Notes From The Editor

Are We There Yet? If you've ever traveled with kids you know the line. From a child's point of view a trip should never take longer than ten minutes - even if they're going from coast to coast. In the same way, new traders are always in a hurry. Everybody wants to make money fast. In fact, the desire for quick profits is usually so strong that novice traders rarely see the most important trade of all - investing in education.

This sort of impatience isn't surprising. It's quite common for folks to underestimate the time it takes to learn new skills. The more complex the process, the more likely people are to take it lightly.

I remember when I first started trading the markets. Looking back it's a miracle that I survived the initial learning curve at all. After years of being in other businesses, I felt I could learn to trade successfully in no time at all. My assumptions and expectations were very immature.

As the years went by I met a number of traders with different levels of experience. Some of them helped me understand and prioritize the basic skills I needed. Fortunately along the way I discovered the fledgling RightLine Report.

It seems strange now, yet I remember questioning what I considered to be their "ultra-conservative" emphasis on safety, execution, and risk management. Of course after losing a big chunk of my initial trading account I was much more willing to listen and learn.

I'll never forget when I first heard of a new company named eBay (EBAY). I had been trading for a while, yet still wasn't using a systematic risk control element in my routine. I watched eBay for a few days and was impressed with the dynamic movement of the stock. It sure looked like easy money, so I began trading it intra-day without the use of stops.

I was lucky at first, and made some quick profits. I immediately decided I had a "special feel" for eBay's price behavior, and in a rather cocky decision loaded up the wagons one morning with an unusually large number of shares.

I was long eBay in a big way, and already counting the tens of thousands of dollars I would make that day when I left my home office for a quick lunch at the local Chinese buffet. I was gone for less than an hour. When I casually strolled back to my desk I noticed a long streak of red price bars dripping down the monitor of my computer. I couldn't believe my eyes when I read the numbers - eBay had dropped drastically since I bought the shares!

With no stop in place I was WAY down in a position that was massively too big for my account size. I watched it continue to slide for a few minutes more, than made the excruciating decision to close out the trade. My heart was in my shoes when I finally realized that I had just lost all the money I had made over the past couple of months. As hard as it was to close out that trade, it didn't hold a candle to the embarrassment I felt when I told my wife about it.

The moral of this story isn't to avoid Chinese food. It's about how unprepared I was to deal with the reality of the marketplace. Every experienced trader knows exactly what I'm talking about.

The most important advice that I could possibly offer is this: Invest in your education first. It usually takes years to learn how to trade well. This doesn't mean you can't make money right out of the gate. Tools like the RightLine Report allow you to "earn as you learn." Simply be aware that it takes most traders several years to become really good at it.

You can make a lot of money trading the stock market. It's a fulfilling vocation that offers a lot of perks you won't find in the average "job." Just remember that the journey to becoming proficient is much more rewarding when you have a realistic understanding of how long it is likely to take.

Trade well,

~ Thomas Sutton, Editor

Quick List

    
Stock     02/08     02/08      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

C         54.29     -0.25     55.21                  3.25/1.63      1.96
SLNO      47.48      0.89     48.29                  3.93/1.97      5.38
KURA      20.33     -0.03     20.88     19.35        1.53/0.77      1.96
AMRC      22.39      0.44     22.72     20.97        1.75/0.88      3.12
BHE       29.51      0.81     29.92                  2.45/1.23      0.96

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.

Market Summary

Stocks ended mostly higher on Thursday, with the S&P 500 closing nearly flat, just shy of the 5,000 mark. US initial jobless claims came in slightly below consensus expectations at 218,000, below last week's revised figure of 227,000. On the corporate front, Disney shares surged by over 10% following robust earnings results after market close Wednesday. While Disney's revenue fell slightly short of consensus estimates, earnings per share exceeded expectations, and the company provided better-than-anticipated forward guidance for 2024 earnings. Treasury yields closed higher, with the 10-year yield settling around 4.15%. Oil prices also saw a significant rise, climbing by over 3%.

Growth-style stocks have once again taken the lead in the early weeks of 2024 after a stellar performance in 2023, during which the Russell 1000 Growth Index surged by over 40%. Year-to-date, the Russell 1000 Growth Index is up by about 7% compared to the relatively flat performance of the Russell 1000 Value Index. The outperformance of growth stocks has been primarily driven by strong showings in the information technology, communication services, and consumer discretionary sectors, collectively comprising approximately 70% of the Russell 1000 Growth Index. Enthusiasm surrounding the growth prospects of artificial intelligence (AI) has significantly contributed to the upward trajectory of these sectors and growth stocks.

February has started off on a strong note for stocks, despite historically being a weaker month. The S&P 500 is up by roughly 3% month-to-date, with the Nasdaq seeing a gain of about 4%. Historical data suggests that investors could find cause for optimism for the rest of the year if stocks maintain their upward momentum throughout February.

                        Feb 7, 2024            Feb 8, 2024    
                  --------------------   --------------------
Dow                 38,677.36   156.00     38,726.33    48.97
Nasdaq              15,756.64   147.65     15,793.71    37.07
S&P 500              4,995.06    40.83      4,997.91     2.85

NYSE Volume                       4.9B                  4.35B
NYSE Advancers                   1,439                  1,700
NYSE Decliners                   1,393                  1,112

Nasdaq Volume                    4.58B                  5.69B
Nasdaq Advancers                 1,833                  2,610
Nasdaq Decliners                 2,440                  1,605

                                 New Highs/Lows

                   02/01  02/02  02/05  02/06  02/07  02/08
                 --------------------------------------------
NYSE New Highs       148    172     75     92    167    152
NYSE New Lows         31     49     82     41     36     26
Nasdaq New Highs     108    159     85    109    223    237
Nasdaq New Lows      128    161    210    123    144    104
   

TRADER'S TIP: "Missed The Breakout? Watch For A Pullback Entry"

New-High breakouts often return to prior resistance levels before resuming the move higher. Once a new 52-week high is set, examine the chart to locate the point of initial breakout and be ready to enter on a bounce from this level.

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".

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

MONDAY, FEB. 5					
9:45 am	S&P final U.S. services PMI	
10:00 am	Chicago Fed President Austan Goolsbee TV appearance				
10:00 am	ISM services	
2:00 pm	Atlanta Fed President Raphael Bostic gives welcoming remarks
				
TUESDAY, FEB. 6					
12:00 pm	Cleveland Fed President Loretta Mester speaks				
1:00 pm	Minneapolis Fed President Neel Kashkari speaks				
2:00 pm	Boston Fed President Susan Collins speaks				
7:00 pm	Philadelphia Fed President Patrick Harker speaks	
			
WEDNESDAY, FEB. 7					
8:30 am	U.S. trade deficit	
11:00 am	Fed Gov. Adriana Kugler speaks				
11:30 am	Boston Fed President Susan Collins speaks				
12:30 pm	Richmond Fed President Tom Barkin speaks				
2:00 pm	Fed Gov. Michelle Bowman speaks				
3:00 pm	Consumer credit	
3:00 pm	CBO briefing on budget and economic outlook
				
THURSDAY, FEB. 8					
8:30 am	Initial jobless claims	
10:00 am	Wholesale inventories	
12:05 pm	Richmond Fed President Tom Barkin speaks
				
FRIDAY, FEB. 9					
8:30 am	CPI seasonal factor revisions				
1:30 pm	Dallas Fed President Lorie Logan speaks

For a chart of typical Up or Down market reactions to specific major US economic reports 
go to:  Economic Indicator Effects

TRADER'S TIP: "What is Money Management?"

In essence, Money Management is the part of your trading method that you use to decide how many shares to hold in a position. Money Management and Position Sizing are essentially the same thing.

Stocks Covered in This Issue

FINANCIAL SERVICES SECTOR

Citigroup Inc. (C: Financial Services/Banks - Diversified) - BULLISH BOUNCE. Among other strengths, the Bullish Bounce protects traders from buying a stock "at the top" of its current cycle. The entry into this setup always takes place in upward-moving stocks that have retreated a bit under normal conditions. Now sitting at 54.29, C is on our radar for a BUY entry at 55.21. If you purchase shares of C, be sure to also place a trailing stop of 3.25. Snug it up to 1.63 on a 1.96 gain. Earnings Report Date: Apr 12, 2024. Beta: 1.51. Market-Cap: 103.319B. Optionable.

HEALTHCARE SECTOR

Soleno Therapeutics, Inc. (SLNO: Healthcare/Biotechnology) - BULLISH BOUNCE. This trader-friendly setup turns repetitive stock behavior into real profits. Based on the tendency for up-trending stocks to drop briefly and then resume the up-trend, the Bullish Bounce places traders into excellent stocks when conditions are primed for more skyward movement. SLNO's current price action near moving average support signals a potential BUY entry at 48.29, followed by a 3.93 trailing stop which can be tightened to 1.97 upon earning 5.38. SLNO closed Thursday at 47.48. Earnings Report Date: Mar 19, 2024. Beta: -1.55. Market-Cap: 1.448B. Optionable.

Kura Oncology, Inc. (KURA: Healthcare/Biotechnology) - SQUEEZE PLAY. KURA is caught in a dilemma. The stock's compressed price range on Thursday 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. KURA is now at 20.33. We can capture price action either way by placing a BUY trigger at 20.88 and a SELL short trigger at 19.35. Once KURA 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 1.53. When you acquire a 1.96 profit, tighten the stop to 0.77. Earnings Report Date: Feb 21, 2024. Beta: 0.85. Market-Cap: 1.539B. Optionable.

INDUSTRIALS SECTOR

Ameresco, Inc. (AMRC: Industrials/Engineering & Construction) - 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 AMRC. A move to the upside will trigger our BUY entry at 22.72, while a drop to 20.97 will trigger our SELL short entry. Follow your position with a 1.75 trailing stop. Tighten the stop to 0.88 once you have a 3.12 gain. AMRC closed Thursday at 22.39. Earnings Report Date: Feb 28, 2024. Beta: 1.56. Market-Cap: 1.146B. Optionable.

TECHNOLOGY SECTOR

Benchmark Electronics, Inc. (BHE: Technology/Electronic Components) - BULLISH BOUNCE. BHE 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 BHE 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 29.92. Set a trailing stop of 2.45, tightening to 1.23 on a 0.96 profit. BHE closed at 29.51 on Thursday. Earnings Report Date: May 01, 2024. Beta: 1.01. Market-Cap: 1.053B. 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.

Disclaimer

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