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November 28, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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It can be a challange in volatile markets to find the trend that matches your trading time frame. That's one of the reasons we always include a chart of the S&P 500 in the Technical Analyst section of the RightLine Report. In addition to the chart you'll find an extremely valuable summary of the daily and weekly trends, along with support and resistance levels for all three major averages.
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"QUICK LIST"
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Stock 11/28 11/28 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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GDHG 23.10 -1.21 24.87 21.33 3.54/1.77 7.02
BJRI 30.04 -0.30 30.69 28.77 1.92/0.96 2.16
MORF 23.40 0.14 23.78 21.92 1.86/0.93 2.6
CLDX 28.21 -0.98 29.68 27.3 2.38/1.19 3.68
DSGR 25.72 -0.44 24.89 1.93/0.97 2.84
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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Stocks experienced an initial surge on Tuesday in response to dovish comments from Fed Governor Christopher Waller, who hinted at the possibility of a rate cut if lower inflation persists. However, this upward momentum was tempered later in the day by hawkish remarks from Fed Governor Michelle Bowman, indicating a need for additional rate hikes to address inflation concerns. Despite these contrasting statements, major indices closed the day with minimal changes, registering slight gains. Post-market, attention shifted to tech earnings, marking a notable point on an otherwise quiet news day. The S&P managed to avoid its first consecutive two-day losses since late October. Gold neared record highs, buoyed by an increase in crude oil prices, while the dollar and Treasury yields faltered amid growing expectations that the Fed might conclude its rate hike cycle, with market focus shifting toward potential rate cuts in early 2024. There is a plausible argument for the Fed concluding its rate-hiking cycle, given the downward trend in core inflation and indications of a moderated economy. Nonetheless, we anticipate Fed officials to affirm their readiness to pursue further rate hikes to discourage excessive advancement in financial conditions, as emphasized by Governor Bowman. From the vantage point of equity leadership, real estate, consumer discretionary, and utilities emerged as the top-performing sectors, with large-cap stocks surpassing small-caps.In commodities, oil rebounded, surpassing $76 per barrel in anticipation of the OPEC+ meeting on November 30. Now the spotlight returns to inflation, Thursday will unveil the October PCE inflation reading, with market attention keenly focused on the core PCE figure, the Fed's favored gauge of inflation. Projections suggest a decline in core PCE from a 3.7% year-over-year increase in September to 3.5%. If these forecasts materialize, PCE inflation would dip below the Fed's own estimate of 3.7% at its September meeting for the year-end 2023. Drawing from historical trends, the current November rally in the S&P 500, having rebounded after three consecutive months of decline, is poised to achieve a gain exceeding 8%. While our perspective is rooted in the belief that long-term market performance is driven by economic and fundamental factors, it's interesting to observe that historically, December has been a robust month for stock-market performance. Since 1945, the S&P 500 has registered positive returns in December 75% of the time, marking the highest percentage among all months. The average returns during this period stand at 1.6%, the highest monthly average. Although historical patterns do not guarantee a similar outcome this year, the favorable seasonality presents a basis for optimism as we approach year-end. Nov 27, 2023 Nov 28, 2023
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Dow 35,333.47 -56.68 35,416.98 83.51
Nasdaq 14,241.02 -9.83 14,281.76 40.73
S&P 500 4,550.43 -8.91 4,554.89 4.46
NYSE Volume 3.4B 3.59B
NYSE Advancers 1,202 1,437
NYSE Decliners 1,654 1,393
Nasdaq Volume 4.22B 4.5B
Nasdaq Advancers 1,655 2,086
Nasdaq Decliners 2,747 2,211
New Highs/Lows
11/21 11/22 11/22 11/24 11/27 11/28
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NYSE New Highs 67 86 86 89 103 68
NYSE New Lows 26 27 26 6 23 27
Nasdaq New Highs 30 133 135 86 93 91
Nasdaq New Lows 54 125 125 62 131 131
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TRADER'S TIP:
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TRADER'S TIP: "Earnings Season Just Ahead - Playing the Pre-Earnings Run" Every few months there are companies that pre-announce BETTER-than expected upcoming earnings, and consequently their stock tends to ramp up as the announcement date approaches. Traders can take advantage of these pre-earnings runs by looking at earnings history and a company's record for beating Wall Street estimates. Combine this with current sentiments on the specific sector as well as recent news on "sympathy stocks," and this type of information provides some insight as to where pre-earnings runs may develop. Just remember that very often a key part of playing the run is to exit prior to the actual announcement, locking in profits BEFORE the Street has a chance to react to the numbers. Oftentimes, shares turn sharply lower immediately following the announcement, regardless of the numbers, as traders rush to take profits. **************************
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/ S&P 500 - 4554.89 November 28, 2023 52-Week High: 4607.07 52-Week Low: 3764.49 Daily Trend: UP Weekly trend: UP Weekly Pivot Levels Resistance 3: 4662.18 Resistance 2: 4604.11 Resistance 1: 4581.72 Pivot: 4546.04 Support 1: 4523.65 Support 2: 4487.97 Support 3: 4429.90 https://www.prorightline.com/rlch/112823SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, NOV. 27 10:00 am New home sales TUESDAY, NOV. 28 9:00 am S&P Case-Shiller home price index (20 cities) 10:00 am Consumer confidence 10:00 am Fed Gov. Christopher Waller speaks 10:00 am Chicago Fed President Austan Goolsbee speaks WEDNESDAY, Nov. 29 8:30 am GDP (first revision) Q3 8:30 am Advanced U.S. trade balance in goods 8:30 am Advanced retail inventories 8:30 am Advanced wholesale inventories 1:45 pm Cleveland Fed President Loretta Mester speaks 2:00 pm Fed Beige Book THURSDAY, NOV. 30 8:30 am Initial jobless claims 8:30 am Personal income (nominal) 8:30 am Personal spending (nominal) 8:30 am PCE index 8:30 am Core PCE index 8:30 am PCE (year-over-year) 8:30 am Core PCE (year-over-year) 9:05 am New York Fed President John Williams speaks 9:45 am Chicago Business Barometer (PMI) 10:00 am Pending home sales FRIDAY, DEC. 1 10:00 am ISM manufacturing 10:00 am Construction spending 10:00 am Chicago Fed President Austan Goolsbee speaks 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: "In The Game" We can take advantage of price movement with careful planning and proper trading execution, but there's no reason to ever force a trade. Taking reasonable risk always includes solid money management so be sure to include Risk Control in your trading plan. Also, we always have the option to stand aside when nothing seems to work - just remember that while the sidelines offer a safe place to watch as we wait for an opening, we have to be on the field to score! ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR Golden Heaven Group Holdings Ltd. (GDHG: Consumer Cyclical/Leisure) - SQUEEZE PLAY. Trader indecision has put GDHG squarely in the center of a Bull versus Bear standoff. This tight spot should soon give way to a clear winner in the short-term, and we want to be in position for the move. To do that we've set a BUY entry at 24.87 and a SELL short entry at 21.33. Now it's up to GDHG to show us which entry will be filled. Once the trade is underway place a 3.54 trailing stop, which can be tightened to 1.77 after you achieve a 7.02 profit. GDHG closed on Tuesday at 23.10. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.195B. Not Optionable. BJ's Restaurants, Inc. (BJRI: Consumer Cyclical/Restaurants) - SQUEEZE PLAY. BJRI traders on both sides of the fence are now locked in a head-to-head shootout. Tuesday'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 30.69 and a SELL short trigger at 28.77. When one of the orders is filled, cancel the remaining order and enter a 1.92 trailing stop. When you've reached a 2.16 paper profit, tighten the stop to 0.96. BJRI closed at 30.04 on Tuesday. Earnings Report Date: Feb 14, 2024. Beta: 1.96. Market-Cap: 698.039M. Optionable. HEALTHCARE SECTOR Morphic Holding, Inc. (MORF: Healthcare/Biotechnology) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in MORF's narrowest trading range of the past seven sessions. With neither group able to take complete control on Tuesday, 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 23.78 and a SELL order at 21.92. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.86 trailing stop. Tighten the stop to 0.93 once you have a 2.6 gain. MORF closed Tuesday at 23.40. Earnings Report Date: Feb 21, 2024. Beta: 1.35. Market-Cap: 1.164B. Optionable. Celldex Therapeutics, Inc. (CLDX: 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. CLDX 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 29.68 and a SELL short trigger at 27.3. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 2.38 which can be tightened to 1.19 on a 3.68 gain. CLDX closed Tuesday at 28.21. Earnings Report Date: Feb 26, 2024. Beta: 2.06. Market-Cap: 1.543B. Optionable. INDUSTRIALS SECTOR Distribution Solutions Group, Inc. (DSGR: Industrials/Industrial Distribution) - BEARISH U-TURN. Shares of DSGR have experienced the pain of selling pressure for a while, yet a recent bounce has given shareholders some welcome yet perhaps temporary relief. On Tuesday the upward bounce ran into a brick wall at a Moving Average. DSGR now appears ready to head lower again. A continuation of this bearish reversal would signal a retracement of the recent gains, so prepare for SHORT entries at 24.89, using a 1.93 stop. Tighten to 0.97 on a gain of 2.84. Tuesday's closing tick was 25.72. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.205B. Not 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/ ======================================================================
Best of luck and have a Great Week!
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