November 21, 2023 - The RightLine Report
Notes From The Editor
Success in the market is all about timing. Pick the right entry and exit points, and you've scored a profitable trade. While this point is obvious to anyone who's even dabbled in stocks, it's easy to overlook an underlying factor that can increase the odds of having good timing: the natural rhythm of the market.
Recently our discussion centered on some elements of trading in the morning. There are certain tendencies that tend to repeat themselves from day to day, giving some order and predictability to a seemingly chaotic market.
The same holds true of afternoon trading, which begins with the "lunchtime lull." As the major institutional traders in New York take lunch at 12:00-2:00 EST, the broader market will typically see a volume pullback and a decline in volatility.
For us retail traders, this offers an excellent chance to take stock of what's happened so far (no pun intended). Make note of which potential set-ups have fallen by the wayside, and which have emerged as the strongest candidates for the second half of trading.
Occasionally the lunchtime lull will extend into the end of the session, producing a non-eventful afternoon. This is often the case on Fridays before long weekends or holidays. Typically, however, volatility will return during the final two hours. Oftentimes the action will be even more intense than the morning session.
For traders holding active positions, one of the most important tasks is to make a note of which companies have upcoming earnings announcements.
Tech companies typically report after the bell, while others will report the following morning. Holding a company's stock over its quarterly report can be a risky proposition. Use the final two hours to find an optimal exit point, being sure to close out the entire position before the closing bell sounds.
End-of-day volatility can be especially high on the last day of the quarter. Mutual funds making adjustments to their portfolios often wait until the last minute to buy or sell. The third Friday of every month, when stock options expire, is another session that tends to produce increased afternoon volatility.
The last two hours can offer up plenty of promising set-ups. But just as trading during the day's first 15-30 minutes can be a tricky proposition, the session's homestretch should also be left to experienced traders. Until you've developed a more advanced set of skills, use the final half hour to manage any active position, to start game-planning for the next day, or to simply relax!
Here's to Profits,
Kent Barton
Senior Analyst
Holiday Note: The market will be closed Thursday November 23 for Thanksgiving. The market will re-open on Friday November 24th and will close at 1:00 PM ET. RightLine offices will be closed Thursday and Friday, and will resume normal hours of operation on Monday November 27th. The next RightLine Report will be published on Tuesday November 28th.
All of us at RightLine wish you and your families a wonderful Happy Thanksgiving!
- RightLine Staff
Stocks Covered Today Stock Splits
Quick List
Stock 11/21 11/21 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
CSV 22.11 0.07 22.63 20.98 1.65/0.83 1.4
SWTX 21.15 -1.07 22.48 20.5 1.98/0.99 3.08
PKOH 22.98 -0.12 23.63 22.11 1.52/0.76 2.72
CSIQ 20.62 -0.19 21.19 19.75 1.44/0.72 1.98
CCSI 22.70 -0.41 23.27 21.55 1.72/0.86 1.88
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
US stocks closed lower in subdued trading on Tuesday, ending 5-day winning streaks for both the Nasdaq and S&P. However, equities rebounded significantly from morning lows, fueled by growing optimism ahead of the NVDA earnings report, especially in the technology and semiconductor sectors.
The Federal Reserve released minutes from the November FOMC meeting in the late afternoon, revealing no significant surprises. The commentary indicated a leaning towards maintaining a more restrictive stance on interest rates for a longer duration to effectively combat inflation, aligning with market expectations.
In terms of sector performance, Healthcare, Materials, and Consumer Staples showed strength, while Tech and REITs lagged behind. With the Thanksgiving holiday just two days away, trading volumes and volatility are already starting to diminish.
Several voices on Wall Street expressed positivity heading into the year-end. Bank of America's strategy call outlined five reasons why the S&P 500 is likely to reach 5,000 by the end of 2024. These reasons include the lack of conviction among bears, a "goldilocks" scenario projected for 2024 according to BofA's bottom-up analyst survey, a forecast of $235 in 2024 EPS despite slowing GDP, historical positivity for equities in election years, and the resilience of exceptionalism in the USA.
Another indication of market strength, is the rapid increase in the percentage of stocks above their 50-day moving averages for sectors like Financials, Communications, Technology, Industrials, and the S&P 500 overall.
Nov 20, 2023 Nov 21, 2023
-------------------- --------------------
Dow 35,151.04 203.76 35,088.29 -62.75
Nasdaq 14,284.53 159.05 14,199.98 -84.55
S&P 500 4,547.38 33.36 4,538.19 -9.19
NYSE Volume 3.65B 3.52B
NYSE Advancers 1,784 946
NYSE Decliners 1,067 1,892
Nasdaq Volume 4.57B 4.14B
Nasdaq Advancers 2,644 1,249
Nasdaq Decliners 1,604 2,900
New Highs/Lows
11/14 11/15 11/16 11/17 11/20 11/21
--------------------------------------------
NYSE New Highs 120 92 46 59 85 67
NYSE New Lows 20 9 26 14 16 26
Nasdaq New Highs 139 139 49 71 112 30
Nasdaq New Lows 162 114 131 103 108 54
Stocks Covered Today Stock Splits
TRADER'S TIP: "What's the Rush?"
Successful traders exercise patience and wait for premium trades. While waiting for the best setups may reduce the excitement of trading, it also lowers risk and increases the potential for profit. So which do you prefer?
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 - 4538.19 November 21, 2023
52-Week High: 4607.07
52-Week Low: 3764.49
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4731.03
Resistance 2: 4603.68
Resistance 1: 4558.85
Pivot: 4476.33
Support 1: 4431.50
Support 2: 4348.98
Support 3: 4221.63
NASDAQ Composite - 14199.98 November 21, 2023
52-Week High: 14446.55
52-Week Low: 10207.47
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 15015.70
Resistance 2: 14509.12
Resistance 1: 14317.29
Pivot: 14002.54
Support 1: 13810.71
Support 2: 13495.96
Support 3: 12989.38
Dow Industrials - 35088.29 November 21, 2023
52-Week High: 35679.13
52-Week Low: 31429.82
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 36425.31
Resistance 2: 35580.02
Resistance 1: 35263.65
Pivot: 34734.73
Support 1: 34418.36
Support 2: 33889.44
Support 3: 33044.15
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, NOV. 20 10:00 am U.S. leading economic indicators 12:00 pm Richmond Fed President Tom Barkin TV appearance TUESDAY, NOV. 21 10:00 am Existing home sales0% 2:00 pm Minutes of Fed's Oct. 31-Nov. 1 FOMC meeting WEDNESDAY, NOV. 22 8:30 am Initial jobless claims 8:30 am Durable-goods orders 8:30 am Durable-goods minus transportation 10:00 am Consumer sentiment (final) THURSDAY, NOV. 23 Thanksgiving holiday, none scheduled FRIDAY, NOV. 24 9:45 am S&P flash U.S. services PMI 9:45 am S&P flash U.S. manufacturing PMI 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: "Hey Vinnie, I think I got a personality!"
Traders come in all shapes, sizes, and dispositions. It's important for each of us to recognize the type of person we are, then trade within that makeup. Identify your personality, and genuinely come to terms with your current strengths and limitations instead of what you would like to be. As you mature as a trader and individual you will acquire new skills and a wide range of positive qualities. Just remember that change takes time, so be who you are now, have no pretensions about it, and trade in a style that suits YOUR personality.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
Carriage Services, Inc. (CSV: Consumer Cyclical/Personal Services) - SQUEEZE PLAY. Tuesday's trading action forced CSV'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 CSV 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 22.63 if CSV moves higher, and place your order to SELL short at 20.98 if price declines to that level. As usual follow your entry with a trailing stop, 1.65 should be sufficient. Reduce your stop to 0.83 on a 1.4 gain. CSV closed Tuesday at 22.11. Earnings Report Date: Feb 20, 2024. Beta: 0.92. Market-Cap: 331.241M. Optionable.
HEALTHCARE SECTOR
SpringWorks Therapeutics, Inc. (SWTX: Healthcare/Biotechnology) - SQUEEZE PLAY. A look at SWTX'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 22.48 and a SELL short trigger at 20.5. Once SWTX shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.98 and tighten to 0.99 on a 3.08 gain. SWTX closed Tuesday at 21.15. Earnings Report Date: N/A. Beta: 0.65. Market-Cap: 1.324B. Optionable.
INDUSTRIALS SECTOR
Park-Ohio Holdings Corp. (PKOH: Industrials/Specialty Industrial Machinery) - 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 PKOH. A move to the upside will trigger our BUY entry at 23.63, while a drop to 22.11 will trigger our SELL short entry. Follow your position with a 1.52 trailing stop. Tighten the stop to 0.76 once you have a 2.72 gain. PKOH closed Tuesday at 22.98. Earnings Report Date: N/A. Beta: 1.25. Market-Cap: 300.769M. Optionable.
TECHNOLOGY SECTOR
Canadian Solar Inc. (CSIQ: Technology/Solar) - SQUEEZE PLAY. Tuesday's narrow price range has created a potentially profitable setup in CSIQ, as sellers and buyers find themselves in a near tie for control of price direction. The next short-term trend could go either way, so prepare for a move out of the draw within the next day or so. Set a BUY entry at 21.19 and a SELL short entry at 19.75. Let CSIQ's price action determine your long or short entry. Once the order is filled, place a 1.44 trailing stop, and tighten it to 0.72 upon getting a 1.98 gain. CSIQ closed Tuesday at 20.62. Earnings Report Date: N/A. Beta: 1.48. Market-Cap: 1.333B. Optionable.
Consensus Cloud Solutions, Inc. (CCSI: Technology/Software - Infrastructure) - SQUEEZE PLAY. CCSI 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. CCSI is now at 22.70. We can capture price action either way by placing a BUY trigger at 23.27 and a SELL short trigger at 21.55. Once CCSI 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 1.72. When you acquire a 1.88 profit, tighten the stop to 0.86. Earnings Report Date: N/A. Beta: 1.89. Market-Cap: 434.787M. 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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