January 18, 2024 - The RightLine Report
Notes From The Editor
The Media - A Friend To Count On?
It's been said that for every expert there's an opinion, and for every opinion there's an expert. The perfect example of this observation arrives annually during the weeks surrounding the arrival of a new year. Without fail an unending lineup of TV talking heads will present a steady stream of authoritative market predictions. Not surprisingly, many of these experts offer opposing viewpoints and expectations for the following year.
While all of the commotion creates a whirl of buy and sell activity for stockbrokers, it provides little if any real value for traders and investors. The biggest quandary is that most experts recommend their favorite stocks or funds - all different of course - and give no specific time frame or exit plan. Each one makes a good case for their particular selection, but then so does the next "expert" in the lineup.
The general theme of all this advice is for viewers to hold onto their purchases for the "long term." Unfortunately, not only do the experts fail to tell us if that means months, years, or decades, next year these same experts may propose an entirely different stock or fund because their previous year's forecast crashed and burned.
Usually the only specifics offered are WHAT to buy. Rarely are investors told how long they should anticipate holding the position, and they NEVER get a specific exit price to use if the stock or fund implodes.
I guess our friendly experts want us to buy and hold their recommendations for the "long term" - whatever that is. Then if the stock or fund tanks during that timeframe we just pray it will bounce back. Apparently no other details are required.
Whew - with expert friends like that, who needs enemies?
Trade well!
~ Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 01/18 01/18 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
WS 28.64 0.64 29.61 27.41 2.2/1.1 5.04
PRAA 22.45 0.28 22.87 21.36 1.51/0.76 2.38
PCRX 31.73 0.09 32.49 30.46 2.03/1.02 2.16
PK 15.99 0.10 16.23 1.08/0.54 0.78
PLAB 29.28 0.68 30.11 28.19 1.92/0.96 2.6
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 on Thursday as they approached the final trading day of this holiday-shortened week. The upward momentum was driven by the strength of mega-cap technology stocks (AAPL, META) and semiconductors (SOX rose by +3.3%), reflecting positive market sentiment. However, market breadth turned negative midday, only to end slightly better.
Optimism waned following less dovish commentary from the Fed, particularly from Bostic, who urged caution on rate cuts amid global uncertainty. He reiterated his projection of the first rate cut in the third quarter of 2024, in contrast to market expectations of a cut in March. Bostic emphasized the need for the Fed to allow events to unfold.
These remarks prompted a pullback in stocks, and Treasury yields reached new highs, with the 10-year surpassing 4.15%. Bostic's comments align with a trend among various Fed speakers, including Waller, downplaying the urgency for rate cuts, despite market expectations favoring lower rates. Sectors benefiting from lower rates, such as homebuilders, lenders, and those requiring easier financing like biotech and solar, experienced notable declines.
Besides macroeconomic news, which included positive jobless claims and housing data along with weaker Philly Fed business index figures, certain sectors like healthcare (impacted by HUM's lowered guidance) and consumer finance (DFS tumbling on results) saw pullbacks. Defensive sectors like Utilities and REITs, which typically rally in a low-rate environment, led the downward movement.
Nevertheless, by the day's end, markets resumed their upward trajectory as they approached option expiration, setting new highs for the S&P and Dow. AAPL had its best session in approximately eight months after an analyst upgrade earlier in the day, marking a strong rebound from yesterday's lows of $180.30, which also coincided with its 200-day support.
Late-day headlines reported that the Senate passed a government funding bill to avert a shutdown until March, sending the bill to the House, further contributing to the positive market sentiment. The ongoing dominance of certain names continued to propel the market to new highs, while Smallcaps and other sectors continued to lag.
Jan 17, 2024 Jan 18, 2024
-------------------- --------------------
Dow 37,266.67 -94.45 37,468.61 201.94
Nasdaq 14,855.62 -88.73 15,055.65 200.03
S&P 500 4,739.21 -26.77 4,780.94 41.73
NYSE Volume 3.93B 4.07B
NYSE Advancers 711 1,572
NYSE Decliners 2,125 1,243
Nasdaq Volume 5.2B 5.64B
Nasdaq Advancers 1,352 2,244
Nasdaq Decliners 2,901 2,013
New Highs/Lows
01/11 01/12 01/15 01/16 01/17 01/18
--------------------------------------------
NYSE New Highs 71 107 0 56 46 68
NYSE New Lows 35 23 0 68 86 52
Nasdaq New Highs 106 134 0 87 54 88
Nasdaq New Lows 134 86 0 207 239 203
Stocks Covered Today Stock Splits
TRADER'S TIP: "Price Action Near Support & Resistance Lines"
It pays to watch support and resistance lines for potential trade setups. One of the best low-risk buy signals takes place when price dips below a significant support line, and then comes back up and closes above it. In the same fashion, a good shorting opportunity is usually provided when price rises marginally above a resistance line, then reverses to close below it.
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 - 4,739.21 January 18, 2024
NASDAQ Composite - 14,855.62 January 18, 2024
Dow Industrials - 37,266.67 January 18, 2024
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, JAN. 15 Martin Luther King Jr. holiday, none scheduled TUESDAY, JAN. 16 8:30 am Empire State manufacturing survey 11:00 am Fed Gov. Christopher Waller speaks WEDNESDAY, JAN. 17 8:30 am Import price index 8:30 am Import price index minus fuel 8:30 am U.S. retail sales 8:30 am Retail sales minus autos 9:00 am Fed Vice Chair for Supervision Michael Barr speaks 9:00 am Fed Gov. Michelle Bowman speaks 9:15 am Industrial production 9:15 am Capacity utilization 9:15 am Business inventories 2:00 pm Fed Beige Book 3:00 pm New York Fed President John Williams delivers opening remarks THURSDAY, JAN. 18 7:30 am Atlanta Fed President Raphael Bostic speaks 8:30 am Initial jobless claims 8:30 am Philadelphia Fed manufacturing survey 8:30 am Housing starts 8:30 am Building permits 12:05 pm Atlanta Fed President Raphael Bostic speaks FRIDAY, JAN. 19 10:00 am Consumer sentiment (prelim) 10:00 am Existing home sales 1:00 pm Fed Vice Chair for Supervision Michael Barr speaks 4:15 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: "Chess Analogy"
A trader who knows how to go both long and short is like the queen in chess, which can move in any direction. This ability is what makes the queen a far more powerful piece than the pawn, which basically can only move forward.
Stocks Covered in This Issue
BASIC MATERIALS SECTOR
Worthington Steel, Inc. (WS: Basic Materials/Steel) - 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 WS's case we will enter a BUY should it reach the 29.61 level, or a SELL short trade if it drops to 27.41. As usual a trailing stop is essential, 2.2 which should be tightened to 1.1 on a 5.04 gain. WS closed Thursday at 28.64. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.439B. Not Optionable.
FINANCIAL SERVICES SECTOR
PRA Group, Inc. (PRAA: Financial Services/Credit Services) - 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 PRAA. A move to the upside will trigger our BUY entry at 22.87, while a drop to 21.36 will trigger our SELL short entry. Follow your position with a 1.51 trailing stop. Tighten the stop to 0.76 once you have a 2.38 gain. PRAA closed Thursday at 22.45. Earnings Report Date: Feb 15, 2024. Beta: 1.49. Market-Cap: 881.03M. Optionable.
HEALTHCARE SECTOR
Pacira BioSciences, Inc. (PCRX: Healthcare/Drug Manufacturers - Specialty & Generic) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in PCRX's narrowest trading range of the past seven sessions. With neither group able to take complete control on Thursday, 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 32.49 and a SELL order at 30.46. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.03 trailing stop. Tighten the stop to 1.02 once you have a 2.16 gain. PCRX closed Thursday at 31.73. Earnings Report Date: Feb 26, 2024. Beta: 0.75. Market-Cap: 1.473B. Optionable.
REAL ESTATE SECTOR
Park Hotels & Resorts Inc. (PK: Real Estate/REIT - Hotel & Motel) - BULLISH BOUNCE. Up-trending stocks like PK have a tendency to bounce their way skyward rather than travel higher in a straight line. After touching down to a moving average support level on Thursday, PK is poised to lift off again. To take advantage of this setup, prepare to BUY shares at 16.23 if positive price action occurs. As always, follow your entry with a trailing stop. A 1.08 trailer should work well with PK. Tighten it to 0.54 on a 0.78 gainer. Earnings Report Date: Feb 20, 2024. Beta: 2.03. Market-Cap: 3.359B. Optionable.
TECHNOLOGY SECTOR
Photronics, Inc. (PLAB: Technology/Semiconductor Equipment & Materials) - SQUEEZE PLAY. Trader indecision has put PLAB 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 30.11 and a SELL short entry at 28.19. Now it's up to PLAB to show us which entry will be filled. Once the trade is underway place a 1.92 trailing stop, which can be tightened to 0.96 after you achieve a 2.6 profit. PLAB closed on Thursday at 29.28. Earnings Report Date: Feb 19, 2024. Beta: 1.41. Market-Cap: 1.833B. 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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