September 19, 2023 - The RightLine Report
Notes From The Editor
How To Follow A Bouncing Market
There's a joke about a trader who phones his doctor and says, "Doc, you've got to help me. Lately I keep thinking I'm a yo-yo!" The doctor replies, "This is the third time you've called this week. Are you stringing me along?"
We all know that the stock market sometimes makes us feel like the payload end of a yo-yo. High volatility and wild trading action requires a double-barrel strategy:
#1 - Control Risk. It's the single most important aspect of trading. In fact, the value of Risk control can't be overstated. Most folks have no clue that a simple tool like the RightLine Risk Control System offers an extremely powerful way to increase profits. Risk Control can turn an average trader into a top performer by putting a cap on losses.
#2 - Trade Both Sides of The Market. It's as easy to go short as it is to go long. During volatile times, the increased daily price range and abrupt reversals provide ideal conditions to take profits from short-term trends going up AND going down.
Bad markets stuck in downtrends also offer short-sellers lower risk opportunities than typically seen during clearly defined up-trends. Shorting lets you make money from investor confusion over credit markets, Fed rates, economic news, foreign crises, popped bubbles and every other type negative event that the media loves to cover.
Bottom Line: It's important to remember that volatility is predictable in the sense that it tends to expand until it reaches a highly excited and agitated state, then contract until things become very calm. You can see these cycles in every time frame from just a few hours to weeks and months, or even longer.
Trade well!
- Thomas Sutton, Editor
Note: For details on the RightLine Risk Control System go to https://prorightline.com/index.php/rightline-risk-control-system/
Stocks Covered Today Stock Splits
Quick List
Stock 09/19 09/19 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
GCO 30.81 1.14 31.5 2.99/1.5 2.84
TWST 20.33 -0.19 20.74 19.27 1.47/0.74 2.36
TNDM 22.03 -0.11 22.59 20.93 1.66/0.83 3
ZNTL 22.17 -0.32 22.91 21.37 1.54/0.77 1.94
ML 21.33 0.85 22.12 2.85/1.43 4.06
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
Stocks ended the day mostly lower on Tuesday, following a relatively uneventful Monday session and in anticipation of the upcoming Federal Reserve meeting on Wednesday. Housing starts for August disappointed by declining more than 11% month-over-month, marking the lowest reading since June 2020. Additionally, Canadian CPI data for August exceeded expectations, reviving concerns about global price pressures and contributing to a risk-off sentiment. The market decline was widespread in terms of sectors, with only health care and communication services in the S&P 500 finishing higher.
Looking ahead, current expectations suggest that the Fed will keep interest rates unchanged during this meeting, although there's a 36% chance, as per market pricing, of an additional 0.25% rate hike in 2023. However, it's anticipated that the Fed's commentary will emphasize that further rate hikes remain a possibility if inflation doesn't continue its downward trend.
Yields on Treasury bonds saw an increase, reaching their highest level for the year. Unlike 2022, the current increase in long-term yields has not been accompanied by stock market declines. This year, rising rates are primarily attributed to robust US economic data, whereas 2022's rising rates stemmed from inflation concerns and expectations of monetary policy tightening.
Sep 18, 2023 Sep 19, 2023
-------------------- --------------------
Dow 34,624.30 6.06 34,517.73 -106.57
Nasdaq 13,710.24 1.90 13,678.19 -32.05
S&P 500 4,453.53 3.21 4,443.95 -9.58
NYSE Volume 3.17B 3.62B
NYSE Advancers 1,298 1,206
NYSE Decliners 1,580 1,669
Nasdaq Volume 4.86B 4.46B
Nasdaq Advancers 1,579 1,733
Nasdaq Decliners 2,747 2,537
New Highs/Lows
09/12 09/13 09/14 09/15 09/18 09/19
--------------------------------------------
NYSE New Highs 67 51 64 45 40 46
NYSE New Lows 95 93 63 91 103 103
Nasdaq New Highs 60 32 49 61 59 44
Nasdaq New Lows 197 215 185 238 271 297
Stocks Covered Today Stock Splits
TRADER'S TIP: "What's It Worth?"
Garfield Drew, a prominent technician sixty years ago, said that "Stocks do not sell for what they are worth, but for what people THINK they are worth." It is generally recognized among technical analysts that prices in ALL markets at ALL times are based on trader psychology instead of company fundamentals.
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 - 4443.95 September 19, 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
NASDAQ Composite - 13678.19 September 19, 2023
52-Week High: 14446.55
52-Week Low: 10088.83
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 14330.04
Resistance 2: 14056.71
Resistance 1: 13882.51
Pivot: 13783.38
Support 1: 13609.18
Support 2: 13510.05
Support 3: 13236.72
Dow Industrials - 34517.73 September 19, 2023
52-Week High: 35679.13
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 35638.09
Resistance 2: 35170.07
Resistance 1: 34894.15
Pivot: 34702.05
Support 1: 34426.13
Support 2: 34234.03
Support 3: 33766.01
Stocks Covered Today Stock Splits
Market Calendar
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
Stocks Covered Today Stock Splits
TRADER'S TIP: "Volatility - Good or Evil?"
Though volatility can be a double-edged sword when trading, a few reminders will help you profit from rapid price movement during volatile periods. First of all, recall that volatility creates trading opportunities. If you focus on the short term, share prices that move by 10% in a day or two should be welcomed. Second, risk management is a must when volatile conditions prevail. Make absolutely certain that you use a pre-planned exit strategy to prevent unwanted losses. And finally, use the gap-open tactic to adjust, or help determine buy and sell points. You'll be glad you did!
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
Genesco Inc. (GCO: Consumer Cyclical/Apparel Retail) - BULLISH BOUNCE. Entering a position in the early stages of a bounce is great way to get on board an up-trending stock. The "Bullish Bounce" setup identifies probable candidates by evaluating the trading action that takes place near support levels. GCO's behavior on Tuesday could very well be a sign that a new bounce is underway. Place a BUY trigger at 31.5. In the event your trigger is met, also place a 2.99 trailing stop which can be trimmed down to 1.5 when you have a 2.84 profit. GCO closed Tuesday at 30.81. Earnings Report Date: Nov 30, 2023. Beta: 1.98. Market-Cap: 354.491M. Optionable.
HEALTHCARE SECTOR
Twist Bioscience Corporation (TWST: Healthcare/Diagnostics & Research) - SQUEEZE PLAY. TWST 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 20.74 and a SELL short trigger at 19.27. When one of the orders is filled, cancel the remaining order and enter a 1.47 trailing stop. When you've reached a 2.36 paper profit, tighten the stop to 0.74. TWST closed at 20.33 on Tuesday. Earnings Report Date: Nov 16, 2023. Beta: 1.27. Market-Cap: 1.167B. Optionable.
Tandem Diabetes Care, Inc. (TNDM: Healthcare/Medical Devices) - SQUEEZE PLAY. Sometimes when Bulls and Bears face off in the market arena for a typical day-long battle, there is no clear winner. This is evident when the daily price range contracts to an unusually narrow state. TNDM found itself in this condition on Tuesday when neither buyers or sellers were able to push ahead. This setup provides traders a chance to hop on board the next breakout - whether it's to the upside or down - with little risk of loss. To do this place a BUY order at 22.59 and a SELL short trigger at 20.93. When TNDM moves outside of Tuesday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 1.66 trailing stop. After you've got a 3 profit, tighten the stop to 0.83. TNDM closed at 22.03 on Tuesday. Earnings Report Date: Oct 31, 2023. Beta: 0.87. Market-Cap: 1.434B. Optionable.
Zentalis Pharmaceuticals, Inc. (ZNTL: Healthcare/Biotechnology) - SQUEEZE PLAY. ZNTL shareholders know what it feels like to be squeezed. Tuesday's slim price range reveals uncertainty on both sides of the table, a situation which often resolves itself by either Bears or Bulls quickly gaining a clear advantage. The question is "who will win?" Near-term market action tell us whether we should sell short or we should buy shares instead. ZNTL closed Tuesday at 22.17. The plan is to enter in the right direction by placing a BUY trigger at 22.91 and a SELL short trigger at 21.37. Once ZNTL establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.54. After you've collected a 1.94 profit, tighten the stop to 0.77. Earnings Report Date: Nov 07, 2023. Beta: 1.78. Market-Cap: 1.565B. Optionable.
TECHNOLOGY SECTOR
MoneyLion Inc. (ML: Technology/Software-Application) - BULLISH BOUNCE. Some people hear of a stock that's performing nicely and then buy it without any regard for timing the entry. This approach usually leaves money on the table, money that could just as well be added to profits. The Bullish Bounce setup provides a well timed entry and reduces exposure to risk by placing both the entry trigger and exit stop near the bottom of the bounce. We have an opportunity to use this approach with ML which met our setup criteria on Tuesday. The BUY trigger for this trade is at 22.12, and the trailing stop is sized at 2.85. Resize the stop to 1.43 upon collecting a 4.06 point gain. ML closed Tuesday at 21.33. Earnings Report Date: Nov 08, 2023. Beta: 1.74. Market-Cap: 764.243M. 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.
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