November 14, 2023 - The RightLine Report
Notes From The Editor
Just like a snowflake, no two trading sessions are the same. Every day brings unique technical situations, news events, and other dynamics that shift the market. But along with these ever-changing factors are some common tendencies that savvy traders can profit from.
What I'm referring to here is the market's "rhythm" throughout the day.
Last week we talked about your personal morning habits, and how they can impact your trading account. Similarly, the market has its own daily habits. This shouldn't be a surprise, considering that when it's all boiled down, the market consists of thousands of humans making decisions.
When trading commences at the opening bell, the movement is fast and furious. Pre-market trading is suddenly reflected in gaps. Stocks not trading in pre-market react to overnight events.
I've often heard market veterans refer to the first hour of trading as "amateur hour" - a time when traders are lured in by quick prices changes, then whipsawed for a loss by the increased volatility.
In practice, I've found that this first hour can offer plenty of enticing entry points. Individual stocks often over-react when the broader market is making a decisive move. Imagine, for example, an equity called XYZ that falls sharply with the major indices at the beginning of trading.
While this sympathetic reaction is understandable, buyers suddenly begin to take notice as the stock approaches support at its 50 DMA. If that moving average is touched and successfully tested, XYZ could put in a decisive bottom and begin to retrace those early losses. The bounce can be particularly strong if the broader market also turns around.
I'm not necessarily endorsing jumping head-over-heels into a trade just five minutes after trading begins; with so little time, it's hard to get a feel for where the market and stock might be headed. However, once the initial dust settles during the first 15-30 minutes, windows of opportunity can suddenly open. The key is to have a reliable entry point, such as a bounce off a trendline or moving average, then place your stop relative to that level.
Early trading is also the time to employ our gap-open strategies for entering trade set-ups that have gapped beyond their entry points.
(Visit https://prorightline.com/gap-open-stock-trading-tactic/ for more information.)
Just as morning action has its own unique "vibe" and tendencies, so to does the afternoon half of the session. We'll touch on that next week and identify some specific tendencies that all traders should be aware of.
Here's to Profits,
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 11/14 11/14 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
HEINY 46.58 0.82 47.28 2.39/1.2 1
SLNO 22.59 0.51 23.2 21.26 1.94/0.97 2.66
SKYW 45.37 2.28 46 3.58/1.79 3.14
HASI 22.50 2.70 22.92 2.66/1.33 1.92
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 positive momentum in US stocks persisted on Tuesday as a significant drop in Treasury bond yields, across both the long and short ends of the curve, accompanied better-than-expected US CPI inflation data. This led to notable gains in stocks, gold, oil, and bonds. The consumer price index (CPI) for October showed no change month-over-month, weaker than expected, and the core rate increased by 0.2%, also below expectations. Year-over-year figures dropped. The S&P 500 Index (SPX) surpassed 4,500 for the first time since mid-September, marking a recovery from the challenging month of October. The index has gained 400 points in less than three weeks, rising for the 10th time in the last 12 trading days.
The Russell 2000 Smallcap index, which has lagged behind large caps throughout the year, spiked by 5%. Markets shifted to anticipating four interest rate cuts in 2024 and no further rate hikes this year. Interest rate-sensitive sectors, including REITs (XLRE), Utilities (XLU), and Discretionary, saw significant gains.
The October Consumer Price Index revealed a flat month-over-month reading, smaller than expected, with a year-over-year CPI increase of 3.2%. The core CPI, excluding food and energy, rose by 0.2% month-over-month and 4.0% year-over-year. Housing inflation eased to its slowest pace in a year.
In commodities, oil prices ended flat after earlier gains, with WTI crude at $78.26 per barrel. Gold prices jumped, settling at $1,966.50 per ounce. The USD/dollar index (DXY) experienced a notable drawdown of up to 1.5%, reaching around 104, following the CPI report that diminished expectations of further rate hikes in 2023 and increased the likelihood of more aggressive easing in 2024. This decline in the dollar was accompanied by a fall in Treasury yields, with the 10-year yield dropping by about 18 bps to 4.44%, and the 2-year falling over 21 bps to 4.83%.
A potential government shutdown on Saturday added an element of uncertainty, with the House preparing to vote on a temporary funding plan. The plan, proposed by House Speaker Mike Johnson, aims to fund some parts of the government through January 19 and others through February 2.
Nov 13, 2023 Nov 14, 2023
-------------------- --------------------
Dow 34,337.87 54.77 34,827.70 489.83
Nasdaq 13,767.74 -30.36 14,094.38 326.64
S&P 500 4,411.55 -3.69 4,495.70 84.15
NYSE Volume 3.33B 4.71B
NYSE Advancers 1,403 2,667
NYSE Decliners 1,456 254
Nasdaq Volume 4.36B 5.35B
Nasdaq Advancers 2,086 3,384
Nasdaq Decliners 2,164 953
New Highs/Lows
11/07 11/08 11/09 11/10 11/13 11/14
--------------------------------------------
NYSE New Highs 30 38 44 44 51 120
NYSE New Lows 54 66 92 105 78 20
Nasdaq New Highs 48 50 46 60 65 139
Nasdaq New Lows 145 205 319 353 246 162
Stocks Covered Today Stock Splits
TRADER'S TIP: "Beyond a Reasonable Doubt"
It's impossible to predict with 100% accuracy, which trades will be successful and which won't. There are always doubts - even the best setups will present conflicting possible outcomes as you access the odds. Don't let this deter you. Use the RightLine Risk Control Calculator to determine a reasonable amount to risk, and then enter the position. If the trade doesn't go in your favor your proper position sizing and stop placement contain the damage. Remember that you have to put money in the market to win. Just do it . . . Wisely! You can check out the RightLine Risk Control Calculator at http://www.rightline.net/home/gate_rm.html
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".
S&P 500 - 4495.70 November 14, 2023
52-Week High: 4607.07
52-Week Low: 3764.49
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4540.58
Resistance 2: 4466.49
Resistance 1: 4440.86
Pivot: 4392.40
Support 1: 4366.77
Support 2: 4318.31
Support 3: 4244.22
NASDAQ Composite - 14094.38 November 14, 2023
52-Week High: 14446.55
52-Week Low: 10207.47
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 14411.95
Resistance 2: 14045.41
Resistance 1: 13921.76
Pivot: 13678.87
Support 1: 13555.22
Support 2: 13312.33
Support 3: 12945.79
Dow Industrials - 34827.70 November 14, 2023
52-Week High: 35679.13
52-Week Low: 31429.82
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 35052.25
Resistance 2: 34601.66
Resistance 1: 34442.38
Pivot: 34151.07
Support 1: 33991.79
Support 2: 33700.48
Support 3: 33249.89
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, NOV. 13 2:00 pm Monthly U.S. federal budget TUESDAY, NOV. 14 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 12:45 pm Chicago Fed President Austan Goolsbee speaks WEDNESDAY, NOV. 15 8:30 am Producer price index Oct. 8"30 am Core PPI 8:30 am PPI year over year 8:30 am Core PPI year over year 8:30 am U.S. retail sales 8:30 am Retail sales minus autos 8:30 am Empire State manufacturing survey 10:00 am Business inventories THURSDAY, NOV. 16 8:30 am Initial jobless claims 8:30 am Import price index 8:30 am Import price index minus fuel 8:30 am Philadelphia Fed manufacturing survey 9:15 am Industrial production 9:15 am Capacity utilization 9:25 am New York Fed President John Williams speaks 10:00 am Home builder confidence index FRIDAY, NOV. 17 8:30 am Housing starts 8:30 am Building permits 9:45 am Chicago Fed President Goolsbee speaks 10:00 am San Francisco Fed President Daly speaks 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: "Closing Shop For The Holidays"
Keep a close watch on trading conditions when a market holiday approaches. Professional traders will often leave early for an extra day away from the office, and many will close positions to avoid holding over a long holiday weekend. Volume is typically light and once institutional money managers are away, small traders can often push a few stocks around increasing volatility substantially. Always make sure you have a reliable risk control system in place.
Stocks Covered in This Issue
CONSUMER DEFENSIVE SECTOR
Heineken N.V. (HEINY: Consumer Defensive/Beverages - Brewers) - BULLISH BOUNCE. Another bullish bouncer, HEINY appears ready to resume trading in an uptrend after recent selling forced the stock lower for several days. Tuesday's positive price action near Moving Average support says it's time to BUY shares if HEINY reaches our entry trigger set at 47.28. Also place a 2.39 trailing stop which can be narrowed to 1.2 when you reach a 1 profit. HEINY closed Tuesday at 46.58. Earnings Report Date: N/A. Beta: 0.65. Market-Cap: 53.067B. Not Optionable.
HEALTHCARE SECTOR
Soleno Therapeutics, Inc. (SLNO: Healthcare/Biotechnology) - 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. SLNO traders reached this state of stand-off on Tuesday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 23.2 and a SELL short trigger at 21.26. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.94 which can be tightened to 0.97 on a 2.66 gain. SLNO closed Tuesday at 22.59. Earnings Report Date: N/A. Beta: -1.52. Market-Cap: 688.981M. Optionable.
INDUSTRIALS SECTOR
SkyWest, Inc. (SKYW: Industrials/Airlines) - BULLISH BOUNCE. Entering a position in the early stages of a bounce is great way to get on board an up-trending stock. The "Bullish Bounce" setup identifies probable candidates by evaluating the trading action that takes place near support levels. SKYW's behavior on Tuesday could very well be a sign that a new bounce is underway. Place a BUY trigger at 46. In the event your trigger is met, also place a 3.58 trailing stop which can be trimmed down to 1.79 when you have a 3.14 profit. SKYW closed Tuesday at 45.37. Earnings Report Date: Jan 31, 2024. Beta: 1.96. Market-Cap: 1.858B. Optionable.
REAL ESTATE SECTOR
Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI: Real Estate/REIT - Specialty) - BULLISH BOUNCE. Some people hear of a stock that's performing nicely and then buy it without any regard for timing the entry. This approach usually leaves money on the table, money that could just as well be added to profits. The Bullish Bounce setup provides a well timed entry and reduces exposure to risk by placing both the entry trigger and exit stop near the bottom of the bounce. We have an opportunity to use this approach with HASI which met our setup criteria on Tuesday. The BUY trigger for this trade is at 22.92, and the trailing stop is sized at 2.66. Resize the stop to 1.33 upon collecting a 1.92 point gain. HASI closed Tuesday at 22.50. Earnings Report Date: Feb 14, 2024. Beta: 1.74. Market-Cap: 2.532B. 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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