January 11, 2024 - The RightLine Report
Notes From The Editor
Many traders consider stock picking the most important aspect of trading, and will devote the majority of their trading time to selecting stocks to buy or short. Just cruise around the Internet or listen to small talk around the water cooler - everyone's looking for the next hot stock!
While choosing entries in good stock candidates is certainly a big part of any successful trading system, selecting stocks and determining entries aren't necessarily the most important components.
In reality, properly sizing your position prior to entering a trade and then managing the trade after the entry have a much greater impact on overall profitability than stock and entry point selection.
Trading veteran John Hayden says, "Although it sounds impossible, always remember this simple truth: Proper risk management techniques will dramatically increase profits of a marginally good trading methodology; Alternatively, an outstanding methodology will lose money if no risk management is practiced."
A well rounded approach to your trading education should include a wide variety of topics. Just remember that none of them are more important than Risk Management - food for thought the next time someone mentions a new hot stock.
Trade well,
~ Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 01/11 01/11 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
TRMD 32.03 -0.23 32.58 30.57 2.01/1.01 1.8
SYRE 20.99 -1.14 22.31 19.7 2.61/1.31 4.34
AKRO 22.58 -0.76 23.41 21.71 1.7/0.85 2.5
CABA 21.51 -0.93 22.38 20.52 1.86/0.93 2.6
CNI 124.51 0.16 126.41 7.17/3.59 3.4
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
The US markets were resilient on Thursday as they rebounded from significant losses triggered by a December inflation report that surpassed consensus expectations. Closing the day with mixed results, stocks saw a notable recovery from morning lows, anticipating further inflation data and banking earnings reports scheduled for the next day (Dec PPI and JPM, Citi, Wells earnings). The morning witnessed an initial surge in Treasury yields and cautious remarks from Fed speaker Loretta Mester, creating early downward pressure on major averages.
The December US inflation data surpassed projections, with annual CPI inflation reaching +3.4%, up from +3.1% in November and exceeding the economists' consensus of +3.2%. While this initially propelled stocks higher, they fell short of closing above the all-time record of 4,796.55 seen on January 3, 2022. Mester's subsequent comments in a Bloomberg interview suggested that March might be too early for a rate cut, emphasizing the need for more evidence in the Fed's forecasting. This led to a significant pullback in sectors reliant on lower financing rates, including solar, biotech, and consumer lenders. Additionally, dividend-paying sectors, such as utilities and REITs, faced declines amid higher yield expectations.
Another significant development was the approval of 11 spot Bitcoin ETFs by the SEC, causing considerable volatility and high trading volumes. Despite Bitcoin initially surging to a two-year high above $49,000, a "sell the news" scenario unfolded, erasing gains and pulling prices below $45,000 as crypto stocks followed suit.
The broader takeaway from the Dec 2023 CPI inflation report highlighted substantial increases in overall inflation, with notable spikes in food, shelter costs, and energy over the past two years. Based on the report, overall inflation has surged by 17.6% since President Biden took office. Notably, all food costs have seen a remarkable increase of 33.7% from January 2021. Shelter expenses have risen by 18.7% from January 2021 to December 2023, while energy costs, in general, have escalated by 32.8% since January 2021. Specifically, electricity expenses have surged by 27.1% since January 2021. In summary, prices have experienced a substantial and sustained elevation over the past two years.
Jan 10, 2024 Jan 11, 2024
-------------------- --------------------
Dow 37,695.73 170.57 37,711.02 15.29
Nasdaq 14,969.65 111.94 14,970.19 0.54
S&P 500 4,783.45 26.95 4,780.24 -3.21
NYSE Volume 3.51B 3.78B
NYSE Advancers 1,600 1,174
NYSE Decliners 1,220 1,631
Nasdaq Volume 4.41B 5.06B
Nasdaq Advancers 2,060 1,569
Nasdaq Decliners 2,142 2,677
New Highs/Lows
01/04 01/05 01/08 01/09 01/10 01/11
--------------------------------------------
NYSE New Highs 63 55 61 44 69 71
NYSE New Lows 14 17 25 24 39 35
Nasdaq New Highs 83 56 108 74 106 106
Nasdaq New Lows 87 95 94 72 96 134
Stocks Covered Today Stock Splits
TRADER'S TIP: "Accumulation and Distribution"
Stocks that are bought with higher volume than they are sold during a particular time frame are said to be under "Accumulation." On the flip side, stocks that are sold with higher volume levels than they are bought are considered to be under "Distribution." Many times Accumulation will precede upward price movement, while Distribution will occur before prices start to drop.
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".
S&P 500 - 4780.24 January 11, 2024
52-Week High: 4798.50
52-Week Low: 3808.86
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4935.25
Resistance 2: 4828.92
Resistance 1: 4763.08
Pivot: 4722.59
Support 1: 4656.75
Support 2: 4616.26
Support 3: 4509.93
NASDAQ Composite - 14970.19 January 11, 2024
52-Week High: 15150.07
52-Week Low: 10589.59
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 15972.10
Resistance 2: 15338.23
Resistance 1: 14931.15
Pivot: 14704.36
Support 1: 14297.28
Support 2: 14070.49
Support 3: 13436.62
Dow Industrials - 37711.02 January 11, 2024
52-Week High: 37801.90
52-Week Low: 31429.82
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 38459.19
Resistance 2: 37992.93
Resistance 1: 37729.51
Pivot: 37526.67
Support 1: 37263.25
Support 2: 37060.40
Support 3: 36594.14
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, JAN. 8 3 pm Consumer credit TUESDAY, JAN. 9 8:30 am Trade deficit WEDNESDAY, JAN. 10 10 am Wholesale inventories 3:15 pm New York Fed President John Williams speaks THURSDAY, JAN.11 8:30 am Initial jobless claims 8:30 am CPI 8:30 am Core CPI 8:30 am CPI (year-over-year) 8:30 am Core CPI (year-over-year) 2:00 pm Budget statement FRIDAY, JAN. 12 8:30 am PPI 8:30 am Core PPI (year-over-year) 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: "The Two Basic Types of Technical Indicators"
Technical indicators use math calculations to measure the relationship of current price action to previous prices. Most indicators fall under one of two categories - Trend-Following or Oscillators. Moving Averages and MACD are two well-known trend-following indicators, while Stochastics and RSI are both popular Oscillators. Trend-Following indicators react slowly, and look far into the past to help uncover the future. On the other hand, Oscillators respond quickly to short-term price fluctuations, moving up and down between Overbought and Oversold conditions. There are advantages and disadvantages to each type of indicator, so it is best to use indicators from both groups. This allows the negative features to offset each other while leaving the positive aspects intact.
Stocks Covered in This Issue
ENERGY SECTOR
TORM plc (TRMD: Energy/Oil & Gas Midstream) - SQUEEZE PLAY. TRMD 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. TRMD closed Thursday at 32.03. The plan is to enter in the right direction by placing a BUY trigger at 32.58 and a SELL short trigger at 30.57. Once TRMD establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 2.01. After you've collected a 1.8 profit, tighten the stop to 1.01. Earnings Report Date: N/A. Beta: -0.14. Market-Cap: 2.827B. Optionable.
HEALTHCARE SECTOR
Spyre Therapeutics, Inc. (SYRE: Healthcare/Biotechnology) - SQUEEZE PLAY. SYRE 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 22.31 and a SELL short trigger at 19.7. When one of the orders is filled, cancel the remaining order and enter a 2.61 trailing stop. When you've reached a 4.34 paper profit, tighten the stop to 1.31. SYRE closed at 20.99 on Thursday. Earnings Report Date: Mar 04, 2024. Beta: 2.85. Market-Cap: 756.081M. Optionable.
Akero Therapeutics, Inc. (AKRO: Healthcare/Biotechnology) - 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. AKRO 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 23.41 and a SELL short trigger at 21.71. When AKRO 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 1.7 trailing stop. After you've got a 2.5 profit, tighten the stop to 0.85. AKRO closed at 22.58 on Thursday. Earnings Report Date: Mar 15, 2024. Beta: -0.43. Market-Cap: 1.258B. Optionable.
Cabaletta Bio, Inc. (CABA: Healthcare/Biotechnology) - SQUEEZE PLAY. The ticker for Thursday's session shows CABA 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 22.38 and a SELL short trigger at 20.52. When CABA 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 1.86 trailing stop. Upon reaching a 2.6 profit, resize the stop to 0.93. Earnings Report Date: Mar 14, 2024. Beta: 2.48. Market-Cap: 921.691M. Optionable.
INDUSTRIALS SECTOR
Canadian National Railway Company (CNI: Industrials/Railroads) - BULLISH BOUNCE. The charts for CNI show that despite the downward pressure from sellers recently, the weekly uptrend is still going strong. Buyers showed up again on Thursday, 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 126.41, and follow your entry with a trailing stop of 7.17. Tighten it to 3.59 when a 3.4 profit is reached. CNI ended the latest session at 124.51. Earnings Report Date: Jan 22, 2024. Beta: 0.67. Market-Cap: 80.645B. 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.
Disclaimer
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