Notes From The Editor

While as traders we prefer to be prepared for a market move in either direction, it's always good for morale to see all the major averages moving higher. However, since market leadership rotates between the different indices, it's sometimes difficult to know which index to track.

Although the Dow has traditionally been given the primary spotlight due to its status as the "oldest" index, it is only made up of 30 stocks. On the other hand, the Nasdaq Composite includes over 4,000 companies - essentially all common stocks listed on the Nasdaq Stock Market.

However, sheer size doesn't mean that it represents the market as a whole. The extremely high percentage of technology companies traded on the Nasdaq cause it to act much like a huge tech sector, while the broader market contains a much wider variety of industries.

The S&P 500 is clearly more balanced. With five hundred of the world's largest companies making up the diverse component list, it carries a lot of weight. Though it may not have gotten as much attention as the Dow and Nasdaq over the past years, it is certainly worth considering when making decisions about "what" the market is doing - especially when it comes to confirming market bottoms and tops.

The Wilshire Total Market Index is the largest and most inclusive index of all. It is made up of virtually every stock traded in the U.S. markets, and is used by many economists to measure broad market health.

Regardless of which index you use, it pays to be aware that there is more than one way to measure "the market." The larger group directly influences most stocks. It's certainly helpful for traders to be aware of which indices have the most affect on their positions. The indices give us clues to help pinpoint the areas where the trend should continue, or a rebound will likely occur.

Trade well,

~ Thomas Sutton, Editor

Quick List

    
Stock     01/25     01/25      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

RILY      20.28      0.05     20.97      19.5        1.47/0.74      3.58
SEM       26.32      0.40     26.75                  1.69/0.85      1.76
LBPH      26.00      0.32     27.26     24.22        3.04/1.52      4.16
AMRC      23.05      1.00      23.4      21.3         2.1/1.05      2.68
NVEI      24.50      0.00     25.04     23.01        2.03/1.02      1.86

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 closed higher following a fourth-quarter USA GDP growth reading that exceeded expectations. Energy emerged as the strongest-performing sector of the S&P 500, bolstered by a nearly 3% increase in oil prices. However, Tesla faced pressure, with shares declining over 10% after reporting earnings per share below consensus expectations and projecting slower vehicle volume growth in 2024.

Overnight, Asian markets, particularly China's Shanghai Composite, surged over 3% in response to the People's Bank of China's decision to reduce banks' reserve-requirement ratio to stimulate economic growth. In Europe, markets mostly rose after the European Central Bank left policy rates unchanged.

Bond yields concluded lower, with the 10-year U.S. Treasury yield closing around 4.12%. On the jobs front, initial jobless claims rose to 214,000 from the previous reading of 189,000.

As mentioned, fourth-quarter real GDP exceeded expectations with a 3.3% quarter-over-quarter annualized growth rate, surpassing the consensus estimate of 1.7%. While a slowdown from the third quarter's 4.9% growth occurred, the 3.3% reading remains well above the long-run estimates for potential growth, approximately 2%. Robust consumption was a crucial driver, increasing by 2.8% quarter-over-quarter, showing significant growth in the consumption of both goods and services.

As the week concludes, market attention will shift to inflation, with the December personal consumption expenditures (PCE) inflation reading expected Friday. Forecasts suggest headline PCE to rise by 2.6% year-over-year, unchanged from November, while core PCE (excluding food and energy) is anticipated to rise by 3% year-over-year, compared to the November reading of 3.2%. This reading is the last on inflation before the January 31 Fed Bank's FOMC meeting. Despite the Fed's median projections indicating 0.75% worth of rate cuts in 2024, markets anticipate the first rate cut as early as March. Our perspective aligns with the likelihood of the Fed maintaining its current stance until there is substantial evidence of inflation moving sustainably lower towards its 2% target, with potential rate cuts more likely in the midyear.

                        Jan 24, 2024           Jan 25, 2024   
                  --------------------   --------------------
Dow                 37,806.39   -99.06     38,049.13   242.74
Nasdaq              15,481.92    55.97     15,510.50    28.58
S&P 500              4,868.55     3.95      4,894.16    25.61

NYSE Volume                      4.34B                  4.02B
NYSE Advancers                   1,242                  2,205
NYSE Decliners                   1,557                    632

Nasdaq Volume                    4.99B                  5.29B
Nasdaq Advancers                 1,782                  2,638
Nasdaq Decliners                 2,479                  1,577

                                 New Highs/Lows

                   01/18  01/19  01/22  01/23  01/24  01/25
                 --------------------------------------------
NYSE New Highs        68    118    180     93    141    122
NYSE New Lows         52     48     35      8     11     21
Nasdaq New Highs      88    197    283    147    246    141
Nasdaq New Lows      203    223    157     96    101    132
   

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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, 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

TRADER'S TIP: "Profits Improve With Technical Timing"

Regardless of the reasons you decide to buy a stock, Technical Analysis is always helpful when it comes to timing entries. Support and resistance on the charts may be unfamiliar to most investors, but they have a huge impact on stock price movement.

Stocks Covered in This Issue

FINANCIAL SERVICES SECTOR

B. Riley Financial, Inc. (RILY: Financial Services/Financial Conglomerates) - SQUEEZE PLAY. Traders are feeling the pressure as RILY's intra-day price range on Thursday shrunk to the narrowest spread in over a week. The tension between buyers and sellers should provide enough pent-up engergy for a breakout move in the days ahead, so get ready to trade with the new trend. To achieve that, place a BUY entry at 20.97 and a SELL short entry at 19.5. RILY's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.47 trailing stop. Tighten it to 0.74 after you get a 3.58 gain. RILY closed Thursday at 20.28. Earnings Report Date: Feb 20, 2024. Beta: 1.59. Market-Cap: 620.221M. Optionable.

HEALTHCARE SECTOR

Select Medical Holdings Corporation (SEM: Healthcare/Medical Care Facilities) - 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 26.32, SEM is on our radar for a BUY entry at 26.75. If you purchase shares of SEM, be sure to also place a trailing stop of 1.69. Snug it up to 0.85 on a 1.76 gain. Earnings Report Date: Feb 21, 2024. Beta: 1.32. Market-Cap: 3.375B. Optionable.

Longboard Pharmaceuticals, Inc. (LBPH: Healthcare/Biotechnology) - SQUEEZE PLAY. Thursday's trading action forced LBPH's daily price range into an abnormally narrow state. This translates into opportunity; for the cyclical nature of price volatility is to shrink extensively, then swell rapidly as shares move in one direction or another. Instead of trying to predict the direction LBPH will take when price volatility begins to increase, we'll set both a BUY (long) and a SELL (short) trigger to get us into the right trade. Be ready to BUY shares at 27.26 if LBPH moves higher, and place your order to SELL short at 24.22 if price declines to that level. As usual follow your entry with a trailing stop, 3.04 should be sufficient. Reduce your stop to 1.52 on a 4.16 gain. LBPH closed Thursday at 26.00. Earnings Report Date: Feb 29, 2024. Beta: 1.08. Market-Cap: 919.287M. Optionable.

INDUSTRIALS SECTOR

Ameresco, Inc. (AMRC: Industrials/Engineering & Construction) - SQUEEZE PLAY. Thursday's narrow price range has created a potentially profitable setup in AMRC, as sellers and buyers find themselves in a near tie for control of price direction. The next short-term trend could go either way, so prepare for a move out of the draw within the next day or so. Set a BUY entry at 23.4 and a SELL short entry at 21.3. Let AMRC's price action determine your long or short entry. Once the order is filled, place a 2.1 trailing stop, and tighten it to 1.05 upon getting a 2.68 gain. AMRC closed Thursday at 23.05. Earnings Report Date: Feb 26, 2024. Beta: 1.54. Market-Cap: 1.204B. Optionable.

TECHNOLOGY SECTOR

Nuvei Corporation (NVEI: Technology/Software - Infrastructure) - SQUEEZE PLAY. A look at NVEI's daily chart shows what a price squeeze is all about. The constricted high-low daily trading range has produced a setup similar to a tightly coiled spring. Expect price to move sharply soon, with the direction yet to be determined. Let the upcoming market action resolve whether you will buy shares or sell short. To capture a move either way, place a BUY trigger at 25.04 and a SELL short trigger at 23.01. Once NVEI shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 2.03 and tighten to 1.02 on a 1.86 gain. NVEI closed Thursday at 24.50. Earnings Report Date: Mar 06, 2024. Beta: 3.29. Market-Cap: 3.428B. 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.

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