September 5, 2024 - The RightLine Report 

 
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                      NOTES FROM THE EDITOR
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Trading is a game of probabilities. Every experienced trader knows that when it comes to the market, there are very few things that can be depended on with absolute certainty. However, even though the market's tendencies and traits are not completely reliable in every situation, they do present a powerful framework that we can use to recognize opportunities with a high probability of success.

For example, the market's fondness for bouncing at significant support levels such as the 22, 50, 100, and 200 EXPMA -- Exponential Moving Average -- is well documented. The 50 period monthly and the 200 period weekly moving averages aren't as well known, yet they carry similar support and resistance significance.

Experience reveals the realities that trade set-ups don't always produce the desired results. However there are still two very important lessons to be learned from the story told by the charts -- even when a trade setup doesn't follow through as anticipated.

The first has to do with the relationship between trade Set-ups and Triggers. For example a bounce setup should be specific enough to leave no doubt that a rebound is likely to occur. "Likely" doesn't mean "definitely." That's why the Trigger is so important in any type of trade setup.

The Trigger should always confirm the price direction that is indicated by the Set-up. Price must clearly move in the intended direction before a position is entered -- usually beyond a resistance level such as the high or opening price of the Set-up day. Sometimes price action provides a Set-up based on reversal conditions that signal a potential bounce. However, there are times when the price action does NOT confirm that the bounce is genuine. Instead of continuing higher above the previous session high, prices stall, then drop back, perhaps below the low of the day. Whenever the Trigger does not confirm an entry into a bounce Set-up, the trade should not be entered.

Which brings us to the second lesson. Just as stocks that break out above previous resistance have a very good chance of going even higher, those that fall beneath support have an increased chance of heading even lower.

Bounce trades that fail to materialize will often produce excellent short setups. Once the low of a previous session gives way, the moving average providing support will also often cave in. Once that happens, prices will normally plunge even lower as a significant technical rule comes into play ... "What once was support becomes resistance."

Bottom Line: Regardless of the specifics for each trade Set-up and Trigger, the Trigger should always confirm the price direction that is indicated by the Set-up. When price doesn't reach the trigger, stay out of the trade and be on the lookout for a break-down of support. This is where you will find some of the best shorting opportunities.

Trade well,

Thomas Sutton, Editor 

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                           "QUICK LIST"
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Stock     09/05     09/05      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

TRS       24.84      0.43     25.18                  1.56/0.78         1
AVBP      26.60      0.48     27.05                  2.62/1.31       2.3
AIRT      22.49     -0.08     23.15     21.72        1.43/0.72      2.18
AEYE      20.90     -0.04     21.63     19.64           1.99/1      3.44
S         22.84     -0.27     23.48     22.05        1.43/0.72      1.92


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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After a two-day decline at the beginning of the holiday-shortened week, equity markets struggled to recover Thursday and ended without gains. Mixed labor market data pushed both short and long-term government bond yields to their lowest levels this year, ahead of the eagerly awaited US payrolls report. Technology stocks, which had been weak, saw a rebound thanks to the Magnificent 7 group. Meanwhile, WTI oil prices fell slightly after dropping below $70 a barrel Wednesday for the first time since December 2023.

The labor market is in the spotlight this week, with anticipation building for Friday's payrolls report. Job gains and low unemployment have been crucial in supporting economic expansion, counterbalancing the effects of high interest rates and inflation. Recently, however, signs of a cooling labor market have emerged. Job openings dropped below eight million in July, reducing the job openings-to-unemployed workers ratio to its lowest in over three years, and slightly below pre-pandemic levels. Additionally, the ADP report revealed that US companies added the fewest jobs since early 2021.

Despite these signs, the cooling appears to be a natural adjustment after a period of robust strength. Weekly jobless claims remain low, suggesting that the rise in unemployment is more due to a slowdown in hiring and increased labor supply rather than a surge in layoffs. Corporate profits are climbing, and unit labor costs have decreased, aided by improved productivity. This reduces the need for companies to cut costs by reducing headcount.

The current focus is on the pace and extent of potential Fed rate cuts rather than the direction of policy. While the Fed has historically faced challenges with its policy decisions, it is now poised to begin a multiyear rate-cutting cycle amidst resilient, though slowing, growth, easing credit conditions, and a labor market that continues to add jobs. This suggests that a soft landing remains likely.

Although rate cuts alone are not a complete solution, the gradual easing of borrowing costs should support consumer and business spending. Generally, the start of a new rate-cutting cycle is positive for stocks, provided the economy avoids a recession.


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                              TRADER'S TIP:  
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TRADER'S TIP: "Hey, That Stop Is Too Big. . ."

It's common for traders to think that a particular stop - say $5 or $10 - is "too big." While the size of a stop usually gets the most attention, the amount of money at risk is actually far more important. Just remember that a "big" stop doesn't equal big risk when your position size is small. To determine the correct number of shares to keep risk low, always plan your trade using the RightLine Risk Control Calculator. 
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                         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/ 
https://www.prorightline.com/rlch/090524SPX.jpg





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                             MARKET CALENDAR
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--ECONOMIC REPORTS AND EVENTS (all times are Eastern): 
MONDAY, SEPT. 2					
Labor Day holiday, none scheduled
				
TUESDAY, SEPT. 3					
9:45 am	S&P final U.S. manufacturing PMI	
10:00 am	Construction spending	
10:00 am	ISM manufacturing
	
WEDNESDAY, SEPT. 4					
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. 5					
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. 6					
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" 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: "Only Ten Percent"

Although only ten percent of individual traders use "money management," it is by far the most important aspect of any trading plan. Leave it out of any trade and you immediately place that position in a high-risk category. Many people believe they can ignore money management just because they have a small trading account, while in fact these vital concepts can be used successfully with any amount of capital. Establishing good habits with a small account not only allows your money to grow, it also prepares you to trade intelligently when you have a much larger account. 

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                      STOCKS COVERED IN THIS ISSUE    
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CONSUMER CYCLICAL SECTOR

TriMas Corporation (TRS: Consumer Cyclical/Packaging & Containers) - BULLISH BOUNCE. Positive price behavior near moving average support on Thursday qualifies TRS for a Bullish Bounce setup. After several sessions of declining prices, TRS should soon begin trading in step with its established weekly uptrend. Tell your broker to BUY shares if TRS moves up to our entry trigger set at 25.18. You can also enter a 1.56 trailing stop, to be replaced with a 0.78 trailing stop when you obtain a 1 profit. TRS closed Thursday at 24.84. Earnings Report Date: Oct 24, 2024. Beta: 0.67. Market-Cap: 1.01B. Optionable.

HEALTHCARE SECTOR

ArriVent BioPharma, Inc. (AVBP: Healthcare/Biotechnology) - BULLISH BOUNCE. AVBP's positive weekly uptrend is still intact despite recent selling that has driven share prices lower. Price action on Thursday shows that traders are aware of the moving average support zone now in play, and they are ready to consider buying again. A shift up from this point will attract even more buyers. The new buying should move AVBP back in step with the bullish weekly trend, so our BUY entry trigger is set at 27.05. Once you hold a position, trail a stop of 2.62. Tighten it to 1.31 on a 2.3 gain. AVBP closed at 26.60 on Thursday. Earnings Report Date: N/A. Beta: --. Market-Cap: 893.385M. Optionable.

INDUSTRIALS SECTOR

Air T, Inc. (AIRT: Industrials/Conglomerates) - SQUEEZE PLAY. AIRT shareholders know what it feels like to be squeezed. Thursday'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. AIRT closed Thursday at 22.49. The plan is to enter in the right direction by placing a BUY trigger at 23.15 and a SELL short trigger at 21.72. Once AIRT establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.43. After you've collected a 2.18 profit, tighten the stop to 0.72. Earnings Report Date: Nov 11, 2024. Beta: 0.74. Market-Cap: 62.074M. Optionable.

TECHNOLOGY SECTOR

AudioEye, Inc. (AEYE: Technology/Software - Application) - 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. AEYE found itself in this condition on Thursday 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 21.63 and a SELL short trigger at 19.64. When AEYE moves outside of Thursday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 1.99 trailing stop. After you've got a 3.44 profit, tighten the stop to 1. AEYE closed at 20.90 on Thursday. Earnings Report Date: Oct 31, 2024. Beta: 1.00. Market-Cap: 248.273M. Optionable.

SentinelOne, Inc. (S: Technology/Software - Infrastructure) - SQUEEZE PLAY. The ticker for Thursday's session shows S is now stuck in a tight price band. With the cyclical contraction and expansion nature of volatility in force, we should see a new period of price expansion in the days ahead. To improve the odds of catching the next directional wave, place a BUY trigger at 23.48 and a SELL short trigger at 22.05. When S starts moving out of its narrow range, your order will be triggered. Once you're in the trade, cancel the opposing trigger and set a 1.43 trailing stop. Upon reaching a 1.92 profit, resize the stop to 0.72. Earnings Report Date: N/A. Beta: 0.67. Market-Cap: 7.245B. 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/ 

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                           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/ 
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Best of luck and have a Great Week!
 
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