March 14, 2024 - The RightLine Report
Notes From The Editor
The new global economy and its impact on the US stock market is constantly making headlines. Regardless of what happens as a result of volatile world events, there are always opportunities to make profits. With this in mind, here is a brief review of a few basic rules about trading in a news-driven environment:
- Listen to the charts, not the hype. On days when non-market news is dominating the headlines, it's easy to become distracted and let emotions take control. But as far as stocks are concerned, the only story that matters is the tale of the ticker. Let price action determine entry and exit points - just as it would on a normal trading day. But remember to...
- Look before you leap. Nothing is worse than taking a position, only to see it immediately turn into a large loss. This can happen frequently when skittishness over news events triggers abrupt changes in direction. The best policy in this sort of choppy trading environment is to simply stay on the sidelines until the uncertainty subsides.
- Keep "hard" stops in place. "Mental" stops work well for some traders; once a stock hits a certain level, they send a buy/sell order to close out their position. However, this method can produce unexpected losses if a news event causes a sudden price spike. Before they have a chance to react, a sizeable loss has already been sustained. A "hard" stop - one that's placed with at a specific level with a broker - limits the negative impact of price spikes.
Here's to profits!
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 03/14 03/14 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
CC 26.65 -0.19 27.12 25.42 1.7/0.85 2.72
CTRN 30.97 -0.11 32.3 30 2.3/1.15 2.14
BSIG 22.66 0.14 22.98 1.35/0.68 1.38
QTRX 26.38 0.06 26.86 25.16 1.7/0.85 2.2
CECO 21.76 -0.24 22.39 20.78 1.61/0.81 1.4
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 ended lower on Thursday, while government bond yields climbed following a hotter-than-expected producer price index (PPI) report and a less robust rebound in retail sales. The energy sector emerged as the top performer, buoyed by a surge in oil prices that saw WTI surpass $80 for the first time in four months. Small-cap stocks experienced a decline of over 2%, reversing some of their recent gains relative to larger counterparts. With the Federal Reserve meeting looming next week, the uptick in yields suggests policymakers are likely to adopt a cautious stance on rate cuts amidst lingering inflation concerns.
The latest PPI figures for February revealed a 0.6% month-over-month increase (compared to 0.3% previously) and a 1.6% rise over the past year (compared to 0.9% previously), driven by the rebound in energy prices. The core index, excluding food and energy, also saw a 0.3% uptick from January (versus 0.2% previously) and remained steady at 2% from a year ago. When combined with consumer price data, Thursday's reports suggest that navigating the final phase of inflation toward 2% may encounter obstacles but doesn't alter the overall trajectory of inflation toward moderation throughout the year.
The February inflation reports affirm the Fed's patient stance on rate cuts, likely to be emphasized in next week's FOMC meeting and updated projections. However, conditions are expected to align for the first rate cut to materialize in June, with market expectations for six rate cuts at the beginning of the year now reduced to three, aligning with both the December Fed projections and our own expectations.
A resilient labor market, underscored by historically low jobless claims and income gains, is poised to sustain growth and stave off recession. Nonetheless, growth is expected to ease toward trend levels of 1.5% to 2% for the U.S. economy.
Amidst gradually moderating inflation and stable growth, the bull market in stocks is likely to persist. Nevertheless, given the robust rally over the past four months, anticipate potentially volatile conditions ahead.
Mar 13, 2024 Mar 14, 2024
-------------------- --------------------
Dow 39,043.32 37.83 38,771.66 -271.66
Nasdaq 16,177.77 -87.87 16,128.53 -49.24
S&P 500 5,165.31 -9.96 5,131.16 -34.15
NYSE Volume 4.29B 4.69B
NYSE Advancers 1,678 600
NYSE Decliners 1,138 2,246
Nasdaq Volume 4.85B 5.46B
Nasdaq Advancers 2,037 1,053
Nasdaq Decliners 2,164 3,216
New Highs/Lows
03/07 03/08 03/11 03/12 03/13 03/14
--------------------------------------------
NYSE New Highs 296 288 127 180 282 138
NYSE New Lows 20 15 19 25 23 59
Nasdaq New Highs 331 354 103 131 189 95
Nasdaq New Lows 90 83 88 125 121 196
Stocks Covered Today Stock Splits
TRADER'S TIP: "Factoring in Dividends"
When trading stocks that distribute healthy dividends, be sure to note the days of record and distribution. If you own the stock on the day of record, you will receive the specified dividend on the day of distribution - a nice little bonus!
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, MAR 11 None scheduled TUESDAY, MAR 12 6:00 am NFIB optimism index 8:30 am Consumer price index 8:30 am Core CPI 8:30 am CPI year over year 8:30 am Core CPI year over year 2:00 pm Monthly U.S. federal budget WEDNESDAY, MAR 13 None scheduled THURSDAY, MAR 14 8:30 am U.S. retail sales 8:30 am Retail sales minus autos 8:30 am Producer price index 8:30 am Core PPI 8:30 am PPI year over year 8:30 am Core PPI year over year 8:30 am Initial jobless claims 10:00 am Business inventories FRIDAY, MAR 15 8:30 am Empire State manufacturing survey 8:30 am Import price index 8:30 am Import price index minus fuel 9:15 am Industrial production 9:15 am Capacity utilization 10:00 am Consumer sentiment (prelim) 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: "Reverse Stock Splits"
Although rare, every now and then you will see or hear of a reverse stock splits. Investors generally view this negatively, as it is often a ploy to prop up the share price. Only on occasion is it done for a positive reason. In other words....avoid!
Stocks Covered in This Issue
BASIC MATERIALS SECTOR
The Chemours Company (CC: Basic Materials/Specialty Chemicals) - 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 CC. A move to the upside will trigger our BUY entry at 27.12, while a drop to 25.42 will trigger our SELL short entry. Follow your position with a 1.7 trailing stop. Tighten the stop to 0.85 once you have a 2.72 gain. CC closed Thursday at 26.65. Earnings Report Date: Apr 25, 2024. Beta: 1.97. Market-Cap: 3.956B. Optionable.
CONSUMER CYCLICAL SECTOR
Citi Trends, Inc. (CTRN: Consumer Cyclical/Apparel Retail) - 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 CTRN's case we will enter a BUY should it reach the 32.3 level, or a SELL short trade if it drops to 30. As usual a trailing stop is essential, 2.3 which should be tightened to 1.15 on a 2.14 gain. CTRN closed Thursday at 30.97. Earnings Report Date: Mar 19, 2024. Beta: 2.39. Market-Cap: 264.618M. Optionable.
FINANCIAL SERVICES SECTOR
BrightSphere Investment Group Inc. (BSIG: Financial Services/Asset Management) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Thursday BSIG seemed intent on initiating a rebound. With moving average support nearby, BSIG is at a logical place for Bulls to regroup and extend the familiar uptrend that shareholders have become accustomed to. On continued buying, plan on taking long entries with a BUY at 22.98. Manage risk with a 1.35 stop. Tighten your stop to 0.68 when you have a 1.38 profit. BSIG ended the day at 22.66. Earnings Report Date: May 02, 2024. Beta: 1.57. Market-Cap: 865.789M. Optionable.
HEALTHCARE SECTOR
Quanterix Corporation (QTRX: Healthcare/Medical Devices) - SQUEEZE PLAY. QTRX 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. QTRX is now at 26.38. We can capture price action either way by placing a BUY trigger at 26.86 and a SELL short trigger at 25.16. Once QTRX 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 1.7. When you acquire a 2.2 profit, tighten the stop to 0.85. Earnings Report Date: May 07, 2024. Beta: 1.31. Market-Cap: 1.004B. Optionable.
INDUSTRIALS SECTOR
CECO Environmental Corp. (CECO: Industrials/Pollution & Treatment Controls) - SQUEEZE PLAY. Thursday's trading action forced CECO'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 CECO 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 22.39 if CECO moves higher, and place your order to SELL short at 20.78 if price declines to that level. As usual follow your entry with a trailing stop, 1.61 should be sufficient. Reduce your stop to 0.81 on a 1.4 gain. CECO closed Thursday at 21.76. Earnings Report Date: May 07, 2024. Beta: 1.23. Market-Cap: 758.351M. 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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