May 9, 2024 - The RightLine Report
Notes From The Editor
The Myth: "You have to be very smart to make money trading stocks online."
The Truth: A high IQ is not required for successful online stock trading. In fact, being too "smart" can be a liability.
Why? Because most "smart" people rely heavily on their intelligence. Since they are logical thinkers, they have a hard time accepting the often illogical and irrational actions of the stock market. As a result they tend to overcomplicate matters. They try to out-think the market and attempt to predict what it will do.
This type of over-thinking and relying on predictions just doesn't work. Stock market behavior is a result of human behavior. No one can be certain what will happen in the future. Successful traders don't base their actions on predictions. They anticipate what is likely to happen, and then make buy and sell decisions based on what actually does happen.
Trading isn't rocket science. Though the skills needed to be successful take time to acquire, you don't need a high IQ to trade intelligently. On the other hand, persistence and discipline are necessary. Fortunately these two qualities are available to anyone who really wants them.
Remember, when it comes to price movement a stock can only do three things. It will go up, go down, or go sideways. Plan ahead for each of these possibilities and you can respond intelligently to whatever happens - no matter how "smart" you are!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 05/09 05/09 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
SILK 20.41 1.18 20.84 2.05/1.03 1.5
PHVS 20.57 -0.28 21.12 19.71 1.41/0.71 4.24
LBPH 21.99 0.29 22.39 20.96 1.43/0.72 2.56
BCYC 23.58 -0.04 24.33 22.76 1.57/0.79 2.12
BAND 21.52 0.37 21.91 20.17 1.74/0.87 1.2
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
The S&P 500 ended higher on Thursday, maintaining its momentum for a third consecutive week of gains. However, US weekly jobless claims climbed to their highest level of the year at 231,000, signaling some weakness in the domestic labor market. This uptick in jobless claims may reinforce the Federal Reserve's belief that current interest rates are sufficiently restrictive and could potentially lead to a cooling of wage gains.
Treasury yields saw a decline across the board, with the 2-year Treasury yield, often seen as a gauge for the fed funds rate, dipping by 0.02%, while the 10-year Treasury yield dropped to 4.45%. This recent downward trend in yields, coupled with market expectations of two Fed rate cuts this year, has provided support to both equity and bond markets.
Inflation will take center stage next week, with the release of the consumer price index (CPI) inflation data for April scheduled for Wednesday. After surpassing expectations in the first three months of the year, forecasts suggest a moderation in both headline and core CPI inflation for April.
We anticipate that achieving the final phase of inflation moderation may require patience and time, but we remain optimistic about further progress. Factors contributing to this could include a slowdown in shelter and used car prices, as well as a broader easing of services inflation driven by a deceleration in wage growth. We believe the Fed will likely await a series of three or more favorable inflation reports before considering a rate cut, a scenario we expect to unfold by the end of the year.
May 8, 2024 May 9, 2024
-------------------- --------------------
Dow 39,056.39 172.13 39,387.76 331.37
Nasdaq 16,302.76 -29.80 16,346.26 43.51
S&P 500 5,187.67 -0.03 5,214.08 26.41
NYSE Volume 3.86B 3.73B
NYSE Advancers 1,260 1,986
NYSE Decliners 1,547 805
Nasdaq Volume 4.55B 4.52B
Nasdaq Advancers 1,879 2,626
Nasdaq Decliners 2,280 1,578
New Highs/Lows
05/02 05/03 05/06 05/07 05/08 05/09
--------------------------------------------
NYSE New Highs 80 123 169 75 139 192
NYSE New Lows 26 18 19 212 32 18
Nasdaq New Highs 81 131 153 159 98 158
Nasdaq New Lows 101 79 54 70 84 93
Stocks Covered Today Stock Splits
TRADER'S TIP: "Earnings: Holding Through or Getting Back In"
It's no secret that we believe in avoiding undue risk. Because earnings reports often end up surprising traders, we often suggest closing out positions before the company announces earnings. However, if a stock is moving in a solid trend (long or short) and earnings estimates support that trend, experienced traders will often elect to drastically reduce the number of shares in their position and hold them through the earnings announcement.
In some cases traders jump back into the trade after the company reports better than expected earnings. This can be profitable at times, but don't chase the stock. If it has jumped more than 5% beyond your exit point, you're probably better off waiting for price to pull back to a moving average support level.
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 6 12:50 pm Richmond Fed President Tom Barkin speaks 1:00 pm New York Fed President Williams speaks TUESDAY, MAY 7 11:30 am Minneapolis Fed President Kashkari speaks 3:00 pm Consumer credit WEDNESDAY, MAY 8 10:00 am Wholesale inventories 11:00 am Fed Vice Chair Philip Jefferson speaks 11:45 am Boston Fed President Susan Collins speaks 1:30 pm Fed Gov. Cook speaks THURSDAY, MAY 9 8:30 am Initial jobless claims 2:00 pm San Francisco Fed President Mary Daly speaks FRIDAY, MAY 10 9:00 am Fed Governor Michelle Bowman speaks 10:00 am Consumer sentiment (prelim) 12:45 pm Chicago Fed President Austan Goolsbee speaks 1:30 pm Fed Vice Chair for Supervision Michael Barr speaks 2:00 pm Monthly U.S. federal budget 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: "Monthly Stock Options Expirations"
US stock options expire at 11:59AM on the third Saturday of each month. Since most retail traders can't trade options on Saturday, this equates to 4:00pm Eastern Time closing bell. This date changes to the third Thursday at 4:00pm whenever Friday is a holiday.
Stocks Covered in This Issue
HEALTHCARE SECTOR
Silk Road Medical, Inc (SILK: Healthcare/Medical Devices) - BULLISH BOUNCE. This trader-friendly setup turns repetitive stock behavior into real profits. Based on the tendency for up-trending stocks to drop briefly and then resume the up-trend, the Bullish Bounce places traders into excellent stocks when conditions are primed for more skyward movement. SILK's current price action near moving average support signals a potential BUY entry at 20.84, followed by a 2.05 trailing stop which can be tightened to 1.03 upon earning 1.5. SILK closed Thursday at 20.41. Earnings Report Date: Jul 30, 2024. Beta: 1.44. Market-Cap: 805.05M. Optionable.
Pharvaris N.V. (PHVS: Healthcare/Biotechnology) - 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. PHVS found itself in this condition on Thursday 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 21.12 and a SELL short trigger at 19.71. When PHVS moves outside of Thursday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 1.41 trailing stop. After you've got a 4.24 profit, tighten the stop to 0.71. PHVS closed at 20.57 on Thursday. Earnings Report Date: Aug 5, 2024. Beta: --. Market-Cap: 1.107B. Optionable.
Longboard Pharmaceuticals, Inc. (LBPH: Healthcare/Biotechnology) - SQUEEZE PLAY. The ticker for Thursday's session shows LBPH 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 22.39 and a SELL short trigger at 20.96. When LBPH 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 1.43 trailing stop. Upon reaching a 2.56 profit, resize the stop to 0.72. Earnings Report Date: Aug 1, 2024. Beta: 1.27. Market-Cap: 854.973M. Optionable.
Bicycle Therapeutics plc (BCYC: Healthcare/Biotechnology) - SQUEEZE PLAY. Thursday's trading session left BCYC 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 24.33 and your SELL short trigger at 22.76. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.57 trailing stop. Once you have a 2.12 profit, reduce the stop to 0.79. Earnings Report Date: Aug 1, 2024. Beta: --. Market-Cap: 897.764M. Optionable.
TECHNOLOGY SECTOR
Bandwidth Inc. (BAND: Technology/Software - Infrastructure) - SQUEEZE PLAY. BAND shareholders know what it feels like to be squeezed. Thursday'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. BAND closed Thursday at 21.52. The plan is to enter in the right direction by placing a BUY trigger at 21.91 and a SELL short trigger at 20.17. Once BAND establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.74. After you've collected a 1.2 profit, tighten the stop to 0.87. Earnings Report Date: Jul 31, 2024. Beta: 1.44. Market-Cap: 581.206M. 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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