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May 18, 2024 - The RightLine Report
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NOTES FROM THE EDITOR
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Trading the markets is a continuous dance of two steps forward and one step back. It is certainly an extremely enjoyable activity - as long as we don't get our toes stepped on too much. To enhance your efforts, I suggest following a well rehearsed routine each time you sit down to make a trade.
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"QUICK LIST"
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Stock 05/17 05/17 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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FVRR 25.13 0.03 25.64 23.95 1.69/0.85 1.52
GME 22.21 -5.46 22.7 3.6/1.8 1.98
STVN 20.71 -0.20 21.42 19.6 1.82/0.91 2.52
BLFS 21.96 -0.01 22.4 20.97 1.43/0.72 2.04
JSPR 23.02 0.18 24 21.89 2.11/1.06 3.38
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" at https://prorightline.com/index.php/rightline-report-quick-list/. In addition,always use the RightLine Risk Calculator before entering any position. For access to the Risk Calculator, go to https://prorightline.com/index.php/risk-calculator/. To learn more about controlling risk go to the RightLine Risk Control System at https://prorightline.com/index.php/rightline-risk-control-system/ For a glossary of terms unique to The RightLine Report go to: https://prorightline.com/index.php/glossary/ Questions? Send us an email using our contact form at: https://prorightline.com/index.php/contact-us/
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MARKET SUMMARY
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Equity markets displayed a mixed performance on Friday, with major indexes hovering around the flat line, marking a quiet conclusion to a robust week. The Dow achieved a significant milestone on Thursday by briefly surpassing the 40,000 mark for the first time. This achievement was fueled by a moderation in inflation and economic growth, instilling confidence that the Federal Reserve may be in a position to implement interest rate cuts in the latter part of the year. Corporate earnings have been another key driver of market strength, with first-quarter results surpassing expectations. While the earnings season is winding down, all eyes are on NVIDIA, the last of the mega-cap tech companies scheduled to report its earnings on Wednesday. Positioned at the forefront of AI development and boasting a staggering 90% year-to-date increase in its share price, NVIDIA's performance will be closely scrutinized. In other news, GameStop shares experienced a sharp decline of over 20% following the company's announcement of plans to sell additional shares amidst a recent surge in its stock price linked to the meme stock phenomenon. Additionally, preliminary results indicated a decline in first-quarter sales for the company. The latest inflation data released this week provided some relief to the markets and contributed to reaching new highs, as disinflation resumed after three months of accelerating price growth. This data reaffirmed the Federal Reserve's stance of refraining from further rate hikes while exercising patience as it maintains rates at restrictive levels. Friday On The Week
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Dow 40,003.59 134.21 +490.75 1.24%
Nasdaq 16,685.97 -12.35 +345.1 2.11%
S&P 500 5,303.27 6.17 +80.59 1.54%
NYSE Volume 3.6B
NYSE Advancers 1,495
NYSE Decliners 1,292
Nasdaq Volume 9.64B
Nasdaq Advancers 2,042
Nasdaq Decliners 2,222
New Highs/Lows
05/10 05/13 05/14 05/15 05/16 05/17
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NYSE New Highs 216 153 157 284 199 187
NYSE New Lows 24 18 14 12 16 25
Nasdaq New Highs 169 142 162 269 186 159
Nasdaq New Lows 100 89 77 76 59 67
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TRADER'S TIP:
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TRADER'S TIP: "No One Knows" The stock market is a world shaped by human behavior, and no one has the slightest idea of what will happen in the future. Successful traders don't base their actions on what they THINK will happen, but instead they respond to what DOES happen. Price can only do three things; go up, go down, or go sideways. Plan ahead for all three, and you can react intelligently to whatever the market decides to do. **************************
THE TECHNICAL ANALYST
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This section contains important technical data for the three major market averages -- the S&P 500, the Nasdaq Comp Index, and the Dow Industrial Average. For guidance on how to use this information, go to: https://prorightline.com/index.php/technical-analyst-section-rightline-report/ https://www.prorightline.com/rlch/051724SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, May 20 9:00 am Fed Vice Chair for Supervision Michael Barr speaks 9:00 am Fed Gov Christopher Waller gives welcoming remarks 10:30 am Fed Vice Chair Philip Jefferson speaks TUESDAY, MAY 21 9:00 am Fed Gov. Christopher Waller speaks 11:45 am Fed Vice Chair for Supervision Michael Barr speaks 7:00 pm Cleveland Fed President Loretta Mester, Atlanta Fed President Raphael Bostic and Boston Fed President Susan Collins speak together on panel WEDNESDAY, MAY 22 10:00 am Existing home sales 2:00 pm Minutes of Fed's May FOMC meeting THURSDAY, MAY 23 8:30 am Initial jobless claims 9:45 am S&P flash U.S. services PMI 9:45 am S&P flash U.S. manufacturing PMI 10:00 am New home sales 3:00 pm Atlanta Fed President Raphael Bostic speaks FRIDAY, MAY 24 8:30 am Durable-goods orders 8:30 am Durable-goods minus transportation 9:35 am Fed Gov Christopher Waller speaks 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" at this link: https://prorightline.com/index.php/economic-indicator-effects/
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TRADER'S TIP:
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TRADER'S TIP: "Profits" Most profits usually come from a relatively few big winning trades, while the remaining positions are made up of numerous small gainers and losers. This comes as a surprise to many traders, for most assume that a very high win-to-loss ratio is necessary to succeed in the markets. In fact, trying to maintain a high win-to-loss ratio usually results in traders taking small gainers too early, before the position can develop into it's full potential. At the same time there is a tendency to ignore losers, to hope that they will reverse and turn into winners. While this is a common strategy for beginners, professionals know that it just doesn't work. All it takes is one big loser to undo several positive trades, so concentrate first on minimizing losses, then look to maximize gains by locking in profits as they accumulate. ***********************************
STOCKS COVERED IN THIS ISSUE
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COMMUNICATION SERVICES SECTOR Fiverr International Ltd. (FVRR: Communication Services/Internet Content & Information) - SQUEEZE PLAY. Sometimes when Bulls and Bears face off in the market arena for a typical day-long battle, there is no clear winner. This is evident when the daily price range contracts to an unusually narrow state. FVRR found itself in this condition on Friday when neither buyers or sellers were able to push ahead. This setup provides traders a chance to hop on board the next breakout - whether it's to the upside or down - with little risk of loss. To do this place a BUY order at 25.64 and a SELL short trigger at 23.95. When FVRR moves outside of Friday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 1.69 trailing stop. After you've got a 1.52 profit, tighten the stop to 0.85. FVRR closed at 25.13 on Friday. Earnings Report Date: Aug 1, 2024. Beta: 1.69. Market-Cap: 972.584M. Optionable. CONSUMER CYCLICAL SECTOR GameStop Corp. (GME: Consumer Cyclical/Specialty Retail) - BULLISH BOUNCE. GME's positive weekly uptrend is still intact despite recent selling that has driven share prices lower. Price action on Friday 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 GME back in step with the bullish weekly trend, so our BUY entry trigger is set at 22.7. Once you hold a position, trail a stop of 3.6. Tighten it to 1.8 on a 1.98 gain. GME closed at 22.21 on Friday. Earnings Report Date: Jun 5, 2024. Beta: -0.21. Market-Cap: 6.8B. Optionable. HEALTHCARE SECTOR Stevanato Group S.p.A. (STVN: Healthcare/Medical Instruments & Supplies) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in STVN's narrowest trading range of the past seven sessions. With neither group able to take complete control on Friday, the stock's short term destiny is up for grabs. You can capitalize on this unusually tight condition by placing both a BUY order at 21.42 and a SELL order at 19.6. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.82 trailing stop. Tighten the stop to 0.91 once you have a 2.52 gain. STVN closed Friday at 20.71. Earnings Report Date: N/A. Beta: 0.76. Market-Cap: 5.649B. Optionable. BioLife Solutions, Inc. (BLFS: Healthcare/Medical Instruments & Supplies) - SQUEEZE PLAY. In certain stocks a tightly constricted price range is a sign that neither bulls nor bears are confident of winning in the near term. This often means that the side that gives up first causes a quick move in the opposite direction. In these fear dominated skirmishes, opposing traders always benefit from the retreat. In the Squeeze Play setup you can actually play both sides of the inevitable surge. BLFS traders reached this state of stand-off on Friday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 22.4 and a SELL short trigger at 20.97. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.43 which can be tightened to 0.72 on a 2.04 gain. BLFS closed Friday at 21.96. Earnings Report Date: Aug 6, 2024. Beta: 1.69. Market-Cap: 1.011B. Optionable. Jasper Therapeutics, Inc. (JSPR: Healthcare/Biotechnology) - SQUEEZE PLAY. JSPR traders on both sides of the fence are now locked in a head-to-head shootout. Friday's price range was the narrowest in over a week, as neither Bears or Bulls have been able to clearly gain the upper hand. This gives us an opportunity to catch the next directional move with little risk of loss. To do this we'll place both a long and a short trigger with a BUY at 24 and a SELL short trigger at 21.89. When one of the orders is filled, cancel the remaining order and enter a 2.11 trailing stop. When you've reached a 3.38 paper profit, tighten the stop to 1.06. JSPR closed at 23.02 on Friday. Earnings Report Date: Aug 9, 2024. Beta: 2.25. Market-Cap: 347.271M. Optionable. IMPORTANT: Before entering any recommended positions, always use the RightLine "Risk Control System" to determine the level of acceptable risk and the maximum number of shares to buy. Link: https://prorightline.com/index.php/rightline-risk-control-system/ Use "Gap Adjusted Entries" to reset the Entry Price for stocks that gap beyond recommended entry levels. Link: https://prorightline.com/index.php/gap-adjusted-entries-increase-profits/ ***********************************
STOCK SPLIT SUMMARY
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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 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. For a closer look at the different stages of a Stock Split go to: https://prorightline.com/index.php/trading-stock-splits-stages/ **********************************
TRADER'S CORNER
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"Frequency of Trading is Critical" By Chuck LeBeau When building or evaluating trading systems the many benefits of systems that trade very frequently are often overlooked. A system that trades frequently has many advantages over less active systems that appear to be more desirable because they have better performance ratios. If a strategy is profitable the more it trades the more money we should make. I apologize for stating what should be obvious but you would be surprised at how often I hear discussions about selecting systems with the highest level of "expectancy" or highest "profit factor" without relating these measurements to the system's trading frequency. Simply stated, our goal should be to show the most profit with the least amount of risk and trading frequency plays a critical role in maximizing profitability and controlling our risk. Trading frequency represents opportunity for profit. The more opportunities we can find the more profit we should expect. For example, a strategy that has a very high profit factor of 4 (profit factor is total profits divided by total losses) may not produce as much profit as a more active system that has a profit factor of only 2. Since the strategy with the lower profit factor is profitable and it has many more opportunities it may easily produce more total profit than the system with the much higher profit factor. Active systems should give us a higher confidence level when analyzing our test data. In addition to increasing total profits, a very active system gives us much more data to analyze when doing our preliminary research. If we have a long-term trend-following strategy that produces only 50 trades over five years of data our positive results may not be nearly as reliable as the results from analyzing a more active strategy that produced 1000 trades over the same data sample. I would be willing to bet that the system with the larger sample of trades is more likely to produce profitable results in the future because our level of confidence must relate to the number of samples in our testing. Active systems should produce more reliable results and a smoother equity curve. If we flip a coin only ten times our odds of having 50% heads and 50% tails are not very good. However if we flip the coin one thousand times we are likely to come much closer to obtaining 50% heads and 50% tails. The same logic applies to our real-time trading. If we have a large sample of real trades then our results should come closer to our expectations than if we only have one or two trades. The active system will approach our expectations much quicker than the system that trades infrequently. If we have 50 or more trades per month with a good system we might reasonably expect to be profitable every month. However if we have a system that is only producing two or three trades per month then our monthly results will less predictable and inconsistent. The infrequent trading system might be expected to produce a profit every year but it would not be realistic to expect it to show a profit every month because the sample size in a month will be very small. ----------------------- This article is part of a larger work of the same title. The author - Chuck LeBeau - also co-wrote the book "Computer Analysis of the Futures Market." Chuck has traded the markets for many years. He specializes in trading system development and related research. ======================================================================
Best of luck and have a Great Week!
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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 To Unsubscribe, send an email to cs@prorightline.com or call 1-312-248-4241. |