Notes From The Editor

When it comes to shopping, everybody wants a good deal. It's no surprise that the same thing is true with stocks. Even the common investment advice to "buy low and sell high" is frequently interpreted as "buy cheap." Many investors seem to forget that usual there is a reason why a cheap stock is so cheap!

Some folks are so inclined to buy cheap stocks they ignore signs that the stock could easily get even cheaper. Obvious downtrends repeatedly point to underlying reasons for a stock's demise, yet many individuals decide to buy anyway because the stock is "down" from a higher price.

Think about it for a second. People will say a stock is a bargain at $20 simply because it has dropped from a high of $60. The concept seems simple enough. The stock used to cost three times the current price, so it MUST be a good deal. Unfortunately the problem with this type of relative reasoning doesn't become clear until the stock drops to $5.

The desire for a bargain often causes normally intelligent people to make bad investment decisions. They forget that cheap stocks in downtrends usually continue to make lower highs and lower lows for much longer than expected. As investors lose money in a declining stock they will eventually leave it in search of a more attractive opportunity.

Many cheap stocks are former high-fliers that have split so many times they now have a huge number of shares in the float. This inflated condition requires massive trading volume for even minor price increases, and keeps the stock from making any significant moves. These stocks trade in a lower price range because professional traders lost interest years ago. They are too sluggish and don't move quickly enough to qualify as good trading candidates.

Bottom Line: When you're thinking about buying a stock, you want it to show positive signs that it will go up. Look for recent bullish activity in the context of a longer period of positive momentum. The same way that declining stocks tend to continue going lower, stocks moving higher in price tend to continue moving higher.

Whenever you come across a "bargain" stock, make sure you have other good reasons to buy it than just the fact that it's cheap!

Trade well,

Thomas Sutton

Quick List

    
Stock     09/03     09/03      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

HZO       31.55     -0.17     32.57     30.46        2.11/1.06         3
BRBR      55.56     -0.37     56.81                  3.69/1.85      3.12
BCH       25.08     -0.27     25.49                    1.4/0.7      0.92
SAVA      27.98     -0.73     29.26     26.66          2.6/1.3     11.78
ASTS      29.41      0.37     30.24     27.18        3.06/1.53         8

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

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Market Summary

Following a 2% gain in August, which marked the fourth consecutive winning month, US equity markets started September on a downturn. On Tuesday, the S&P 500 fell by 2.1%, and the Dow Jones dropped 626 points. The decline was led by technology stocks, with the Nasdaq falling 3.3%, and the energy sector also lagged due to a significant drop in oil prices.

This decline was driven by signs of weakening demand from China and the potential for increased output from OPEC+. The day's trading had a clear "risk-off" sentiment, with lower-risk assets such as bonds and defensive sectors like consumer staples and utilities seeing gains, while growth and cyclical investments faced the most pressure. The rise in bond prices pushed the 10-year Treasury yield below 3.85%.

Part of Tuesday's decline can be attributed to routine market rebalancing and profit-taking following recent rallies. Additionally, a lackluster manufacturing report heightened recession concerns.

While there is a noticeable economic slowdown, we believe that predictions of an imminent recession are premature. A period of increased volatility and some temporary market weakness is not surprising, but it is unlikely to signal a long-term change in market direction. It's important to remember that US stocks entered the week just shy of all-time highs.

TRADER'S TIP: "Volume . . . High or Low?"

"High" and "low" volume are relative terms. "High" volume for one stock is often considered "low" for another. Generally, "high" volume for any given stocks is at least 25% above the 10-day average, and "low" volume is at least 25% below the average.

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".

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

MONDAY, SEPT. 3					
Labor Day holiday, none scheduled
				
TUESDAY, SEPT. 4					
9:45 am	S&P final U.S. manufacturing PMI	
10:00 am	Construction spending	
10:00 am	ISM manufacturing
	
WEDNESDAY, SEPT. 5					
8:30 am	U.S. trade deficit	
10:00 am	Job openings	
10:00 am	Factory orders	
2:00 pm	Fed Beige Book				
TBA	Auto sales
			
THURSDAY, SEPT. 6					
8:15 am	ADP employment	
8:30 am	Initial jobless claims			
8:30 am	U.S. productivity (revision)	Q
9:45 am	S&P final U.S. services PMI	
10:00 am	ISM services	

FRIDAY, SEPT. 7					
8:30 am	U.S. employment report	
8:30 am	U.S. unemployment rate	
8:30 am	U.S. hourly wages	
8:30 am	Hourly wages year over year				
2:45 pm	New York Fed President Williams speaks	

For a chart of typical Up or Down market reactions to specific major US economic reports 
go to:  Economic Indicator Effects

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

CONSUMER CYCLICAL SECTOR

MarineMax, Inc. (HZO: Consumer Cyclical/Specialty Retail) - SQUEEZE PLAY. HZO 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 32.57 and a SELL short trigger at 30.46. When one of the orders is filled, cancel the remaining order and enter a 2.11 trailing stop. When you've reached a 3 paper profit, tighten the stop to 1.06. HZO closed at 31.55 on Tuesday. Earnings Report Date: Oct 24, 2024. Beta: 1.82. Market-Cap: 704.142M. Optionable.

CONSUMER DEFENSIVE SECTOR

BellRing Brands, Inc. (BRBR: Consumer Defensive/Packaged Foods) - 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. BRBR's behavior on Tuesday could very well be a sign that a new bounce is underway. Place a BUY trigger at 56.81. In the event your trigger is met, also place a 3.69 trailing stop which can be trimmed down to 1.85 when you have a 3.12 profit. BRBR closed Tuesday at 55.56. Earnings Report Date: N/A. Beta: 0.90. Market-Cap: 7.181B. Optionable.

FINANCIAL SERVICES SECTOR

Banco de Chile (BCH: Financial Services/Banks - Regional) - BULLISH BOUNCE. Another bullish bouncer, BCH appears ready to resume trading in an uptrend after recent selling forced the stock lower for several days. Tuesday's positive price action near Moving Average support says it's time to BUY shares if BCH reaches our entry trigger set at 25.49. Also place a 1.4 trailing stop which can be narrowed to 0.7 when you reach a 0.92 profit. BCH closed Tuesday at 25.08. Earnings Report Date: Oct 29, 2024. Beta: 0.19. Market-Cap: 12.709B. Optionable.

HEALTHCARE SECTOR

Cassava Sciences, Inc. (SAVA: Healthcare/Biotechnology) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in SAVA'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 29.26 and a SELL order at 26.66. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.6 trailing stop. Tighten the stop to 1.3 once you have a 11.78 gain. SAVA closed Tuesday at 27.98. Earnings Report Date: Nov 5, 2024. Beta: -0.62. Market-Cap: 1.342B. Optionable.

TECHNOLOGY SECTOR

AST SpaceMobile, Inc. (ASTS: Technology/Communication Equipment) - 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. ASTS traders reached this state of stand-off on Tuesday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 30.24 and a SELL short trigger at 27.18. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 3.06 which can be tightened to 1.53 on a 8 gain. ASTS closed Tuesday at 29.41. Earnings Report Date: Nov 12, 2024. Beta: 1.63. Market-Cap: 8.096B. 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.

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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