order and enter a 2.15 trailing stop. When you've reached a 4.24 paper profit, tighten the stop to 1.08. DNTH closed at 24.75 on Thursday. Earnings Report Date: Mar 21, 2024. Beta: N/A. Market-Cap: 725.625M. Not Optionable.
Tandem Diabetes Care, Inc. (TNDM: Healthcare/Medical Devices) - SQUEEZE PLAY. TNDM shareholders know what it feels like to be squeezed. Thursday's slim price range reveals uncertainty on both sides of the table, a situation which often resolves itself by either Bears or Bulls quickly gaining a clear advantage. The question is "who will win?" Near-term market action tell us whether we should sell short or we should buy shares instead. TNDM closed Thursday at 26.63. The plan is to enter in the right direction by placing a BUY trigger at 27.81 and a SELL short trigger at 25.72. Once TNDM establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 2.09. After you've collected a 2.36 profit, tighten the stop to 1.05. Earnings Report Date: May 01, 2024. Beta: 1.11. Market-Cap: 1.748B. Optionable.
INDUSTRIALS SECTOR
Worthington Enterprises, Inc. (WOR: Industrials/Metal Fabrication) - BULLISH BOUNCE. WOR 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 WOR 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 63.25. Set a trailing stop of 4.23, tightening to 2.12 on a 3.36 profit. WOR closed at 62.09 on Thursday. Earnings Report Date: Mar 20, 2024. Beta: 1.32. Market-Cap: 3.104B. 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.
Stocks Covered Today Stock Splits
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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