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October 28, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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Playing the Blame Game
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"QUICK LIST"
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Stock 10/27 10/27 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
FG 29.76 0.02 30.46 28.61 1.85/0.93 1.82
GBCI 30.10 -0.65 31.06 28.77 2.29/1.15 2.06
FTRE 27.53 -0.37 28.28 26.57 1.71/0.86 2.16
NTNX 34.72 0.31 35.57 33.48 2.09/1.05 2.66
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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On Friday, the S&P 500 Index (SPX) slipped into correction territory, having dropped more than 10% from its recent peak. Concerns about high interest rates and the state of the economy kept investors on the defensive. Nevertheless, technology shares provided a glimmer of hope. Better-than-expected earnings from Amazon (AMZN) and Intel (INTC) contributed to a small gain in the Nasdaq Composite (COMP). Economic and inflation data released on Friday didn't offer any major surprises and didn't significantly change the prevailing belief in the market that the Federal Reserve might be finished with rate hikes. However, the September Personal Consumption Expenditure (PCE) report, the Fed's favored gauge of inflation, showed slightly higher figures than expected. This served as a reminder that inflation is still above the Fed's long-term target. The banking and energy sectors faced considerable weakness on Friday, despite the strength in crude oil futures. Small-cap stocks, as indicated by the Russell 2000 Index (RUT), declined further, underlining growing concerns about the economy. The RUT closed at its lowest level in almost three years and posted a 2.6% drop for the week. Next week promises to be eventful, with many potential market-moving events, including the October Employment Report on Friday. Therefore, we can expect elevated volatility in the short term. Additionally, it will be the busiest week of earnings season, with over 1,200 companies expected to report. McDonald's Corp. (MCD) leads the way on Monday, followed by Dow member and industrial bellwether Caterpillar (CAT) on Tuesday, along with Advanced Micro Devices (AMD), Amgen (AMGN), Anheuser-Busch Inbev SA (BUD), BP p.l.c. (BP), and Pfizer, Inc. (PFE). Friday On The Week
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Dow 32,417.59 -366.71 -709.69 -2.14%
Nasdaq 12,643.01 47.41 -340.8 -2.62%
S&P 500 4,117.37 -19.86 -106.79 -2.53%
NYSE Volume 4.04B
NYSE Advancers 750
NYSE Decliners 2,137
Nasdaq Volume 4.2B
Nasdaq Advancers 1,388
Nasdaq Decliners 2,907
New Highs/Lows
10/20 10/23 10/24 10/25 10/26 10/27
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NYSE New Highs 4 7 8 12 16 20
NYSE New Lows 401 454 198 421 297 369
Nasdaq New Highs 9 16 26 22 25 20
Nasdaq New Lows 533 640 347 602 515 615
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TRADER'S TIP:
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TRADER'S TIP: "EMAs, SMAs, or DMAs?" Did you know that EMAs - Exponential Moving Averages - are calculated based on "yesterday's" EMA? That's where the "exponential" part comes in. This means that if you're looking at a 200 Daily EMA based on 500 days of data vs. 2000 days of data, the results will be different. This explains why various charts programs display differing EMAs for the same stock. Though this calculation also affects the shorter moving averages like the 22 and 50 DMA (Daily Moving Average), it is not as dramatic as with the 200 EMA. For daily charts the most widely used 200 MA is the 200 SMA (Simple Moving Average). However, in recent years some traders have begun using 200 EMAs because of the default settings in the charting packages. It pays to know which you are viewing. For the record, at RightLine we use EMAs for all moving averages except the 200 DMA, for which we use the SMA. One powerful feature found in RightLine and some other charting programs is the ability to change the time frame referenced on the chart. While this is a very helpful feature, be aware that changing this setting will affect any displayed EMAs (Exponential Moving Average) lines. **************************
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 - 4117.37 October 27, 2023 52-Week High: 4607.07 52-Week Low: 3698.15 Daily Trend: DOWN Weekly trend: DOWN Weekly Pivot Levels Resistance 3: 4471.37 Resistance 2: 4315.77 Resistance 1: 4216.57 Pivot: 4160.17 Support 1: 4060.97 Support 2: 4004.57 Support 3: 3848.97 https://www.prorightline.com/rlch/102723SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, OCT. 30 None scheduled TUESDAY, OCT. 31 8:30 am Employment cost index 9:45 am Chicago Business Barometer 10:00 am Consumer confidence WEDNESDAY, NOV. 1 8:15 am ADP employment 9:45 am S&P U.S. manufacturing PMI 10:00 am Job openings 10:00 am ISM manufacturing 10:00 am Construction spending 2:00 pm Federal Reserve decision on interest rates 2:30 pm Fed Chairman Powell press conference THURSDAY, NOV. 2 8:30 am Initial jobless claims 8:30 am U.S. productivity 10:00 am Factory orders FRIDAY, NOV. 3 8:30 am U.S. nonfarm payroll 8:30 am U.S. unemployment rate 8:30 am U.S. hourly wages 8:30 am Hourly wages year over year 9:45 am S&P U.S. services PMI 10:00 am ISM services 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: "Slippage" "Price slippage" is the difference in the price of the stock that appears on the ticker at the time you place a trade, and the price at which your order is actually filled. "Transaction slippage" is the difference between estimated and actual transaction costs. To control slippage, always trade liquid stocks, avoid low volume issues, and use limit orders whenever possible. ***********************************
STOCKS COVERED IN THIS ISSUE
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FINANCIAL SERVICES SECTOR F&G Annuities & Life, Inc. (FG: Financial Services/Insurance - Life) - 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 FG. A move to the upside will trigger our BUY entry at 30.46, while a drop to 28.61 will trigger our SELL short entry. Follow your position with a 1.85 trailing stop. Tighten the stop to 0.93 once you have a 1.82 gain. FG closed Friday at 29.76. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 3.735B. Optionable. Glacier Bancorp, Inc. (GBCI: Financial Services/Banks - Regional) - 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 GBCI's case we will enter a BUY should it reach the 31.06 level, or a SELL short trade if it drops to 28.77. As usual a trailing stop is essential, 2.29 which should be tightened to 1.15 on a 2.06 gain. GBCI closed Friday at 30.10. Earnings Report Date: Jan 24, 2024. Beta: 0.81. Market-Cap: 3.337B. Optionable. HEALTHCARE SECTOR Fortrea Holdings Inc. (FTRE: Healthcare/Biotechnology) - SQUEEZE PLAY. FTRE is caught in a dilemma. The stock's compressed price range on Friday 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. FTRE is now at 27.53. We can capture price action either way by placing a BUY trigger at 28.28 and a SELL short trigger at 26.57. Once FTRE 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 1.71. When you acquire a 2.16 profit, tighten the stop to 0.86. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 2.445B. Optionable. TECHNOLOGY SECTOR Nutanix, Inc. (NTNX: Technology/Software - Infrastructure) - SQUEEZE PLAY. Trader indecision has put NTNX 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 35.57 and a SELL short entry at 33.48. Now it's up to NTNX to show us which entry will be filled. Once the trade is underway place a 2.09 trailing stop, which can be tightened to 1.05 after you achieve a 2.66 profit. NTNX closed on Friday at 34.72. Earnings Report Date: Nov 28, 2023. Beta: 1.26. Market-Cap: 8.451B. 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/ **********************************
TRADER'S CORNER
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Pivot Points During each trading session Nasdaq Market makers and floor traders on the NYSE refer to a set of pivot points based on the previous day's high, low, and closing prices. These pivotal levels are used as support and resistance that trigger buy or sell decisions when they are broken. Penetration of these pivots causes a shift in perceived valuation and the entry of new players into the marketplace. There are times when pivot points are able to hold price within their boundaries, and then other times they don't. It's wise for traders to know where these import zones are located, for it's at these junctions that many high-volume traders will enter or exit positions. In "The Technical Analyst" section of the RightLine Report you'll find Pivot Points based on weekly price data. These longer term Weekly Pivot Points are more more useful to traders who hold positions for several days, weeks, or longer. Here are the common names and symbols for the basic pivot points: Center Pivot Point ------ P First Resistance Point -- R1 First Support Point ----- S1 Second Resistance Point - R2 Second Support Point ---- S2 The calculations to arrive at the pivot points are based on support and resistance levels. Here are the daily and weekly formulas used by most professionals: Center Pivot Point P = (H1 plus L1 plus C1) divided by 3 First Resistance Point R1 = (2xP) minus L1 First Support Point S1 = (2xP) minus H1 Second Resistance Point R2 = P plus (R1 minus S1) Second Support Point S2 = P minus (R1 minus S1) Daily Pivot Points: C1 is yesterday's closing price H1 is yesterday's high L1 is yesterday's low Weekly Pivot Points: C1 is last week's closing price H1 is last week's high L1 is last week's low ~ How Pivot Points are Used Local floor traders tend to control trading on days when there is little news to influence the stock market. Generally Price range for the current day is expected to stay between the Central Pivot Point (P) and the First Resistance & Support Points (S1 & S2). Price moves beyond these points indicate a shift in momentum between bulls and bears. When these initial pivot points are exceeded, more traders with longer time frames are drawn into the market due to the widening price range. When the first support and/or resistance levels are broken they will usually reverse their function - previous support becomes resistance and previous resistance becomes support. As a rule these points are then tested to confirm whether they will hold their new status. Any successful breach of first support or resistance gets the attention of traders using longer time frames. Once the range of trading expands beyond the first points, the second support or resistance levels come into play and go through the same process. If they are penetrated, more longer-term traders are attracted by the price movement and participate in the action. More times than not, this leads to the formation of a new short-term trend. Awareness of the price levels at which new traders are likely to enter the market can help off-floor traders determine when market makers and floor traders have shifted from buyer to sellers, or vice versa. This information is very valuable whenever there is little news influencing the market and the "locals" are running the show. Floor traders typically are satisfied to push the market up and down within these daily limits. To avoid getting jerked around, traders with longer time frames than intra-day can place orders beyond the pivot points, or they use pivot points based on weekly data instead of daily. Not only does this help avoid "whiplash," but also increases the likelihood of catching a ride on a new trend as it emerges from the current session range. Traders who usually hold positions for several days or weeks will usually prefer to use weekly pivot points instead of daily. Pivot points are very popular with stock exchange floor traders, but many times major news items and other market moving events will create enough pressure to drive prices beyond the support and resistance levels. However, pivot points often provide meaningful direction while allowing low risk entries and exits at highly probable reversal junctions. As with any tactical tool, they are most effectively used as part of a clearly defined trading plan. Pivot points work exceptionally well in strategies designed to capture intraday profits on those boring summer days with little news, when the market seems to be drifting. In fact, that drift usually offers "pivot conscious" traders a chance to turn a profit while the less-informed are asleep at the wheel! ======================================================================
Best of luck and have a Great Week!
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The RightLine Report is an information service for investors and traders. It is not a solicitation nor a recommendation or offer to buy or sell securities. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. The publishers of The RightLine Report are not brokers or financial advisors, and are not acting in any way to influence the purchase or sale of any security. Stock picks, entry points and exit points should be considered an information resource to assist the trader in developing a trading plan and it is the sole responsibility of the reader to conduct his or her own due diligence before executing a trade. Trading securities should be considered speculative with a high degree of volatility and risk. The publishers of The RightLine Report recommend that anyone trading securities should do so with caution, exercise prudent trading discipline and have a personal risk management strategy in place before doing so. It is possible at this or some subsequent date, the publishers and staff of The Pro Right Line Corp. may own, buy or sell securities presented. The Pro Right Line Corp. is not a financial advisory service. Its publishers, owners or investors, are not liable for any losses or damages, monetary or otherwise, that result from the content of The RightLine Report. Past RightLine Report performance may not be indicative of future performance. All subscriptions and/or use of the RightLine.net website are subject to RightLine's "Terms of Use" and "Subscriber Terms & Conditions" which are posted at www.rightline.net. Any REDISTRIBUTION of the above information, without The RightLine's written consent, is STRICTLY PROHIBITED. Copyright / The Pro Right Line Corporation - All Rights Reserved To Unsubscribe, send an email to cs@prorightline.com or call 1-312-248-4241. |