January 4, 2024 - The RightLine Report
Notes From The Editor
Years ago a Chicago CBOE floor trader gave me some interesting advice. We were discussing the obvious pressures that go along with trading the market, and particularly the sleepless nights that sometimes result when holding large positions in volatile markets.
His stress management technique was simple but very effective: sell a portion of the shares, and see if you sleep comfortably. If not, sell more, and try again to get a good night's sleep. If that doesn't work, keep selling until you DO sleep well!
We've all heard of the "three M's" of trading - Money, Management and Mind. Of the three, mind tends to get the least attention, when in fact it really deserves the most.
Take a look at any financial publication, and you'll see that Money and Management issues usually outnumber Mind issues by a hefty margin. Clearly the focus is financial, yet we all know that financial success in the market is directly related to how effectively we use our minds.
We all want to make money - that's why we trade stocks. However, when money becomes the primary basis of our decisions, we miss out on some of the best aspects of life. Yes, most of us want to be rich and happy. Which comes first, the egg or the chicken? Some people believe that "rich" leads to "happy" yet there's plenty of evidence to the contrary.
Regardless of the route you take, an extremely important member of the Mind department is passion. Some people would really love to trade the stock market on a regular basis, yet they fear failure and are unwilling to learn the skills necessary to reach their objectives. These folks would have a hard time sleeping at night while carrying stock positions large enough to meet their goals.
It's great to have security and a reliable income, but it isn't worth sacrificing a passionate career. Loving what we do is a vital part of a healthy lifestyle, and choosing what is primary for YOU is a fundamental step to creating a fulfilled life.
Trade well,
Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 01/04 01/04 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
RILY 21.88 -0.91 23.23 21.05 2.18/1.09 6.18
SLNO 36.70 0.65 37.55 2.93/1.47 4.94
AVTE 20.29 -0.22 21.13 2.01/1.01 2.68
CRGX 19.89 -0.20 20.57 19.12 1.45/0.73 3.28
PHR 22.05 -0.06 22.75 21.09 1.66/0.83 2.2
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 markets displayed a mixed performance on Thursday, driven by weakness in technology stocks, especially semiconductors, leading to a decline in the Nasdaq for the week. The Semiconductor Index (SOX) experienced a 5.8% drop in three days. Energy stocks also faced a decline, impacting the S&P 500, which struggled to maintain the 4,700 level. Despite attempts, it failed to do so. High beta tech names were negatively affected by rising bond yields, spurred by robust economic data, including the ADP private payrolls and jobless claims, indicating a resilient labor market.
Certain sectors exhibited strength, including Healthcare (XLV) with a third consecutive day of gains in 2024, alongside robust performances in Financials (XLF) and Industrials (XLI). Among the Dow Jones Industrial Average leaders were AMGN, MRK, CAT, TRV, and MMM. However, earnings results from the food space (CAG) and Healthcare (WBA, cutting dividends) were disappointing.
Despite a few weak days at the start of 2024, market sentiment remains favorable, with approximately 76-78% of the S&P 500 components trading above their 200-day simple moving averages, the highest since 2021. The CBOE Volatility index (VIX) held at 14. Markets concluded the day at their lows ahead of the jobs data due Friday morning.
In commodities, crude oil reversed lower, settling at $72.19 per barrel. Natural gas futures for Feb rose to $2.821 per MMBtu, gold prices rose to $2,050 an ounce, and Bitcoin is currently at $44,289. Treasury yields extended gains, with the 10-year yield around 4%, up about 15 basis points over the first three trading days of the new year, and the two-year yield rose to 4.38%.
Jan 3, 2024 Jan 4, 2024
-------------------- --------------------
Dow 37,430.19 -284.85 37,440.34 10.15
Nasdaq 14,592.21 -173.73 14,510.30 -81.91
S&P 500 4,704.81 -38.02 4,688.68 -16.13
NYSE Volume 3.95B 3.72B
NYSE Advancers 783 1,386
NYSE Decliners 2,029 1,427
Nasdaq Volume 5.46B 5.3B
Nasdaq Advancers 1,113 2,045
Nasdaq Decliners 3,089 2,230
New Highs/Lows
12/28 12/29 01/01 01/02 01/03 01/04
--------------------------------------------
NYSE New Highs 133 101 0 46 42 63
NYSE New Lows 7 9 0 10 10 14
Nasdaq New Highs 255 59 0 62 26 83
Nasdaq New Lows 60 37 0 39 38 87
Stocks Covered Today Stock Splits
TRADER'S TIP: "The Market In The Mirror"
Ever notice how the stock market seems to have a mind of its own, and does whatever it pleases with little regard for what any of us think? This seemingly unpredictable and somewhat mysterious aspect of the market perpetuates the idea that Wall Street is beyond comprehension - maybe even beyond the laws of nature! Be assured that there is nothing magical going on behind the curtain. The market is made up entirely of human beings - just like you.
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 - 4688.68 January 4, 2024
52-Week High: 4793.30
52-Week Low: 3794.33
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4879.77
Resistance 2: 4823.19
Resistance 1: 4796.51
Pivot: 4766.61
Support 1: 4739.93
Support 2: 4710.03
Support 3: 4653.45
NASDAQ Composite - 14510.30 January 4, 2024
52-Week High: 15150.07
52-Week Low: 10265.04
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 15475.42
Resistance 2: 15252.47
Resistance 1: 15131.91
Pivot: 15029.51
Support 1: 14908.95
Support 2: 14806.55
Support 3: 14583.59
Dow Industrials - 37440.34 January 4, 2024
52-Week High: 37790.08
52-Week Low: 31429.82
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 38599.12
Resistance 2: 38089.10
Resistance 1: 37889.32
Pivot: 37579.07
Support 1: 37379.29
Support 2: 37069.04
Support 3: 36559.01
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, JAN 1 New Year's holiday, markets closed TUESDAY, JAN 2 9:45 am S&P final U.S. manufacturing PMI Dec. 10:00 am Construction spending Nov. WEDNESDAY, JAN 3 10:00 am U.S. job openings Nov. 10:00 am ISM manufacturing Dec. 2 pm Minutes of Fed's December meeting TBA Auto sales Dec. THURSDAY, JAN 4 8:15 am ADP employment Dec. 8:30 am Initial jobless claims Dec. 30 9:45 am S&P final U.S. services PMI Dec. FRIDAY, JAN 5 8:30 am U.S. employment report Dec. 8:30 am U.S. unemployment rate Dec. 8:30 am U.S. hourly wages Dec. 8:30 am Hourly wages (year over year) 10:00 am ISM services Dec. 10:00 am Factory orders Nov. 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 Bigger The Profit, The Tighter The Stop"
As your profits in a trade grow, be sure to tighten up your stops. However this doesn't mean that you should attempt to guess where the "top" is. To consistently get the most out of each trade, be willing to stay in a position until your stop takes you out of the trade. It's okay to be slightly late to take profits, just be sure to set your stops to allow for normal intra-day price fluctuations. A good exit strategy doesn't usually get you out at the "perfect" moment. Why? Because a properly set trailing stop is always wide enough to keep you in the trade long enough to get NEAR the top. Keep in mind that if you do get shaken out too early, you can always get back in if conditions merit.
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 23.23 and a SELL short entry at 21.05. RILY's price movement will decide which entry is filled. As soon as you're in the trade, enter a 2.18 trailing stop. Tighten it to 1.09 after you get a 6.18 gain. RILY closed Thursday at 21.88. Earnings Report Date: Feb 20, 2024. Beta: 1.59. Market-Cap: 669.154M. Optionable.
HEALTHCARE SECTOR
Soleno Therapeutics, Inc. (SLNO: Healthcare/Biotechnology) - NEW HIGH DIP. Stocks in the early stages of a bounce tend to move higher. This is especially true when a strong performer in an established uptrend dips to a well-known support level. SLNO fits this model perfectly. After setting a new 52-week high a few days back, the stock dipped for several sessions due to profit taking. Now the price action is signaling there is a reversal underway. Plan to buy this dip if the bounce lifts SLNO to our entry level BUY trigger at 37.55. Set a trailing stop of 2.93 and tighten to 1.47 on a 4.94 gain. SLNO closed Thursday at 36.70. Earnings Report Date: Mar 19, 2024. Beta: -1.53. Market-Cap: 1.119B. Optionable.
Aerovate Therapeutics, Inc. (AVTE: Healthcare/Biotechnology) - BULLISH BOUNCE. Everyone familiar with price charts knows that a stock tends to bounce its way higher rather than move in a straight line. The lower levels of these short-term rebounds offer a safe and often early entry into stocks that are in the process of establishing longer-term uptrends. AVTE's reaction to support on Thursday created a Bullish Bounce setup with a BUY entry trigger at 21.13. Use a 2.01 trailing stop, which should work well with AVTE's typical daily range. Tighten it to 1.01 on a 2.68 profit. AVTE closed at 20.29 on Thursday. Earnings Report Date: Mar 27, 2024. Beta: 1.14. Market-Cap: 561.402M. Not Optionable.
CARGO Therapeutics, Inc. (CRGX: Healthcare/Biotechnology) - SQUEEZE PLAY. Thursday's narrow price range has created a potentially profitable setup in CRGX, 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 20.57 and a SELL short entry at 19.12. Let CRGX's price action determine your long or short entry. Once the order is filled, place a 1.45 trailing stop, and tighten it to 0.73 upon getting a 3.28 gain. CRGX closed Thursday at 19.89. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 819.569M. Not Optionable.
Phreesia, Inc. (PHR: Healthcare/Health Information Services) - SQUEEZE PLAY. A look at PHR'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 22.75 and a SELL short trigger at 21.09. Once PHR shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.66 and tighten to 0.83 on a 2.2 gain. PHR closed Thursday at 22.05. Earnings Report Date: Mar 20, 2024. Beta: 0.95. Market-Cap: 1.226B. 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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