May 21, 2024 - The RightLine Report
Notes From The Editor
Most investors underestimate the importance of planning. Though it ranks at the very top of our list of trading tips, planning isn't a priority for most traders.
On the other hand, most are concerned about what the market will do next. In fact, forecasting market direction is Wall Street's number one vice. Unfortunately it offers little reward for the time invested.
Now and then we're all mesmerized by the crystal ball. Thankfully there is an easy remedy to this common obsession. Instead of thinking about what the market may or may not do, just plan what YOU will do.
Bottom Line: When it comes to the stock market the most important quality is an action - price movement. Our objective is to capture this movement. While trying to predict price direction may seem like a logical first step, it actually complicates the process.
It is very difficult to consistently predict market direction. Stubbornly trying to do it anyway is a compulsion that takes more time and energy than it's worth.
Trade well!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 05/21 05/21 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
PRAA 22.68 0.33 23.03 21.48 1.55/0.78 2.06
DNTH 24.57 -0.89 25.6 2.48/1.24 3.6
SAVA 22.27 0.18 22.77 21.23 1.54/0.77 1.78
ATRC 22.45 0.14 22.81 21.27 1.54/0.77 2.54
KVYO 24.49 -0.37 25.11 23.51 1.6/0.8 1.74
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 experienced minimal changes on Tuesday, with the S&P 500 registering a slight 0.2% increase for the day. In the absence of significant data releases or noteworthy headlines, equities seemed content to remain close to their record highs, reflecting an overarching sentiment of optimism fueled by robust corporate earnings growth and expectations of forthcoming accommodative monetary policy adjustments from the Federal Reserve later in the year. The yield on the ten-year Treasury note dipped slightly, settling just above 4.4% after starting the month of May at 4.7%.
Across other markets, both oil and gold prices declined, while sectors such as utilities and consumer staples emerged as top performers, suggesting a somewhat defensive stance amid the day's subdued activity. Despite enjoying above-average GDP growth over the past year, largely driven by robust household spending, several factors, including elevated interest rates, depleted savings, and moderating wage growth, pose challenges to sustaining this momentum. While we anticipate that consumer spending will not come to a halt this year, we do expect a slight softening in its pace, leading to a more moderate overall GDP growth rate.
Quarterly earnings reports from various consumer-oriented companies have provided further insights into the state of consumer behavior. Ahead of its upcoming earnings release, Target announced plans to lower prices on a wide range of its most frequently purchased items. This is a strategic move aligned with recent commentary from industry peers like McDonald's, Walmart, and Starbucks. These companies have indicated that consumers are exhibiting signs of cautiousness regarding discretionary spending. While we believe that the labor market will remain resilient enough to sustain ongoing consumer spending and prevent a recession, the persistent challenges posed by inflationary pressures suggest that consumer spending will be closely scrutinized in the coming months.
May 20, 2024 May 21, 2024
-------------------- --------------------
Dow 39,806.77 -196.82 39,872.99 66.22
Nasdaq 16,794.87 108.91 16,832.62 37.75
S&P 500 5,308.13 4.86 5,321.41 13.28
NYSE Volume 3.43B 3.67B
NYSE Advancers 1,405 1,331
NYSE Decliners 1,383 1,464
Nasdaq Volume 6.89B 6.28B
Nasdaq Advancers 2,079 1,819
Nasdaq Decliners 2,124 2,414
New Highs/Lows
05/14 05/15 05/16 05/17 05/20 05/21
--------------------------------------------
NYSE New Highs 157 284 199 187 239 184
NYSE New Lows 14 12 16 25 29 33
Nasdaq New Highs 162 269 186 159 224 141
Nasdaq New Lows 77 76 59 67 101 112
Stocks Covered Today Stock Splits
TRADER'S TIP: "Mistakes"
"The greatest mistake you can make in life is to be continually fearing you will make one."
~ Elbert Hubbard
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, 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
Stocks Covered Today Stock Splits
TRADER'S TIP: "Learning To Fly"
Low-cost access to the markets via the Internet has without a doubt been the biggest single change to ever impact the stock market. In fact, it has literally revolutionized the entire industry. But cheap and fast trading tools don't produce successful traders and investors any more than cheap and fast planes produce good pilots. Just like learning to fly, learning to maneuver through the market profitably takes time, training, and sincere effort.
Stocks Covered in This Issue
FINANCIAL SERVICES SECTOR
PRA Group, Inc. (PRAA: Financial Services/Credit Services) - SQUEEZE PLAY. Tuesday's trading session left PRAA in a very narrow price range after buyers and sellers fought to a near stalemate. Both sides are looking for some traction, and a breakout either way could provide a nice gain in the short term. To get aboard, set your BUY trigger at 23.03 and your SELL short trigger at 21.48. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.55 trailing stop. Once you have a 2.06 profit, reduce the stop to 0.78. Earnings Report Date: Aug 5, 2024. Beta: 1.47. Market-Cap: 892.503M. Optionable.
HEALTHCARE SECTOR
Dianthus Therapeutics, Inc. (DNTH: Healthcare/Biotechnology) - BULLISH BOUNCE. The charts for DNTH show that despite the downward pressure from sellers recently, the weekly uptrend is still going strong. Buyers showed up again on Tuesday, resulting in the early stages of a rebound that started near moving average support. The resulting Bullish Bounce set-up offers a potential entry point for a long play. Set your trigger to BUY shares at 25.6, and follow your entry with a trailing stop of 2.48. Tighten it to 1.24 when a 3.6 profit is reached. DNTH ended the latest session at 24.57. Earnings Report Date: Aug 1, 2024. Beta: --. Market-Cap: 721.117M. Optionable.
Cassava Sciences, Inc. (SAVA: Healthcare/Biotechnology) - SQUEEZE PLAY. SAVA shareholders know what it feels like to be squeezed. Tuesday's slim price range reveals uncertainty on both sides of the table, a situation which often resolves itself by either Bears or Bulls quickly gaining a clear advantage. The question is "who will win?" Near-term market action tell us whether we should sell short or we should buy shares instead. SAVA closed Tuesday at 22.27. The plan is to enter in the right direction by placing a BUY trigger at 22.77 and a SELL short trigger at 21.23. Once SAVA establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.54. After you've collected a 1.78 profit, tighten the stop to 0.77. Earnings Report Date: Aug 1, 2024. Beta: -0.37. Market-Cap: 1.068B. Optionable.
AtriCure, Inc. (ATRC: Healthcare/Medical Instruments & Supplies) - SQUEEZE PLAY. The ticker for Tuesday's session shows ATRC is now stuck in a tight price band. With the cyclical contraction and expansion nature of volatility in force, we should see a new period of price expansion in the days ahead. To improve the odds of catching the next directional wave, place a BUY trigger at 22.81 and a SELL short trigger at 21.27. When ATRC starts moving out of its narrow range, your order will be triggered. Once you're in the trade, cancel the opposing trigger and set a 1.54 trailing stop. Upon reaching a 2.54 profit, resize the stop to 0.77. Earnings Report Date: Jul 23, 2024. Beta: 1.41. Market-Cap: 1.086B. Optionable.
TECHNOLOGY SECTOR
Klaviyo, Inc. (KVYO: Technology/Software - Infrastructure) - SQUEEZE PLAY. KVYO is stuck in a Bull/Bear deadlock. Fortunately for traders this impasse should be resolved soon, with one side or the other taking control. We want to be positioned for a potential quick move up or down, so get ready to catch this train with a BUY entry at 25.11 and a SELL short entry at 23.51. Once your trade is filled, enter a 1.6 trailing stop. Tighten it to 0.8 after a 1.74 gain. KVYO closed on Tuesday at 24.49. Earnings Report Date: N/A. Beta: --. Market-Cap: 6.479B. 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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