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January 23, 2024 - The RightLine Report
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NOTES FROM THE EDITOR
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A Trader's Thoughts: "What makes up a winning attitude?"
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"QUICK LIST"
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Stock 01/23 01/23 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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PRAA 24.92 -0.32 25.83 24.13 1.7/0.85 2.22
OGN 16.27 0.58 16.52 1.27/0.64 1.22
IMCR 72.08 0.16 73.15 4.62/2.31 7.26
CABA 20.22 -0.25 20.87 19.39 1.48/0.74 2.52
SAVA 26.02 -0.28 26.93 25.05 1.88/0.94 3.12
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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Stocks closed marginally higher on Tuesday, with primary headlinse dominated by corporate earnings. The S&P 500 saw its best performance in consumer staples and communication services, fueled by robust quarterly earnings from Proctor & Gamble and Verizon. The yield curve showed a steepening trend, with the 10-year Treasury yield reaching approximately 4.14%, while the 2-year yield edged lower to 4.38%. Most Asian markets experienced gains following the Bank of Japan's decision to keep the policy rate unchanged. Looking ahead, the market anticipates several crucial economic readings this week, including fourth-quarter GDP on Thursday and personal consumption expenditures (PCE) inflation on Friday. The forecast suggests real GDP growth at a 1.5% quarter-over-quarter annualized rate, a decline from the 4.9% growth rate in the third quarter, while headline PCE is expected to rise by 2.6% year-over-year. Expectations indicate a continued decline in inflation, with the December PCE inflation reading anticipated on Friday. While December's consumer price index (CPI) inflation reading exceeded expectations earlier this month, with headline CPI rising by 3.4% year-over-year and core CPI by 3.9%, cautious remarks from Fed officials and robust economic data, such as the recent retail sales report, have tempered expectations for early Fed rate cuts. Market expectations suggest the Fed will maintain policy rates at the January meeting, with around a 60% probability of a rate cut by March 20, a decrease from approximately 75% on January 12. Our alignment with market expectations is that the Fed will likely keep policy rates steady in the upcoming meeting, but we maintain the view that the first rate cut may not happen until around midyear. In 2024, familiar sectors that led the market higher in 2023, namely information technology and communication services, have continued their strong performance, up by over 50% last year. Much of this upward movement is attributed to the growth potential of artificial intelligence (AI). Expectations for corporate profit growth are aligned with this enthusiasm, with both information technology and communication services anticipated to achieve over 15% earnings growth in 2024. The health care sector, which remained relatively flat in 2023, has also seen a robust start to the year, rising by nearly 3%. Conversely, interest-rate-sensitive sectors like utilities and real estate, along with cyclical sectors such as energy and materials, have lagged in 2024. Small-cap stocks and investment-grade bonds, after rallying in the final months of 2023, have retreated at the beginning of this year. Looking ahead, there is an outlook for market leadership to broaden in 2024, with cyclical areas, including small- and mid-cap stocks, expected to perform well alongside large-cap technology companies. Jan 22, 2024 Jan 23, 2024
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Dow 38,001.81 138.01 37,905.45 -96.36
Nasdaq 15,360.29 49.32 15,425.94 65.66
S&P 500 4,850.43 10.62 4,864.60 14.17
NYSE Volume 4.3B 3.92B
NYSE Advancers 2,164 1,355
NYSE Decliners 678 1,434
Nasdaq Volume 5.47B 5.23B
Nasdaq Advancers 3,021 2,062
Nasdaq Decliners 1,274 2,159
New Highs/Lows
01/16 01/17 01/18 01/19 01/22 01/23
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NYSE New Highs 56 46 68 118 180 93
NYSE New Lows 68 86 52 48 35 8
Nasdaq New Highs 87 54 88 197 283 147
Nasdaq New Lows 207 239 203 223 157 96
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TRADER'S TIP:
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TRADER'S TIP: "Buy the Dip, Sell the Rise" When prices set new highs in a strong uptrend, always buy the first pullback, or dip. When prices set new lows in a strong downtrend, always short the first pullback, or rise. Once you are in the trade, look for the previous trend to continue. **************************
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/ S&P 500 - 4,850.43 January 23, 2024 https://www.prorightline.com/rlch/012324SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, JAN. 22 10:00 am U.S. leading economic indicators TUESDAY, JAN. 23 None scheduled WEDNESDAY, JAN. 24 9:45 am S&P flash U.S. services PMI 9:45 am S&P flash U.S. manufacturing PMI THURSDAY, JAN. 25 8:30 am Q4 GDP (prelim) 8:30 am Initial jobless claims 8:30 am Durable-goods orders 8:30 am Durable-goods minus transportation 8:30 am Advanced U.S. trade balance in goods 8:30 am Advanced retail inventories 8:30 am Advanced wholesale inventories 10:00 am New home sales FRIDAY, JAN. 26 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) 10:00 am Pending home sales 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: "Profit vs. Pain" Successful traders obtain consistent profits. Losing traders obtain consistent pain. In order to become the trader you desire, you must change the internal representations of what a loss means. You must diligently apply yourself to mastering your perceptions, believing with certainty that you will transform yourself into an outstanding trader, have the discipline to develop and obey your trading methodology, have the courage to execute your methodology without hesitation, have the wisdom to differentiate between into wishing" and intuition, have the persistence never to quit, have the integrity to stand apart from other traders, and have the mental flexibility to be open-minded. If you do, I promise you that at some point in time you will represent a loss in such a way that you will become a highly profitable trader." ~ John Hayden, full-time trader for over 20 years, author of "The 21 Irrefutable Truths of Trading" ***********************************
STOCKS COVERED IN THIS ISSUE
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FINANCIAL SERVICES SECTOR PRA Group, Inc. (PRAA: Financial Services/Credit Services) - SQUEEZE PLAY. Tuesday's trading session left PRAA in a very narrow price range after buyers and sellers fought to a near stalemate. Both sides are looking for some traction, and a breakout either way could provide a nice gain in the short term. To get aboard, set your BUY trigger at 25.83 and your SELL short trigger at 24.13. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.7 trailing stop. Once you have a 2.22 profit, reduce the stop to 0.85. Earnings Report Date: Feb 15, 2024. Beta: 1.49. Market-Cap: 977.963M. Optionable. HEALTHCARE SECTOR Organon & Co. (OGN: Healthcare/Drug Manufacturers - General) - BULLISH BOUNCE. OGN has charted an upward weekly trend until recently when sellers showed up to push prices lower. On Tuesday the selling ran into solid support. A potential bounce up from this level should attract buyers and likely return OGN 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 16.52. Set a trailing stop of 1.27, tightening to 0.64 on a 1.22 profit. OGN closed at 16.27 on Tuesday. Earnings Report Date: Feb 05, 2024. Beta: 0.74. Market-Cap: 4.159B. Optionable. Immunocore Holdings plc (IMCR: 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. IMCR's current price action near moving average support signals a potential BUY entry at 73.15, followed by a 4.62 trailing stop which can be tightened to 2.31 upon earning 7.26. IMCR closed Tuesday at 72.08. Earnings Report Date: Feb 28, 2024. Beta: 0.97. Market-Cap: 3.564B. Optionable. Cabaletta Bio, Inc. (CABA: Healthcare/Biotechnology) - SQUEEZE PLAY. The ticker for Tuesday'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 20.87 and a SELL short trigger at 19.39. 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 1.48 trailing stop. Upon reaching a 2.52 profit, resize the stop to 0.74. Earnings Report Date: Mar 14, 2024. Beta: 2.48. Market-Cap: 866.415M. Optionable. Cassava Sciences, Inc. (SAVA: Healthcare/Biotechnology) - SQUEEZE PLAY. SAVA is stuck in a Bull/Bear deadlock. Fortunately for traders this impasse should be resolved soon, with one side or the other taking control. We want to be positioned for a potential quick move up or down, so get ready to catch this train with a BUY entry at 26.93 and a SELL short entry at 25.05. Once your trade is filled, enter a 1.88 trailing stop. Tighten it to 0.94 after a 3.12 gain. SAVA closed on Tuesday at 26.02. Earnings Report Date: Feb 26, 2024. Beta: -0.29. Market-Cap: 1.099B. Not 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/ ***********************************
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/ ======================================================================
Best of luck and have a Great Week!
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