July 25, 2024 - The RightLine Report
Notes From The Editor
Whipsaw market environments are inherently difficult to trade; their abrupt directional changes seem to come out of nowhere. During these types volatile of markets you can take a few steps to protect your capital - or better yet - reap some profits.
- When it doubt, stay out! Typically a whipsaw phase will eventually resolve itself to a new trend. As long as the major indexes are moving in one direction (or bouncing between two well-defined support/resistance levels), we have a basic guide map from which we can base our trades. Staying on the sidelines guarantees that your account will be sheltered until the whipsaws end.
- Find stocks that have a lower correlation with the broader market. Oftentimes you'll run across an equity that doesn't show much correlation with the major indexes. This can even be the case with entire sectors. Stocks can generate a directional momentum all their own - strong enough to override the underlying bias created by what the market's direction.
- Find stocks with lower Betas. Lower Betas are an indication of lower volatility. These stocks are less likely to be whipped around by the market's gyrations. They may see similar directional shifts, but the magnitude of those moves tends to be smaller. This translates to safer stops and positions that tend to stay open longer. These are ideal for more conservative or longer-term traders.
Remember: there's nothing wrong with volatility. In fact, swing traders thrive on it! By keeping an eye on what the overall market is doing, you can grow your account - even when stocks are acting schizophrenic.
Here's to profits,
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 07/25 07/25 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
JMIA 12.28 0.04 12.94 1.73/0.87 1.66
MARA 20.28 -0.39 21.54 19.31 2.23/1.12 2.44
IMCR 40.15 0.57 40.77 3.29/1.65 2.96
LBPH 35.82 0.32 37.52 3.58/1.79 6.66
NFE 20.34 -0.31 21.18 19.22 1.96/0.98 1.82
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
US stocks had a mixed performance on Thursday, showing signs of stabilization after recent declines driven by disappointing earnings from major technology companies and a broader shift away from growth stocks. Despite spending most of the day in positive territory, the S&P 500 closed slightly lower, while the Dow Jones gained 81 points, and small-cap stocks outperformed with a rise of over 1%.
Tech stocks continued to struggle, with the Nasdaq falling nearly 1%. Bond prices rose, pushing 10-year Treasury yields down to around 4.25%, while gold prices fell and oil prices increased by 1%.
Earnings reports added to the day's volatility, with positive surprises from IBM and Chipotle, but disappointments from Ford and American Airlines weighed on those shares.
The latest GDP report indicated that the economy grew by a solid 2.8% in the second quarter, surpassing the consensus estimate of 1.9%. This represents a notable improvement from the previous quarter's 1.4% growth, driven by increased household consumption and a significant rise in investment spending, particularly in equipment. Key takeaways include:
- Strong personal consumption suggests consumers are still actively spending.
- Emerging softness in the labor market, slower wage growth, and reduced accumulated savings point to potentially slower future spending growth. However, there's no indication that consumer spending will decline sharply enough to trigger a broader GDP downturn.
Given the solid labor market, we anticipate that consumer spending will continue to support moderate economic growth for the rest of the year. This growth should reassure the Federal Reserve that the economy does not require immediate monetary support, likely leading to the Fed maintaining current interest rates next week. Nonetheless, expectations for a rate cut in September remain unchanged.
On Friday, the PCE (Personal Consumption Expenditures) index, the Fed's preferred inflation measure, will be released. Unless it shows unexpected increases in consumer price pressures, the combination of moderating inflation and strong GDP growth supports the "soft landing" scenario that has been bolstering the equity rally this year.
Jul 24, 2024 Jul 25, 2024
-------------------- --------------------
Dow 39,853.87 -504.22 39,935.07 81.20
Nasdaq 17,342.41 -654.94 17,181.72 -160.69
S&P 500 5,427.13 -128.61 5,399.22 -27.91
NYSE Volume 3.95B 4.6B
NYSE Advancers 494 1,848
NYSE Decliners 2,314 937
Nasdaq Volume 6.75B 6.13B
Nasdaq Advancers 998 2,506
Nasdaq Decliners 3,201 1,717
New Highs/Lows
07/18 07/19 07/22 07/23 07/24 07/25
--------------------------------------------
NYSE New Highs 244 48 100 214 111 178
NYSE New Lows 11 18 21 17 28 29
Nasdaq New Highs 228 56 99 238 167 214
Nasdaq New Lows 65 104 92 89 117 108
Stocks Covered Today Stock Splits
TRADER'S TIP: "Information Overload?"
So how do we manage the huge amount of market info and other financial advice being thrown our way every day? We can filter out a lot of the useless information by asking another question; how does this specifically help me to become a more successful trader and investor? Broad generalizations are helpful to an extent, but focusing on exactly what we need can provide the high-octane fuel to accelerate our progress.
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".
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, JULY 22 None scheduled TUESDAY, JULY 23 10:00 am Existing home sales June 9:45 am S&P flash U.S. services PMI 9:45 am S&P flash U.S. manufacturing PMI WEDNESDAY, JULY 24 10:00 am New home sales THURSDAY, JULY 25 8:30 am GDP 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 FRIDAY, JULY 26 8:30 am Personal income (nominal) 8:30 am Personal spending (nominal) 8:30 am PCE index] 8:30 am PCE (year-over-year) 8:30 am Core PCE index 8:30 am Core PCE (year-over-year) 10:00 am Consumer sentiment (final) 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: "Earnings Conference Calls"
Since the SEC implemented the Fair Disclosure laws, most companies have begun allowing individual shareholders to listen in on earnings conference calls that were previously limited to analysts only. If you are tracking a stock as it approaches its scheduled earnings announcement, always look for the related conference call and mark it on your calendar. The behavior of the stock during the call can telegraph early reaction to management's explanation of earnings related events. If you can't find any mention of the call, give the firm's Investor Relations department a ring and ask when or if a call will be held.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
Jumia Technologies AG (JMIA: Consumer Cyclical/Internet Retail) - NEW HIGH DIP. New highs always reflect stocks that are doing exceptionally well. This is the case with JMIA, which has pulled back a bit after setting a new 52-week high just a few days ago. Thursday's bounce from Moving Average support tells us this stock may be ready to move back up to blue sky territory. JMIA now rests at 12.28, and we're anticipating a move up to our BUY trigger at 12.94. Be ready to buy shares at that point and follow your entry with a 1.73 trailing stop. Decrease the stop to 0.87 on a 1.66 gain. Earnings Report Date: Aug 6, 2024. Beta: 3.02. Market-Cap: 1.255B. Optionable.
FINANCIAL SERVICES SECTOR
Marathon Digital Holdings, Inc. (MARA: Financial Services/Capital Markets) - SQUEEZE PLAY. MARA is caught in a dilemma. The stock's compressed price range on Thursday has resulted in a condition comparable to a wound up rubber band. We anticipate that this undecided equity will take off soon, but with the direction still in question we'll let upcoming market action tell us whether to buy shares or sell short. MARA is now at 20.28. We can capture price action either way by placing a BUY trigger at 21.54 and a SELL short trigger at 19.31. Once MARA reveals its direction, enter your triggered order and disregard the other one. As soon as your position is in place, follow up with a trailing stop of 2.23. When you acquire a 2.44 profit, tighten the stop to 1.12. Earnings Report Date: Aug 1, 2024. Beta: 5.57. Market-Cap: 5.735B. Optionable.
HEALTHCARE SECTOR
Immunocore Holdings plc (IMCR: Healthcare/Biotechnology) - BULLISH BOUNCE. Positive price behavior near moving average support on Thursday qualifies IMCR for a Bullish Bounce setup. After several sessions of declining prices, IMCR should soon begin trading in step with its established weekly uptrend. Tell your broker to BUY shares if IMCR moves up to our entry trigger set at 40.77. You can also enter a 3.29 trailing stop, to be replaced with a 1.65 trailing stop when you obtain a 2.96 profit. IMCR closed Thursday at 40.15. Earnings Report Date: Aug 8, 2024. Beta: 0.75. Market-Cap: 2.008B. Optionable.
Longboard Pharmaceuticals, Inc. (LBPH: Healthcare/Biotechnology) - BULLISH BOUNCE. LBPH's positive weekly uptrend is still intact despite recent selling that has driven share prices lower. Price action on Thursday shows that traders are aware of the moving average support zone now in play, and they are ready to consider buying again. A shift up from this point will attract even more buyers. The new buying should move LBPH back in step with the bullish weekly trend, so our BUY entry trigger is set at 37.52. Once you hold a position, trail a stop of 3.58. Tighten it to 1.79 on a 6.66 gain. LBPH closed at 35.82 on Thursday. Earnings Report Date: Aug 1, 2024. Beta: 1.26. Market-Cap: 1.393B. Optionable.
UTILITIES SECTOR
New Fortress Energy Inc. (NFE: Utilities/Utilities - Regulated Gas) - 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 NFE. A move to the upside will trigger our BUY entry at 21.18, while a drop to 19.22 will trigger our SELL short entry. Follow your position with a 1.96 trailing stop. Tighten the stop to 0.98 once you have a 1.82 gain. NFE closed Thursday at 20.34. Earnings Report Date: N/A. Beta: 1.47. Market-Cap: 4.171B. 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
The RightLine Report is an information service for investors and traders. It is not a solicitation nor a recommendation or offer to buy or sell securities. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. The publishers of The RightLine Report are not brokers or financial advisors, and are not acting in any way to influence the purchase or sale of any security. Stock picks, entry points and exit points should be considered an information resource to assist the trader in developing a trading plan and it is the sole responsibility of the reader to conduct his or her own due diligence before executing a trade. Trading securities should be considered speculative with a high degree of volatility and risk.
The publishers of The RightLine Report recommend that anyone trading securities should do so with caution, exercise prudent trading discipline and have a personal risk management strategy in place before doing so. It is possible at this or some subsequent date, the publishers and staff of The Pro Right Line Corp. may own, buy or sell securities presented. The Pro Right Line Corp. is not a financial advisory service. Its publishers, owners or investors, are not liable for any losses or damages, monetary or otherwise, that result from the content of The RightLine Report. Past RightLine Report performance may not be indicative of future performance.
All subscriptions and/or use of the RightLine.net website are subject to RightLine's "Terms of Use" and "Subscriber Terms & Conditions" which are posted at www.rightline.net.
Any REDISTRIBUTION of the above information, without The RightLine's written consent, is STRICTLY PROHIBITED.
Copyright / The Pro Right Line Corporation - All Rights Reserved
Click Here To Unsubscribe