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October 10, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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Welcome to Part II of our discussion about market internals. In a recent issue of the RightLine Report we talked about some of the basic indicators you can use to gauge both the "conviction" of big moves and the market's overall health.
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"QUICK LIST"
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Stock 10/10 10/10 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
CTRN 23.45 0.57 23.76 22.02 1.74/0.87 1.74
COCO 27.43 0.29 28.2 26.29 1.91/0.96 3.48
TRUP 26.18 0.29 26.93 24.76 2.17/1.09 2.52
IDYA 26.92 0.17 27.33 25.74 1.59/0.8 1.84
CLFD 26.96 0.01 27.84 25.99 1.85/0.93 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" 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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A considerable decline in Treasury yields provided a strong boost to US equities on Tuesday, propelling both the S&P 500 Index (SPX) and the Nasdaq Composite (COMP) to their highest levels in three weeks. These gains occurred as investors closely monitored the Middle East conflict and prepared for upcoming monthly inflation reports. The onset of the Israel-Hamas conflict prompted a "flight-to-safety," driving bond purchases and leading to a drop in the 10-year Treasury note yield (TNX) to nearly 4.62% earlier on Monday. This was a significant decrease from around 4.90% late in the previous week. It's worth noting that bond markets were closed on Monday for the Columbus Day holiday, so this pullback marked a substantial relief for investors. In addition to the easing of crude oil prices, a decline in the USD/dollar further contributed to the positive momentum in the stock market. The focus of investors now turns to the upcoming Producer Price Index (PPI) on Wednesday and the Consumer Price Index (CPI) on Thursday, both of which will provide insights into expectations for future interest rates. While the CPI report is expected to have a more significant impact on the market, valuable signals can also be gleaned from the components of the PPI. Retailers, regional banks, and technology companies were among the top performers on Tuesday. The Philadelphia Semiconductor Index (SOX) witnessed an increase of more than 1%, reaching a three-week high. Small-cap stocks, represented by the Russell 2000 Index (RUT), posted an increase of around 1.5%, surpassing their larger-cap counterparts. WTI crude oil futures declined for the first time in three days, while the USD/dollar index (DXY) faced its fifth consecutive day of erosion, reaching its lowest level in over a week. Oct 9, 2023 Oct 10, 2023
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Dow 33,604.65 197.07 33,739.30 134.65
Nasdaq 13,484.24 52.90 13,562.84 78.60
S&P 500 4,335.66 27.16 4,358.24 22.58
NYSE Volume 3.18B 3.54B
NYSE Advancers 1,962 2,128
NYSE Decliners 912 764
Nasdaq Volume 3.84B 4.32B
Nasdaq Advancers 2,070 2,902
Nasdaq Decliners 2,154 1,378
New Highs/Lows
10/03 10/04 10/05 10/06 10/09 10/10
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NYSE New Highs 10 11 10 27 28 42
NYSE New Lows 443 265 221 99 27
Nasdaq New Highs 20 17 9 33 39 55
Nasdaq New Lows 562 216 93 314 321 179
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TRADER'S TIP:
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TRADER'S TIP: "Adapting To A Changing Market" One of the key attributes of a successful trader is the ability to adapt to changing markets. It isn't always easy, for change comes in many forms, and is caused by a wide range of economic, political, social, regulatory, and technical forces. It can occur slowly or abruptly, and sometimes affects a large number of investors, or just a small group. But no matter what the causes market change, and how fast it takes place, eventually everyone who participates in the market either learns to adapt, or pays the price. Even normal "bull to bear and back" market cycles require that we adapt to change, to recognize when the shift between up and down trends is taking place. And though many investors have been conditioned to think that the only defense against a bear market is to wait it out, strategies that take advantage of the inevitable short-term counter-trend rallies, and short stocks in the direction of the negative primary trend can turn a bear market into a bull! **************************
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 - 4358.24 October 10, 2023 52-Week High: 4607.07 52-Week Low: 3491.58 Daily Trend: UP Weekly trend: DOWN Weekly Pivot Levels Resistance 3: 4498.31 Resistance 2: 4390.66 Resistance 1: 4349.58 Pivot: 4283.01 Support 1: 4241.93 Support 2: 4175.36 Support 3: 4067.71 https://www.prorightline.com/rlch/101023SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, OCT 9 9:00 am Dallas Fed President Logan speaks 12:50 pm Fed Gov. Jefferson speaks TUESDAY, OCT 10 6:00 am NFIB optimism index 10:00 am Wholesale inventories WEDNESDAY, OCT 11 8:30 am Producer price index 8"30 am Core PPI 8:30 am PPI year over year 8:30 am Core PPI year over year 2:00 pm Minutes of Fed's September FOMC meeting THURSDAY, OCT 12 8:30 am Initial jobless claims 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 FRIDAY, OCT 13 8:30 am Import price index 8:30 am Import price index minus fuel 10:00 am Consumer sentiment (preliminary) 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: "Sometimes You Gotta . . ." The fear of "missing out" can cloud a trader's judgment, so be sure to base all buy or sell decisions on careful planning instead of emotional reactions. The market is full of opportunities - there's plenty for everyone. Rushing in can lead to problems, so remember the old saying . . . "sometimes you gotta slow down to go fast!" ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR Citi Trends, Inc. (CTRN: Consumer Cyclical/Apparel Retail) - SQUEEZE PLAY. CTRN 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. CTRN is now at 23.45. We can capture price action either way by placing a BUY trigger at 23.76 and a SELL short trigger at 22.02. Once CTRN 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 1.74. When you acquire a 1.74 profit, tighten the stop to 0.87. Earnings Report Date: Nov 27, 2023. Beta: 2.28. Market-Cap: 200.827M. Optionable. CONSUMER DEFENSIVE SECTOR The Vita Coco Company, Inc. (COCO: Consumer Defensive/Beverages - Non-Alcoholic) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in COCO'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 28.2 and a SELL order at 26.29. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.91 trailing stop. Tighten the stop to 0.96 once you have a 3.48 gain. COCO closed Tuesday at 27.43. Earnings Report Date: Nov 07, 2023. Beta: N/A. Market-Cap: 1.548B. Optionable. FINANCIAL SERVICES SECTOR Trupanion, Inc. (TRUP: Financial Services/Insurance - Specialty) - 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 TRUP. A move to the upside will trigger our BUY entry at 26.93, while a drop to 24.76 will trigger our SELL short entry. Follow your position with a 2.17 trailing stop. Tighten the stop to 1.09 once you have a 2.52 gain. TRUP closed Tuesday at 26.18. Earnings Report Date: Nov 01, 2023. Beta: 1.61. Market-Cap: 1.083B. Optionable. HEALTHCARE SECTOR IDEAYA Biosciences, Inc. (IDYA: Healthcare/Biotechnology) - SQUEEZE PLAY. One interesting trait of price volatility is that it cycles back and forth through periods of expansion and contraction. Stocks that have recently seen their daily price range shift from an average or wide range to an extremely contracted state are ideal candidates for expansive price moves. In many cases the next move is relatively fast and covers a sizable amount of territory. To take advantage of these trades we use both a BUY and a SELL entry. This allows us to enter in whichever direction the breakout takes. In IDYA's case we will enter a BUY should it reach the 27.33 level, or a SELL short trade if it drops to 25.74. As usual a trailing stop is essential, 1.59 which should be tightened to 0.8 on a 1.84 gain. IDYA closed Tuesday at 26.92. Earnings Report Date: Nov 06, 2023. Beta: 0.77. Market-Cap: 1.549B. Optionable. TECHNOLOGY SECTOR Clearfield, Inc. (CLFD: Technology/Communication Equipment) - SQUEEZE PLAY. Trader indecision has put CLFD 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 27.84 and a SELL short entry at 25.99. Now it's up to CLFD to show us which entry will be filled. Once the trade is underway place a 1.85 trailing stop, which can be tightened to 0.93 after you achieve a 1.92 profit. CLFD closed on Tuesday at 26.96. Earnings Report Date: Nov 15, 2023. Beta: 1.40. Market-Cap: 411.458M. 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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