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September 16, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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Common Trading Mistakes...And How to Avoid Them (Part II)
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"QUICK LIST"
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Stock 09/15 09/15 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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PLCE 24.45 -1.25 23.58 2.53/1.27 2.82
CTRN 21.61 -0.19 22.03 20.76 1.27/0.64 2.32
KNSL 409.83 -0.99 418.81 27.92/13.96 16.92
RBA 65.18 0.08 66.93 4.99/2.5 2.3
SNOW 162.41 -0.57 165.86 10.46/5.23 10.92
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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Stocks ended the week on a lower note as the United Auto Workers (UAW) initiated a strike at three major auto manufacturing plants in the US. While the anticipated economic impact is relatively minor, potentially shaving off around 0.1% from GDP growth per week of the strike, this development might cast a shadow on overall market sentiment. Simultaneously, Treasury yields continued their upward ascent, with the 10-year Treasury yield hovering at approximately 4.34%, in line with its highest level of the year. The rising yields exerted some pressure on stock markets, particularly in growth-oriented sectors. On Friday, the technology-heavy Nasdaq underperformed the broader S&P 500, and both indices posted modest weekly declines. Looking ahead to next week, the Federal Reserve is scheduled to hold its two-day meeting and unveil its interest-rate decision along with an updated set of economic projections on Wednesday, September 20. Market expectations point to the Fed maintaining the fed funds rate within the 5.25% to 5.5% range at this meeting. The likelihood of an interest-rate hike in November has also diminished notably in recent days. From our perspective, the Fed is poised to keep rates unchanged while emphasizing that its battle against inflation remains ongoing, especially in light of the recent surge in oil and energy prices. Traders will closely scrutinize the Fed's fresh set of projections, including its outlook for economic growth, inflation, the unemployment rate, and the projected peak for the fed funds rate in the coming year. In our assessment, given the ongoing moderation in core inflation and the emergence of signs indicating a slowdown in the job market and consumer activity, the Fed is likely to persist with an extended pause throughout 2023, possibly contemplating a gradual shift toward neutral rates in 2024. Friday On The Week
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Dow 34,618.24 -288.87 +41.65 0.12%
Nasdaq 13,708.33 -217.72 -53.2 -0.39%
S&P 500 4,450.32 -54.78 -7.17 -0.16%
NYSE Volume 7.05B
NYSE Advancers 966
NYSE Decliners 1,917
Nasdaq Volume 8.27B
Nasdaq Advancers 1,519
Nasdaq Decliners 2,808
New Highs/Lows
09/08 09/11 09/12 09/13 09/14 09/15
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NYSE New Highs 48 65 67 51 64 45
NYSE New Lows 96 75 95 93 63 91
Nasdaq New Highs 40 58 60 32 49 61
Nasdaq New Lows 249 202 197 215 185 238
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TRADER'S TIP:
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TRADER'S TIP: "Trading Frequency" "If a strategy is profitable, the more it trades the more money we should make. I apologize for stating what should be obvious but you would be surprised at how often I hear discussions about selecting systems with the highest level of "expectancy" or highest "profit factor" without relating these measurements to the system's trading frequency. Simply stated, our goal should be to show the most profit with the least amount of risk, and trading frequency plays a critical role in maximizing profitability and controlling our risk." ~Chuck Lebeau, Trader and author **************************
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 - 4450.32 September 15, 2023 52-Week High: 4607.07 52-Week Low: 3491.58 Daily Trend: DOWN Weekly trend: DOWN Weekly Pivot Levels Resistance 3: 4599.39 Resistance 2: 4534.62 Resistance 1: 4492.47 Pivot: 4469.84 Support 1: 4427.69 Support 2: 4405.06 Support 3: 4340.28 https://www.prorightline.com/rlch/091523SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, SEPT. 18 10:00 am Home builder confidence index TUESDAY, SEPT. 19 8:30 am Housing starts 8:30 am Building permits WEDNESDAY, SEPT. 20 2:00 pm Fed interest-rate decision 2:30 pm Fed Chair Powell press conference THURSDAY, SEPT. 21 8:30 am Initial jobless claims 8:30 am Philadelphia Fed manufacturing survey 8:30 am U.S. current account deficit 10:00 am U.S. leading economic indicators 10:00 am Existing home sales FRIDAY, SEPT. 22 8:50 am Fed Gov. Lisa Cook speaks 9:45 am S&P flash U.S. services PMI 9:45 am S&P flash U.S. manufacturing PMI 1:00 pm Minneapolis Fed President Neel Kashkari speaks 1:00 pm San Francisco Fed President Mary Daly 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: "Weekly Volume" Trading volume either confirms price movement or brings it into question. It's considered very bullish when a stock rises on higher than average volume, while a similar move on lower than average volume is less bullish. It's always a good idea to look at a weekly chart to confirm rising volume. You can have five sessions of moderately higher volume on a daily chart without seeing anything significant. But put it on a weekly chart and suddenly it stands out in stark contrast. When all of those slightly higher volume days are added together, they show a real spike. Rising volume often means that institutions are buying, and that's the kind of buying that drives stocks skyward. ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR The Children's Place, Inc. (PLCE: Consumer Cyclical/Apparel Retail) - BEARISH U-TURN. PLCE's reaction after running into moving average resistance on Friday sets up this stock for a Bearish U-Turn trade. Having spent the past few days of moving higher, PLCE is now likely to revert back to its dominant weekly downtrend. Get ready to SELL short shares if PLCE drops to our entry at 23.58. Once in the trade, place a 2.53 trailing stop, which should be tightened to 1.27 after a 2.82 profit. PLCE closed Friday at 24.45. Earnings Report Date: Nov 15, 2023. Beta: 2.18. Market-Cap: 305.109M. Optionable. Citi Trends, Inc. (CTRN: Consumer Cyclical/Apparel Retail) - 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. CTRN traders reached this state of stand-off on Friday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 22.03 and a SELL short trigger at 20.76. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.27 which can be tightened to 0.64 on a 2.32 gain. CTRN closed Friday at 21.61. Earnings Report Date: Nov 27, 2023. Beta: 2.32. Market-Cap: 185.069M. Optionable. FINANCIAL SERVICES SECTOR Kinsale Capital Group, Inc. (KNSL: Financial Services/Insurance-Property & Casualty) - BULLISH BOUNCE. Everyone familiar with price charts knows that a stock tends to bounce its way higher rather than move in a straight line. The lower levels of these short-term rebounds offer a safe and often early entry into stocks that are in the process of establishing longer-term uptrends. KNSL's reaction to support on Friday created a Bullish Bounce setup with a BUY entry trigger at 418.81. Use a 27.92 trailing stop, which should work well with KNSL's typical daily range. Tighten it to 13.96 on a 16.92 profit. KNSL closed at 409.83 on Friday. Earnings Report Date: Oct 25, 2023. Beta: 0.89. Market-Cap: 9.493B. Optionable. INDUSTRIALS SECTOR RB Global, Inc. (RBA: Industrials/Specialty Business Services) - BULLISH BOUNCE. This trader-friendly setup turns repetitive stock behavior into real profits. Based on the tendency for up-trending stocks to drop briefly and then resume the up-trend, the Bullish Bounce places traders into excellent stocks when conditions are primed for more skyward movement. RBA's current price action near moving average support signals a potential BUY entry at 66.93, followed by a 4.99 trailing stop which can be tightened to 2.5 upon earning 2.3. RBA closed Friday at 65.18. Earnings Report Date: Nov 06, 2023. Beta: 0.92. Market-Cap: 11.872B. Optionable. TECHNOLOGY SECTOR Snowflake Inc. (SNOW: Technology/Software-Application) - BULLISH BOUNCE. Among other strengths, the Bullish Bounce protects traders from buying a stock "at the top" of its current cycle. The entry into this setup always takes place in upward-moving stocks that have retreated a bit under normal conditions. Now sitting at 162.41, SNOW is on our radar for a BUY entry at 165.86. If you purchase shares of SNOW, be sure to also place a trailing stop of 10.46. Snug it up to 5.23 on a 10.92 gain. Earnings Report Date: Nov 28, 2023. Beta: 0.78. Market-Cap: 53.547B. 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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"Spoofing" Have you ever heard of "spoofing?" Most traders are unaware of the term as it relates to the market, but quite a few might have "spoofed" without realizing that there can be some serious consequences. Some traders consider it a harmless trick, but the Securities and Exchange Commission (SEC) views it as a criminal offense and aggressively prosecutes spoofers. So now we know that it's unacceptable, what exactly is it? Spoofing is market manipulation in which a trader with a position in a stock places an anonymous buy order for a large number of shares through an ECN (Electronic Communications Network) and then cancels it seconds later. The price of the stock will immediately jump, giving the impression of high demand, which draws others into buying the stock, allowing the manipulator to sell at a higher price. Here's how it works. Stock prices on the Nasdaq are quoted in the form of bid and offer prices. The bid price is a proposal to purchase at a specified price, and the offer price is a proposal to sell at a specified price. The highest bid and lowest offer prices quoted on Nasdaq are displayed publicly as the "National Best Bid and Offer" or NBBO. The NBBO is an important indicator of the prices that market- making firms provide to their customers. They often guarantee customers that their orders will be given the NBBO prices, at a minimum, for smaller orders. In other words, a customer seeking to sell stock will receive at least the bid price shown in the NBBO and a customer seeking to buy will pay not more than the offer price shown in the NBBO. The SEC enforces a Limit Order Display Rule that generally requires market makers to display customer limit orders of 100 shares or more - IF the price of the limit order is better than the previously displayed NBBO. A customer limit order with a superior price changes the NBBO when displayed, by either raising the bid side or lowering the offer side of the NBBO. A trader who engages in spoofing typically places a limit order for the purchase or sale of a thinly-traded Nasdaq security that is for a better price than the then-current NBBO. This generally results in the limit order being publicly displayed, which changes the NBBO by improving prices on one side of the market. The trader proceeds by immediately obtaining execution through other market makers of one or more other orders on the opposite side of the market at the improved price, and then cancels the initial limit order. See how it works? A little spoofing by a trader every now and then may seem innocent, but both the SEC and Nasdaq have cautioned that spoofing is considered to be a serious offense. They do respond strongly to anyone who participates in the activity, even if the amount of profit made is small. The National Association of Securities Dealers subsidiary NASDR has developed a surveillance scenario to detect spoofing using what they refer to as the ADS, or Advanced Detection System. Also, through the integration of an "Order Audit Trail System" they can now identify anyone behind large "flash" orders placed in ECNs at prices away from the inside market. Spoofing is a high risk, low reward, illegal strategy, and the penalty includes jail time and large fines. You don't have to be a rocket scientist to see how dim-witted it is to "spoof." Some traders may view it a harmless short cut to possible riches, but in fact it's an unlawful fast track to BIG trouble! ======================================================================
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. |