April 11, 2023 - The RightLine Report
Notes From The Editor
The Market's Daily Routine
Even the most novice trader quickly realizes that nothing is a certainty when it comes to the movement of stocks. However, the market does tend to follow certain patterns that can help you get a better grip on where prices might be headed. This applies to both seasonal trends - such as the typical holiday season bounce in late-December - and on a daily basis.
Generally speaking, many trading sessions tend to follow this pattern:
The First Hour: This is where you'll see a reaction to any events that transpired since the last session's closing bell. Oftentimes you'll see an immediate gap on news events, and then follow-through selling in the same direction. The first hour - or just before the opening bell - is also when most economic data will be dropped on the market, leading to added volatility.
Late Morning: After the initial reaction of the first hour, there's often a counter-reaction in the opposite direction. Late-arriving economic data can occasionally move the market during this timeframe.
Lunchtime: From roughly 12:00-1:00 Eastern time, volume tends to see a moderate dip as major institutional traders take lunch. This can result in a temporary lull in trading. This is also a great time to position yourself for the later half of the session.
Afternoon: This is where you'll often encounter head-fake rallies or sell-offs. Prevailing trends can shift in the afternoon as intraday attitudes shift and money rotates between the various sectors. If volatility settled down earlier in the session, if may pick up during this timeframe.
The Last Half-Hour: As the closing bell approaches, traders rush to exit positions and/or take new entries in anticipation of an overnight move. This can lead to much higher volatility - particularly ahead of the weekend. As a general rule of thumb, it's a good idea for short- term traders to stay on the sidelines unless they're expecting a directional gap the next morning.
Here's to profits,
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 04/11 04/11 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
LNC 21.10 0.14 21.64 20.3 1.34/0.67 2.86
COLB 22.22 0.34 22.6 21.19 1.41/0.71 2.88
PRG 24.12 0.66 24.68 22.9 1.78/0.89 2.08
CNXN 44.86 0.33 45.5 2.65/1.33 2.42
BEPC 33.49 0.89 33.98 2.51/1.26 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" 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
US stocks were mixed on Tuesday, with the tech sector faltering as key inflation data and the start of earnings season are on the immediate horizon. The S&P 500 was flat, the Dow Jones Industrial Average gained about 0.3%, while the technology-heavy Nasdaq Composite declined by 0.4%. OANDA analyst Edward Moya says "This is the week that could tell us that the US consumer is no longer showing resilience and in fact is rather weak; core inflation is making things more expensive, retail sales might show the consumer is tapped out, and the banks might paint a picture that American savings accounts are down and credit card debt is skyrocketing." In light of this and a recent strong jobs report, the market has responded by changing the probability of another rate hike from the Fed at the next FOMC meeting. Traders are now pricing in a 68% probability that the Federal Reserve Bank will increase interest rates by another 0.25% in May. Oil and the USD/dollar were lower, the yield on a 10-year Treasury note (TNX) remained even at 3.41%.
Apr 10, 2023 Apr 11, 2023
-------------------- --------------------
Dow 33,586.52 101.23 33,684.79 98.27
Nasdaq 12,084.36 -3.60 12,031.88 -52.48
S&P 500 4,109.11 4.09 4,108.94 -0.17
NYSE Volume 3.45B 3.67B
NYSE Advancers 1,934 2,218
NYSE Decliners 1,050 787
Nasdaq Volume 4.35B 4.69B
Nasdaq Advancers 2,587 2,645
Nasdaq Decliners 1,824 1,788
New Highs/Lows
04/04 04/05 04/06 04/06 04/10 04/11
--------------------------------------------
NYSE New Highs 48 27 34 34 34 48
NYSE New Lows 39 51 39 39 39 20
Nasdaq New Highs 82 55 59 63 55 71
Nasdaq New Lows 233 272 175 175 167 120
Stocks Covered Today Stock Splits
TRADER'S TIP: "Small Stocks & Big Moves"
Studies show that most stocks which increase in price by ten times or more are "small-cap" or "micro-cap." This is due to the relatively low number of shares available. As demand for the stock increases, the price rises dramatically. If you want big explosive moves, think small- cap.
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 - 4108.94 April 11, 2023
52-Week High: 4512.94
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 2860.90
Resistance 2: 2797.61
Resistance 1: 1398.80
Pivot: 2734.32
Support 1: 1335.51
Support 2: 2671.03
Support 3: 2607.74
NASDAQ Composite - 12031.88 April 11, 2023
52-Week High: 13710.70
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 12722.97
Resistance 2: 12396.65
Resistance 1: 12242.30
Pivot: 12070.33
Support 1: 11915.98
Support 2: 11744.01
Support 3: 11417.69
Dow Industrials - 33684.79 April 11, 2023
52-Week High: 35492.22
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 23071.38
Resistance 2: 22682.44
Resistance 1: 11341.22
Pivot: 22293.50
Support 1: 10952.28
Support 2: 21904.56
Support 3: 21515.61
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, April 10 10:00 am Wholesale inventories TUESDAY, APRIL 11 6:00 am NFIB optimism index 1:30 pm Chicago Fed President Goolsbee speaks 7:30 pm Minneapolis Fed President Kashkari speaks WEDNESDAY, APRIL 12 8:30 am Consumer price index 8:30 am Core CPI 8:30 am CPI year over year 8:30 am Core CPI year over year 9:00 am Richmond Fed President Barkin speaks 12:00 pm San Francisco Fed President Daly speaks 2:00 pm Treasury BudgetB 2:00 pm Minutes of FOMC meeting THURSDAY, APRIL 13 8:30 am Producer price index 8"30 am Core PPI 8:30 am PPI year over year 8:30 am Core PPI year over year 8:30 am Initial jobless claims 8:30 am Continuing jobless claims FRIDAY, APRIL 14 8:30 am U.S. retail sales 8:30 am Retail sales minus autos 8:30 am Import price index 8:30 am Import prices minus fuel 8:45 am Fed Gov. Waller speaks 9:15 am Industrial production 9:15 am Capacity utilization 10:00 am Business inventories 10:00 am Consumer sentiment 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: "Beta - What Is It?"
Beta measures the level of risk, or price volatility of a stock in relation to the market as represented by the S&P 500. The market beta is always 1.0, so a stock with a beta of 1.0 means that the stock moves precisely with the market. When the market rises, the stock will rise on average to the same degree, and when the market drops, the stock will drop to the same extent.
A beta of more than one indicates higher risk than the market, while a beta of less than one indicates lower risk than the market. For example, a beta of 0.6 means a stock price is likely to move up or down only 60% of the market change, but a beta of 1.40 means the stock is likely to move up or down 40% more than the market. Some stocks have a negative beta and are inversely correlated with the market. When the market goes up, they go down, and vice versa. Each stock writeup in the RightLine Report includes the Beta for that particular stock.
Stocks Covered in This Issue
FINANCIAL SERVICES SECTOR
Lincoln National Corporation (LNC: Financial Services/Insurance-Life) - SQUEEZE PLAY. Traders are feeling the pressure as LNC's intra-day price range on Tuesday shrunk to the narrowest spread in over a week. The tension between buyers and sellers should provide enough pent-up engergy for a breakout move in the days ahead, so get ready to trade with the new trend. To achieve that, place a BUY entry at 21.64 and a SELL short entry at 20.3. LNC's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.34 trailing stop. Tighten it to 0.67 after you get a 2.86 gain. LNC closed Tuesday at 21.10. Earnings Report Date: May 02, 2023. Beta: 1.79. Market-Cap: 3.571B. Optionable.
Columbia Banking System, Inc. (COLB: Financial Services/Banks-Regional) - SQUEEZE PLAY. Tuesday's narrow price range has created a potentially profitable setup in COLB, as sellers and buyers find themselves in a near tie for control of price direction. The next short-term trend could go either way, so prepare for a move out of the draw within the next day or so. Set a BUY entry at 22.6 and a SELL short entry at 21.19. Let COLB's price action determine your long or short entry. Once the order is filled, place a 1.41 trailing stop, and tighten it to 0.71 upon getting a 2.88 gain. COLB closed Tuesday at 22.22. Earnings Report Date: Apr 26, 2023. Beta: 0.96. Market-Cap: 4.627B. Optionable.
INDUSTRIALS SECTOR
PROG Holdings, Inc. (PRG: Industrials/Rental & Leasing Services) - SQUEEZE PLAY. A look at PRG's daily chart shows what a price squeeze is all about. The constricted high-low daily trading range has produced a setup similar to a tightly coiled spring. Expect price to move sharply soon, with the direction yet to be determined. Let the upcoming market action resolve whether you will buy shares or sell short. To capture a move either way, place a BUY trigger at 24.68 and a SELL short trigger at 22.9. Once PRG shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.78 and tighten to 0.89 on a 2.08 gain. PRG closed Tuesday at 24.12. Earnings Report Date: Apr 26, 2023. Beta: 2.09. Market-Cap: 1.159B. Optionable.
TECHNOLOGY SECTOR
PC Connection, Inc. (CNXN: Technology/Electronics & Computer Distribution) - 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 44.86, CNXN is on our radar for a BUY entry at 45.5. If you purchase shares of CNXN, be sure to also place a trailing stop of 2.65. Snug it up to 1.33 on a 2.42 gain. Earnings Report Date: May 03, 2023. Beta: 0.78. Market-Cap: 1.179B. Optionable.
UTILITIES SECTOR
Brookfield Renewable Corporation (BEPC: Utilities/Utilities-Renewable) - 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. BEPC's current price action near moving average support signals a potential BUY entry at 33.98, followed by a 2.51 trailing stop which can be tightened to 1.26 upon earning 1.92. BEPC closed Tuesday at 33.49. Earnings Report Date: May 05, 2023. Beta: 0.89. Market-Cap: 5.77B. 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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