March 5, 2024 - The RightLine Report
Notes From The Editor
Everyone knows how impulsive the market is at times, and we've all felt the g-forces present when stocks choose to mimic roller coasters. The unpredictable up-and-down gyrations can be a challenge, so here are a few suggestions that will help you stay on track no matter what route the market decides to take!
- Check Your Emotions. The market is much more powerful than any individual. Though you have no control over what it does, you do have control over how you respond to its actions. Getting emotional when the market goes down doesn't make it go back up. On the other hand, the stress could cause you to make unwise decisions. Avoid this sort of self-sabotage. Remember - although your actions won't change the market, they WILL determine how much money you make.
- Be Sure Of Your Time Horizon. Most people buy stocks without first considering the time frame that suits them best. Are your plans short- term or long-term? It makes a big difference. A twenty year old who opens his first trading account has a much different time horizon than a sixty-five year old that plans to retire next year. Before entering a position, always consider which time frame will best serve your needs.
- Use Risk Management. Losing trades are a fact of life. Applying risk control tactics will quickly eliminate losers and insure they don't hurt you. Your advanced winners can provide the gains to offset any minor losses AND leave you with a good profit. You also have the option to stand aside when nothing seems to work. Just bear in mind that while the sidelines offer a temporary safe refuge, you have to be on the field to score.
- Choose Your Attitude. Success in the stock market requires more than just a proven trading strategy. Winning is a reflection of your state of mind. Never let the negative attitude of others cause you unnecessary grief. Genuine confidence dissolves fear, and paves the way to a prosperous future.
Bottom Line: Prepare for both challenges and rewards. Some of the best rewards will come from opportunities found within the challenges. Although the business of trading may seem complicated at times, it is much simpler when we follow a step-by-step process. If you need a refresher, be sure to check out the "How To Use The RightLine Report" article at the link below.
Trade well!
Thomas Sutton, Editor
How To Use The RightLine Report - https://prorightline.com/how-to-use-the-rightline-report/
Stocks Covered Today Stock Splits
Quick List
Stock 03/06 03/06 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
DRCT 23.84 -0.28 24.75 22.3 2.45/1.23 3.52
AVTE 22.84 0.35 23.52 21.39 2.13/1.07 4.04
BCYC 24.66 0.21 25.33 23.16 2.17/1.09 2.32
DNTH 24.78 -0.68 25.8 23.87 1.93/0.97 4.24
IIIV 21.49 -0.28 22.17 20.64 1.53/0.77 1.68
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 closed lower on Tuesday, as the market adopted a defensive stance. Leading the S&P 500 were consumer staples and energy sectors, while information technology lagged behind. Reports surfaced indicating a decline of over 20% year-over-year in Apple's iPhone sales in China during the first six weeks of 2024, further dampening the sentiment in technology shares.
Overseas, Asian markets showed a mixed performance overnight, with China's National People's Congress meeting taking the spotlight. The Chinese government maintained its growth target at 5% for 2024 and announced plans for a budget deficit of around 3% of GDP, signaling a lack of significant fiscal stimulus to boost economic activity in the near term.
In earnings news, Target saw its shares climb approximately 12% after reporting earnings results that exceeded expectations. Target's earnings per share surpassed estimates by 23%, driven by robust profit-margin expansion.
Treasury yields retreated, with the 10-year yield settling at around 4.14% and the 2-year yield ticking down to 4.55%. On the macroeconomic front, the ISM services PMI reading for February came in at 52.6, indicating a slower expansion in economic activity in the U.S. services sector compared to January, marking the 14th consecutive month of expansion.
While Tuesday saw weakness in certain sectors, the information technology and communication services sectors continue to lead the S&P 500 year-to-date, with gains of approximately 10% and 9%, respectively. Strong corporate earnings and optimism surrounding the growth potential of artificial intelligence have contributed to their performance. However, sectors like industrials, health care, and financials have also seen gains of around 6% year-to-date. Additionally, materials, real estate, and industrials emerged as the top-performing sectors over the past month, each posting gains of over 4.5% compared to the S&P 500's 2.8% increase.
Mar 4, 2024 Mar 5, 2024
-------------------- --------------------
Dow 39,068.75 -18.63 38,506.60 -483.23
Nasdaq 16,207.51 -67.43 15,939.59 -267.92
S&P 500 5,147.58 10.50 5,064.44 -66.51
NYSE Volume 4.77B 4.42B
NYSE Advancers 1,218 1,188
NYSE Decliners 1,613 1,638
Nasdaq Volume 5.73B 6.37B
Nasdaq Advancers 1,748 1,545
Nasdaq Decliners 2,561 2,753
New Highs/Lows
02/27 02/28 02/29 03/01 03/04 03/05
--------------------------------------------
NYSE New Highs 181 163 239 270 288 166
NYSE New Lows 22 34 23 25 36 37
Nasdaq New Highs 254 172 271 368 368 133
Nasdaq New Lows 63 96 80 87 115 114
Stocks Covered Today Stock Splits
TRADER'S TIP: "Trading With Uncertainty"
Successful traders learn how to be comfortable with uncertainty. It's impossible to be sure that your trade will be profitable before you enter a position. Waiting for all the right "facts" to arrive usually results in missing out on the opportunity. Accept that you can't know in advance whether or not a trade will work. Risk is a constant companion when trading. You can't eliminate it, so learn how to recognize and manage it.
New traders want all the facts before they do a trade and by the time all the facts are out the trading opportunity is gone, then they enter the trade and wonder why it didn't work. If you're about to drive to town and you need every traffic light to turn green before you leave, you'll never get out of the driveway.
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, MARCH 4 12:00 pm Philadelphia Fed President Tom Harker speaks TUESDAY, MARCH 5 10:00 am Factory orders 10:00 am ISM services 12:00 pm Fed Vice Chair for Supervision Michael Barr speaks 3:30 pm Fed Vice Chair for Supervision Michael Barr speaks WEDNESDAY, MARCH 6 8:15 am ADP employment 10:00 am Fed Chair Jerome Powell testifies to Congress 10:00 am U.S. wholesale inventories 10:00 am Job openings 12:00 pm San Francisco Fed President Mary Daly speaks 2:00 pm Federal Reserve Beige Book 4:15 pm Minneapolis Fed President Neel Kashkari speaks THURSDAY, MARCH 7 8:30 am Initial jobless claims 8:30 am U.S. productivity (revision) 8:30 am U.S. trade balance 9:40 am Fed Chair Jerome Powell testifies to Congress 11:30 am Cleveland Fed President Loretta Mester speaks 3:00 pm Consumer credit FRIDAY, MARCH 8 7:00 am New York Fed President John Williams speaks 8:30 am U.S. nonfarm payrolls 8:30 am U.S. unemployment rate 8:30 am U.S. hourly wages 8:30 am Hourly wages year over year 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: "Big Gaps, Big Potential"
Large upside breakout gaps can be very bullish and present a terrific buy opportunity. However, consider the move suspicious unless it takes place with heavy trade volume. The initial group of motivated buyers should attract enough attention to convince an even bigger crowd to join in. Be prepared to exit quickly if the volume doesn't support the price expansion.
Stocks Covered in This Issue
COMMUNICATION SERVICES SECTOR
Direct Digital Holdings, Inc. (DRCT: Communication Services/Advertising Agencies) - 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 DRCT. A move to the upside will trigger our BUY entry at 24.75, while a drop to 22.3 will trigger our SELL short entry. Follow your position with a 2.45 trailing stop. Tighten the stop to 1.23 once you have a 3.52 gain. DRCT closed Tuesday at 23.84. Earnings Report Date: N/A. Beta: 8.13. Market-Cap: 340.206M. Not Optionable.
HEALTHCARE SECTOR
Aerovate Therapeutics, Inc. (AVTE: Healthcare/Biotechnology) - SQUEEZE PLAY. Tuesday's trading action forced AVTE'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 AVTE 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 23.52 if AVTE moves higher, and place your order to SELL short at 21.39 if price declines to that level. As usual follow your entry with a trailing stop, 2.13 should be sufficient. Reduce your stop to 1.07 on a 4.04 gain. AVTE closed Tuesday at 22.84. Earnings Report Date: Mar 27, 2024. Beta: 1.17. Market-Cap: 631.958M. Not Optionable.
Bicycle Therapeutics plc (BCYC: Healthcare/Biotechnology) - SQUEEZE PLAY. BCYC is caught in a dilemma. The stock's compressed price range on Tuesday 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. BCYC is now at 24.66. We can capture price action either way by placing a BUY trigger at 25.33 and a SELL short trigger at 23.16. Once BCYC 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 2.17. When you acquire a 2.32 profit, tighten the stop to 1.09. Earnings Report Date: May 02, 2024. Beta: 0.89. Market-Cap: 934.128M. Optionable.
Dianthus Therapeutics, Inc. (DNTH: Healthcare/Biotechnology) - 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 DNTH's case we will enter a BUY should it reach the 25.8 level, or a SELL short trade if it drops to 23.87. As usual a trailing stop is essential, 1.93 which should be tightened to 0.97 on a 4.24 gain. DNTH closed Tuesday at 24.78. Earnings Report Date: Mar 21, 2024. Beta: N/A. Market-Cap: 726.505M. Not Optionable.
TECHNOLOGY SECTOR
i3 Verticals, Inc. (IIIV: Technology/Software - Infrastructure) - SQUEEZE PLAY. A look at IIIV'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 22.17 and a SELL short trigger at 20.64. Once IIIV shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.53 and tighten to 0.77 on a 1.68 gain. IIIV closed Tuesday at 21.49. Earnings Report Date: May 07, 2024. Beta: 1.57. Market-Cap: 717.177M. 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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