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September 2, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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Successful traders know that instead of spending a lot of time trying to figure out WHY the market is going up or down, it's much more productive to decide WHAT to do WHEN the market does go up or down. The advantage of this approach is that it sets aside deceptive bull-bear bias and lets the market price action tell us what to do.
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"QUICK LIST"
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Stock 09/02 09/02 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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RCUS 21.20 0.70 21.62 1.48/0.74 1.38
NVCR 22.29 0.23 22.68 21.09 1.59/0.8 2.98
KRNT 22.35 0.09 21.55 1.46/0.73 2.96
SPR 21.37 0.05 20.48 1.5/0.75 3.2
ASAN 21.63 0.13 22.33 20.92 1.41/0.71 1.98
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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Indications of a more relaxed job market brought a boost to the major USA stock indices this week. Investors are increasingly optimistic that the Federal Reserve could soon conclude its historically aggressive campaign of raising interest rates. The S&P 500 Index (SPX) reached a four-week intraday high early on Friday, though it pulled back slightly, still closing the week with a gain of 2.5%. On Friday, the Labor Department reported the addition of 187,000 nonfarm jobs to the economy in August. This figure exceeded the expectations of 170,000 but was accompanied by a revision that subtracted 110,000 jobs from the June and July counts. Unexpectedly, the unemployment rate rose to 3.8%. In summary, the report seemed to raise minimal concerns about inflation and led investors to reduce their expectations for another Fed rate hike later this year. The job numbers appear to be a fairly positive mix in line with the Fed's criteria. This mix includes slower job growth and wage increases, as well as a slight uptick in the unemployment rate. An optimistic perspective on the rising unemployment rate suggests that it largely reflects a growing labor supply.The cyclical sectors such as financials, energy, and materials, which typically align with economic cycles, outperformed on Friday. This alignment is consistent with relatively robust economic growth indicated by the jobs report. The impending jobs report and the prospect of a three-day weekend could be driving some investors to adopt a slightly more cautious stance. The late August rebound in stocks and their relatively strong performance over the summer - marked by the S&P 500 Index's nearly 8% gain from June through August - suggest that the market is currently on relatively stable ground. Unless the payroll numbers exceed expectations and prompt concerns about Fed tightening, it's likely that the market's upward momentum will continue. Friday On The Week
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Dow 34,837.71 115.80 +490.81 1.43%
Nasdaq 14,031.81 -3.15 +441.16 3.25%
S&P 500 4,515.77 8.11 +110.06 2.5%
NYSE Volume 3.25B
NYSE Advancers 1,864
NYSE Decliners 1,021
Nasdaq Volume 4.04B
Nasdaq Advancers 2,695
Nasdaq Decliners 1,567
New Highs/Lows
08/25 08/28 08/29 08/30 08/31 09/01
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NYSE New Highs 25 50 65 98 78 116
NYSE New Lows 66 22 25 18 20 29
Nasdaq New Highs 33 69 69 83 90 101
Nasdaq New Lows 212 176 130 81 104 95
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TRADER'S TIP:
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TRADER'S TIP: "Nay-Sayers and Hay-Makers" It seems that practically every market turn comes draped in commentary and analysis from all angles of pundits and prophets. For every pullback there's the requisite reasoning for a "golden buying opportunity," which comes equally weighted with the seemingly sound logic of numerous warning signs signaling impending doom. Enough already! Once in a while try turning down the volume and simply observing the charts and figures that come across without the rhetoric. It can be so much more informative. **************************
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 - 4515.77 September 1, 2023 52-Week High: 4607.07 52-Week Low: 3491.58 Daily Trend: UP Weekly trend: DOWN Weekly Pivot Levels Resistance 3: 4743.20 Resistance 2: 4616.93 Resistance 1: 4566.35 Pivot: 4490.66 Support 1: 4440.08 Support 2: 4364.39 Support 3: 4238.12 https://www.prorightline.com/rlch/090123SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, September 04, 2023: 04-Sep Labor Day holiday Tuesday, September 05, 2023: 05-Sep 10:00 am Factory orders Wednesday, September 06, 2023: 06-Sep 8:30 am U.S. trade deficit 06-Sep 10:00 am ISM services 06-Sep 2:00 pm Fed Beige Book Thursday, September 07, 2023: 07-Sep 8:30 am Initial jobless claims 07-Sep 8:30 am U.S. productivity (revision) Friday, September 08, 2023: 08-Sep 10:00 am Wholesale inventories 08-Sep 3:00 pm Consumer credit 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: "A Trader's Mind: Beliefs" "You experience what you believe, unless you believe you won't, in which case you don't, which means you did." - Harry Palmer ***********************************
STOCKS COVERED IN THIS ISSUE
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HEALTHCARE SECTOR Arcus Biosciences, Inc. (RCUS: Healthcare/Biotechnology) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Friday RCUS seemed intent on initiating a rebound. With moving average support nearby, RCUS is at a logical place for Bulls to regroup and extend the familiar uptrend that shareholders have become accustomed to. On continued buying, plan on taking long entries with a BUY at 21.62. Manage risk with a 1.48 stop. Tighten your stop to 0.74 when you have a 1.38 profit. RCUS ended the day at 21.20. Earnings Report Date: Oct 31, 2023. Beta: 0.84. Market-Cap: 1.579B. Optionable. NovoCure Limited (NVCR: Healthcare/Medical Devices) - SQUEEZE PLAY. NVCR 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. NVCR is now at 22.29. We can capture price action either way by placing a BUY trigger at 22.68 and a SELL short trigger at 21.09. Once NVCR 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 1.59. When you acquire a 2.98 profit, tighten the stop to 0.8. Earnings Report Date: Oct 25, 2023. Beta: 0.60. Market-Cap: 2.376B. Optionable. INDUSTRIALS SECTOR Kornit Digital Ltd. (KRNT: Industrials/Specialty Industrial Machinery) - BEARISH U-TURN. A quick look at the charts for KRNT show that despite the upward pressure caused by recent buying, the weekly downtrend is still in place. Friday's chart shows a potential return to that downtrend is in the works. This Bearish U-Turn set-up offers a potential entry point for a SHORT play. Set your trigger to SELL shares at 21.55, and follow your entry with a trailing stop of 1.46. Tighten the stop to 0.73 after reaching a 2.96 profit. KRNT ended the latest session at 22.35. Earnings Report Date: Nov 07, 2023. Beta: 1.73. Market-Cap: 1.099B. Optionable. Spirit AeroSystems Holdings, Inc. (SPR: Industrials/Aerospace & Defense) - BEARISH U-TURN. This short setup turns common stock behavior into profits. Grounded in the tendency for down-trending stocks to bounce briefly and then return to the familiar down-trend, the Bearish U-Turn points traders to weak stocks when conditions are calling for more downward price action. SPR's behavior on Friday near moving average support signals a potential SELL short entry at 20.48, followed by a 1.5 trailing stop which can be tightened to 0.75 upon earning 3.2. SPR closed Friday at 21.37. Earnings Report Date: Nov 01, 2023. Beta: 1.64. Market-Cap: 2.25B. Optionable. TECHNOLOGY SECTOR Asana, Inc. (ASAN: Technology/Software-Application) - SQUEEZE PLAY. Friday's trading action forced ASAN's daily price range into an abnormally narrow state. This translates into opportunity; for the cyclical nature of price volatility is to shrink extensively, then swell rapidly as shares move in one direction or another. Instead of trying to predict the direction ASAN will take when price volatility begins to increase, we'll set both a BUY (long) and a SELL (short) trigger to get us into the right trade. Be ready to BUY shares at 22.33 if ASAN moves higher, and place your order to SELL short at 20.92 if price declines to that level. As usual follow your entry with a trailing stop, 1.41 should be sufficient. Reduce your stop to 0.71 on a 1.98 gain. ASAN closed Friday at 21.63. Earnings Report Date: Sep 05, 2023. Beta: 1.21. Market-Cap: 4.69B. 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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"Tactics For Short-Term Traders Trading The News" Everyone wants to trade the news, but it's often a fruitless exercise. In most cases, the big money has already acted upon the news by the time you read or hear it. So how can at-home traders take advantage of news-related opportunities without becoming the ultimate bag-holders? News events generally fall into three categories: economic, company and institutional releases. Economic releases are scheduled well in advance, with most of them hitting the airwaves at 6:30 a.m., 9:45 a.m. or 10 a.m. EST. Company releases can come at any time, but they surge in the weeks following the end of a quarter. Institutional releases spike on Monday mornings but continue throughout the week. Of the three categories, economic news reaches traders with the shortest delay from the source. Earnings reports come in second, because full-disclosure rules force companies to distribute news through a wide variety of sources at the same time. Institutional releases are the slowest of the three by a wide margin. Traders should assume that preferred clients hear about analyst upgrades and downgrades well in advance of the public. Realize that your real-time news feed doesn't get you most of the news in real time. Even with government releases, institutions and funds will be at the point of release and acting upon the news before you receive it. They will typically initiate program trades that act instantly to remove perceived inefficiencies triggered by the data. Traders face a bigger obstacle trying to decipher cause-and-effect relationships between news and price movement. Often they'll assume that good news is good, and buy a stock that's already risen for a few days. But smarter money has already bought the rumor and is now selling the news. The trader is left holding a loss that may persist for weeks or months. Trading earnings news requires considerable discipline and patience. Start by standing aside through most releases, or exiting positions minutes before the news hits the airwaves. Save your capital for releases that fall well outside current expectations for future revenue and per-share results. It's best to avoid all positions based on prior performance, because that performance is measured by managed numbers that are highly manipulated. It's still dangerous to play extreme releases, because after-hours trading can be very thin. Reduce your size and place a limit order only when you've done your homework and know the exact price you want to own or sell short. This is typically a few cents above major resistance or below major support. Selling short during extended hours can be quite rewarding, because the Nasdaq has no uptick rule during this time of day. The best entry often comes during the afternoon following the earnings release, or two to three days later. Here's the theory: Everyone who wants to buy or sell the news takes action within the first few hours after the release. Once they have come off the sidelines, there's no one left to take the side of the market that pushed the stock in its initial direction. A strong shakeout then begins, and it's your time to get to work. See chart - https://prorightline.com/rlr/TClpnt021404.gif Pull up a 60-minute chart and pick out the most obvious support and resistance levels. Assume a selloff will get a ride back to the 50- period exponential moving average before there's a substantial recovery. Be ready to hold positions at a loss until the underlying trend reasserts itself or your stops get hit. Place tiered limit orders and enter the trade one small piece at a time. This way you'll be positioned if the market turns ahead of schedule. When there's a sharp pullback following an early rally, conservative traders should stand aside and wait a few days. This price action suggests that the smart money is selling the news into the hands of an overeager public. This type of reversal often lasts two or three days before profit-taking runs its course and lets the stock move back to the highs. Be patient during this initial selloff and wait for a low- risk entry. See chart - https://prorightline.com/rlr/TCckfr021404.gif Selling pressure often will end with a breakout from a simple pullback pattern, such as a bull flag. Although you're making the trade a few days after the earnings release, the intraday chart still generates the feedback needed to find your entry. Once you get in, watch the highs of the earnings day very closely. If a double-top pattern starts to form, exit the position immediately. These techniques should give you enough courage to jump in the next time your favorite company blows away earnings expectations. But what about those government releases that move the markets every day? How can at-home traders turn a profit at the same time the big boys are firing their biggest guns? Let's start by looking at the market clock. Many government reports, including monthly unemployment numbers, get released one hour before the market opens at 9:30 a.m. ET. It's vital that you're awake and focused at this important time. Better yet, watch the index futures for at least an hour before the release. This premarket price action reflects an important bias that will get supported or faded, depending on the news. Don't trade the release directly. Instead, take note of price boundaries hit by the futures after the release, but before the open. The key observation is whether they trade into or through obvious support-resistance barriers. Trading into a "line in the sand" suggests the broad market will reverse shortly after the open. Trading through a barrier can trigger an equity breakout or breakdown within the first 45 minutes of the regular session. The strongest trend days appear when there's synergy between the prerelease bias and subsequent news. The broad market can gap up and hold above the opening price easily when these two forces work together. But watch out for a shakeout day when the unemployment numbers give neither side an advantage. These choppy sessions often present good opportunities to build swing positions for the following week. Pick your prices early and step in slowly as the shakeout pulls the market into your numbers. Then hold tight through the weekend and look for follow-through on Monday or Tuesday. Don't try to interpret the news on a fundamental basis -- just stick to the charts and play the numbers. When you second-guess yourself because a release looks bullish or bearish, you'll hesitate just as the best trade is being offered to you. The bottom line is, we're not smart enough to understand the news and what it suggests about the economy. But we can see how everyone else is interpreting it and then take appropriate action. Remember that you're a trader, not a gambler. Never buy or sell before economic numbers just to play the release. These are lottery tickets that have no place in a sound trading discipline. It's even worse if you make money by doing it because the profit reinforces a horse race mentality that leads to disaster. Many lesser economic reports are issued at 6:30 a.m., 9:45 a.m. and 10 a. m. ET. Some news is even released during the lunch hour. Keep in mind most of these reports are not market movers and will be traded as excuses rather than responses. In other words, focus your attention on the periods when the reports hit the airwaves, but don't get hung up on the data. This strategy becomes very important when releases take place 15 or 30 minutes into the new trading day. The big boys often paint the numbers into the news and then fade that direction. Beneath the surface, they're using the release to find better prices to sell short or shake the public out of long positions. You can often predict this reversal through a simple convergence- divergence analysis. Consider where the market closed the prior day and the sentiment at that time. A common scenario is a sell-off day that closes near the lows. You wake up the next morning expecting a red screen and a gap down. To your surprise, the index futures are up a few ticks and look ready to rally. Then you recall there's an economic release coming out at 10 a.m. A rally continues into the report, and then the market sells off on relatively good news. It turns out a bid was being kept under the index futures so big money could sell short at higher prices. This is typically done with reports the public thinks are market movers, but institutions recognize as old, flawed or inconsequential data. Gross domestic product reports, like the one released last week, fit perfectly into this category. Durable goods numbers, regional manufacturing data and even inflation indices such as the producer price index and consumer price index also fit into this category. Traders can still take advantage of real surprises on these secondary reports. Watch for economic numbers that fall well outside standard deviation. Earlier this year there was a massive rally following the relatively obscure Empire State Manufacturing Survey. The number was so far above expectations that everyone had to stop and take notice. All bets are off when the market spits out one of these unexpected events. The good news is you're standing on equal footing with the big boys when this happens, because they're just as surprised as everyone else. It's a perfect time to keep it simple and trade the trend. ********************************** This special guest article was written by Alan Farley, author of "The Master Swing Trader." ======================================================================
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. |