November 7, 2023 - The RightLine Report
Notes From The Editor
Volatile price movement is a common aspect of trading. Although traditional investors don't care for roller-coaster market action, it creates plenty of opportunity for traders.
Price movement is a trader's best friend, even though it doesn't always occur in our preferred direction or at our desired pace. Without it there would be no losers, no winners, and no profits. Luckily, every sell-off eventually bounces, and every rally eventually reverses into a decline.
Trading these slopes requires training and experience. State of the art tools and fast broadband connections make the job much easier than just a few years ago. Of course, having the tools and knowing how to use them successfully are two different things. It takes patience and discipline to gain the necessary education and skills. However, with the right attitude and persistence, just about anyone can improve their personal earnings.
Playing the Trading Game
A trader's first objective should be to STAY in the game long enough to learn how to PLAY the game. The RightLine Risk Control system let's traders accomplish this by providing a safe trading environment regardless of the market conditions.
Another important objective is to eliminate any distracting focus on money. You can overcome the tendency to keep your eyes glued to the cash on the table by seriously reducing the number of shares held in each position.
At some point along the way you realize that money is simply a byproduct of learning to play the game well. To play the game well is to consistently score new points while protecting accumulated points.
Traders who learn the needed skills and maintain the mindset always welcome volatile price movement because it allows points to be scored faster.
Trade well,
~ Thomas Sutton, Editor
Note: 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. The RightLine Risk Calculator is available in the RightLine Member's Area.
Stocks Covered Today Stock Splits
Quick List
Stock 11/07 11/07 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
TTGT 25.79 -0.24 26.51 24.9 1.61/0.81 2.36
ARWR 27.51 0.57 27.94 2.17/1.09 2.16
SPR 24.62 0.02 25.21 23.43 1.78/0.89 2.06
UCTT 25.16 -0.02 25.6 24.13 1.47/0.74 1.86
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 stock indices extended their recent positive trajectory on Tuesday, with the S&P 500 Index (SPX) registering its seventh consecutive gain. This seven-day winning streak is the longest it has experienced in two years. The ongoing surge is largely fueled by investor optimism that the Federal Reserve's campaign to raise interest rates may have peaked.
The upswing is notably led by large-cap technology stocks, contributing to the eighth consecutive gain for the Nasdaq Composite (COMP). The positive momentum has also extended to smaller players in cloud computing and semiconductor sectors, particularly those that reported quarterly results exceeding expectations.
Simultaneously, Treasury yields saw a dip, and oil prices experienced a significant drop. These factors have further solidified the notion that the rate hike witnessed in July may have marked the conclusion of the present rate cycle.
The third-quarter earnings season is winding down over the next couple of weeks. Up to this point, approximately 85% of S&P 500 companies have disclosed their earnings, and an impressive 81% of them have surpassed earnings projections. Earnings growth is on track to rise by about 3.9% year-over-year, a significant improvement over the estimated 1.0% growth for this quarter*. This positive earnings growth marks a departure from three consecutive quarters of negative earnings, possibly signaling better profit margins and continued earnings momentum. Nevertheless, forecasts for fourth-quarter earnings growth have been revised down, transitioning from roughly 7.5% year-over-year to the current 3.4%*. We view this as a more credible expectation for corporate earnings growth as we approach year-end, in line with the possibility of a moderation in economic growth.
Looking ahead, the spotlight turns to inflation next week, as CPI (Consumer Price Index) inflation data is set to be released on Tuesday. Expectations suggest a modest cooling of both headline and core inflation. Headline inflation is projected to decrease from a month-over-month growth of 0.4% to slightly above 0.1%, largely attributed to declining oil and energy prices in the past month. Core inflation is expected to remain stable at 0.3% month-over-month. Of particular interest will be the trends in shelter and rental inflation, which make up a significant portion of the core CPI basket. From our vantage point, housing and rental costs have displayed a real-time deceleration and are likely to have a more substantial impact on core CPI figures in the coming months. This trend should exert additional downward pressure on core inflation, which presently stands at around 4.1%, well exceeding the Federal Reserve's 2.0% target.
Nov 6, 2023 Nov 7, 2023
-------------------- --------------------
Dow 34,095.86 34.54 34,152.60 56.74
Nasdaq 13,518.78 40.50 13,639.86 121.08
S&P 500 4,365.98 7.64 4,378.38 12.40
NYSE Volume 3.67B 3.8B
NYSE Advancers 800 1,208
NYSE Decliners 2,077 1,665
Nasdaq Volume 4.36B 4.37B
Nasdaq Advancers 1,560 2,109
Nasdaq Decliners 2,728 2,217
New Highs/Lows
10/31 11/01 11/02 11/03 11/06 11/07
--------------------------------------------
NYSE New Highs 15 29 66 82 36 30
NYSE New Lows 119 138 55 18 24 54
Nasdaq New Highs 18 26 43 63 45 48
Nasdaq New Lows 302 328 161 91 112 145
Stocks Covered Today Stock Splits
TRADER'S TIP: "Inside the RSI"
Simply stated, the RSI compares the magnitude of a stock's recent gains to the magnitude of its recent losses on a scale from 0 to 100. It is usually considered bullish for the underlying stock when the RSI rises above 30, and bearish when it falls below 70. A powerful way to use the RSI is to look for a divergence. An indication of an impending price reversal takes place when a stock or market reaches a new high, yet the RSI doesn't reach its previous high. A "failure swing" is said to confirm the impending reversal whenever the RSI drops below its most recent "valley."
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 - 4378.38 November 7, 2023
52-Week High: 4607.07
52-Week Low: 3744.22
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4769.66
Resistance 2: 4528.98
Resistance 1: 4443.66
Pivot: 4288.30
Support 1: 4202.98
Support 2: 4047.62
Support 3: 3806.93
NASDAQ Composite - 13639.86 November 7, 2023
52-Week High: 14446.55
52-Week Low: 10207.47
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 14887.48
Resistance 2: 14058.76
Resistance 1: 13768.52
Pivot: 13230.04
Support 1: 12939.80
Support 2: 12401.32
Support 3: 11572.59
Dow Industrials - 34152.60 November 7, 2023
52-Week High: 35679.13
52-Week Low: 31429.82
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 36839.67
Resistance 2: 35213.58
Resistance 1: 34637.45
Pivot: 33587.49
Support 1: 33011.36
Support 2: 31961.40
Support 3: 30335.31
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, NOV. 6 11:00 am Fed Gov. Cook speaks 2:00 pm Federal Reserve senior loan survey TUESDAY, NOV. 7 7:30 am Minneapolis Fed President Kashkari TV appearance 8:00 am Chicago Fed President Goolsbee TV appearance 8:30 am U.S. trade deficit 9:15 am Fed Vice Chair for Supervision Barr speaks 10:00 am Fed Gov. Waller speaks 1:30 pm Fed Gov. Michelle Bowman speaks 3:00 pm Consumer credit WEDNESDAY, NOV. 8 5:15 am Fed Gov. Cook speaks 9:15 am Fed Chair Powell delivers opening remarks 10:00 am Wholesale inventories 2:00 pm Fed Vice Chair for Supervision Barr speaks 4:45 pm Fed Vice Chair Jefferson speaks THURSDAY, NOV. 9 8:30 am Initial jobless claims 2:00 pm Fed Chair Jerome Powell on panel at IMF 8:40 pm Philadelphia Fed President Patrick Harker speaks FRIDAY, NOV 10 7:30 am Dallas Fed President Lorie Logan speaks 9:00 am Atlanta Fed President Raphael Bostic speaks 10:00 am Consumer sentiment (prelim) 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: "What's Your Focus?"
Although most traders give the "enter" side of the trading equation a high priority, the "exit" side is far more important. Inexperienced market players often watch their positions go up, then slide all the way back down. It's easy to forget that paper profits only become "real" when they are converted to cash. Profitable exit strategies require active management, and deserve much more attention than entries.
Stocks Covered in This Issue
COMMUNICATION SERVICES SECTOR
TechTarget, Inc. (TTGT: Communication Services/Internet Content & Information) - SQUEEZE PLAY. A look at TTGT'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 26.51 and a SELL short trigger at 24.9. Once TTGT shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.61 and tighten to 0.81 on a 2.36 gain. TTGT closed Tuesday at 25.79. Earnings Report Date: Nov 08, 2023. Beta: 0.99. Market-Cap: 717.496M. Optionable.
HEALTHCARE SECTOR
Arrowhead Pharmaceuticals, Inc. (ARWR: Healthcare/Biotechnology) - BULLISH BOUNCE. Here is another example of a stock in an established uptrend that has recently experienced a counter-trend drop. The sliding price action has now found support near a moving average zone, bouncing upward during Tuesday's session to close at 27.51. Anticipate the rebound to continue, and be ready to buy ARWR at 27.94. Follow your entry with a trailing stop of 2.17 which can be tightened to 1.09 on a 2.16 profit. Earnings Report Date: Nov 27, 2023. Beta: 0.88. Market-Cap: 2.949B. Optionable.
INDUSTRIALS SECTOR
Spirit AeroSystems Holdings, Inc. (SPR: Industrials/Aerospace & Defense) - SQUEEZE PLAY. SPR 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 25.21 and a SELL short entry at 23.43. Once your trade is filled, enter a 1.78 trailing stop. Tighten it to 0.89 after a 2.06 gain. SPR closed on Tuesday at 24.62. Earnings Report Date: Feb 05, 2024. Beta: 1.69. Market-Cap: 2.599B. Optionable.
TECHNOLOGY SECTOR
Ultra Clean Holdings, Inc. (UCTT: Technology/Semiconductor Equipment & Materials) - SQUEEZE PLAY. Traders are feeling the pressure as UCTT's intra-day price range on Tuesday shrunk to the narrowest spread in over a week. The tension between buyers and sellers should provide enough pent-up engergy for a breakout move in the days ahead, so get ready to trade with the new trend. To achieve that, place a BUY entry at 25.6 and a SELL short entry at 24.13. UCTT's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.47 trailing stop. Tighten it to 0.74 after you get a 1.86 gain. UCTT closed Tuesday at 25.16. Earnings Report Date: N/A. Beta: 2.03. Market-Cap: 1.127B. 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.
Disclaimer
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