April 13, 2023 - The RightLine Report
Notes From The Editor
Trends Are Always Friends
To get into trends early, look for stocks that have just made new four- week highs or lows. Also check the slope of the 22-day moving average. If it's leaning decidedly in one direction or the other, you can assume that the trend is relatively stable.
Keep in mind that the purpose of trading isn't to catch 100% of every move. The purpose is to be profitable, find stocks that are active within your time frame, and take a reasonable amount out of the anticipated movement.
There's an old saying that one should "never try to catch a falling knife." The same concept applies when anticipating reversals for entry purposes.
For example, instead of trying to predict when a descent will end, it's always best to exercise a bit of patience. Let the market find a bottom and begin the early stages of a reversal. Then it's time to enter long positions. That way you have a definite safety exit nearby in case the bottom is soft.
The same approach applies to shorting as well. No need to predict a top. Just anticipate turn-a-rounds at known resistance levels, wait for the reversal to start and then enter your trade.
Whether up or down a trend is a trend, and as you know the trend is always your friend.
Trade well!
~ Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 04/13 04/13 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
JAKK 20.85 -0.02 21.71 20.18 1.53/0.77 2.04
GME 22.55 0.28 23.13 21.66 1.47/0.74 2.92
SRDX 23.88 0.64 24.32 22.66 1.66/0.83 2.56
ZIM 20.35 0.51 21.02 19.52 1.5/0.75 2.7
AI 22.29 0.25 23.44 21.06 2.38/1.19 3.62
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 higher across the board on Thursday following the release of updated producer price data that may encourage the Federal Reserve Bank to be less aggressive on raising interest rates. The Labor Department reported that the Producer Price Index (PPI), which measures the prices that producers get for goods and services, dropped 0.5% in March compared to February. Economists had expected the PPI to stay the same as the prior month. The Core PPI, which excludes food and energy, was up only 0.1%, also below expectations of a 0.3% increase. On Wednesday, Consumer Price Index (CPI) numbers were also below expectations. This deceleration in inflation has raised expectations the Fed may implement the final interest rate increase of its 13-month rate-hiking campaign at its upcoming meeting in May. Investors also appear to have a relatively upbeat outlook for the current earnings season, which has just gotten underway. Gold, oil, Bitcoin and the yield on a 10-year treasury note were all higher.
Apr 12, 2023 Apr 13, 2023
-------------------- --------------------
Dow 33,646.50 -38.29 34,029.69 383.19
Nasdaq 11,929.34 -102.54 12,166.27 236.93
S&P 500 4,091.95 -16.99 4,146.22 54.27
NYSE Volume 3.67B 3.61B
NYSE Advancers 1,380 2,130
NYSE Decliners 1,617 859
Nasdaq Volume 4.95B 4.98B
Nasdaq Advancers 1,648 3,184
Nasdaq Decliners 2,842 1,247
New Highs/Lows
04/06 04/06 04/10 04/11 04/12 04/13
--------------------------------------------
NYSE New Highs 34 34 34 48 57 54
NYSE New Lows 39 39 39 20 28 31
Nasdaq New Highs 59 63 55 71 80 86
Nasdaq New Lows 175 175 167 120 192 157
Stocks Covered Today Stock Splits
TRADER'S TIP: "The Four Stages of Market Action"
A study of price charts reveals that all markets have the same basic movements. First is the accumulation or consolidation stage, which occurs at the bottom of a market; this is often referred to as a "base building" period. The second stage is the rally or run-up stage that occurs when stocks trend higher. The third stage is the distribution stage, another form of consolidation that signals the top of a market. The fourth stage is the sell off, or declining stage. Most markets spend over 80% of the time in the consolidation stages, when it is usually best to trade for short-term profits.
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 - 4146.22 April 13, 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 - 12166.27 April 13, 2023
52-Week High: 13710.70
52-Week Low: 10088.83
Daily Trend: DOWN
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 - 34029.69 April 13, 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: "The Pre-Split Run"
One of the more powerful trades that we can participate in is "the pre- split run." The pre-split run is the phenomenon we often see when a stock makes a strong move higher in the days after a split announcement and before the stock actually splits. The positive publicity surrounding a stock split announcement attracts new buyers. Active investors routinely purchase these stocks prior to the split in anticipation of the pre-split run. This increased buying often moves prices higher, so be sure to keep the Upcoming Splits List handy when you are trading. You can find it in each edition of the RightLine Report or go to our web site at: http://www.rightline.net/splits/announced.html.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
JAKKS Pacific, Inc. (JAKK: Consumer Cyclical/Leisure) - SQUEEZE PLAY. When a stock's daily price range contracts to an unusually low point, you can safely assume that in most cases a breakout from that range will result in a nice price move. To capture a portion of this potential movement we have set both a long and a short entry into JAKK. A move to the upside will trigger our BUY entry at 21.71, while a drop to 20.18 will trigger our SELL short entry. Follow your position with a 1.53 trailing stop. Tighten the stop to 0.77 once you have a 2.04 gain. JAKK closed Thursday at 20.85. Earnings Report Date: Apr 26, 2023. Beta: 2.20. Market-Cap: 202.736M. Optionable.
GameStop Corp. (GME: Consumer Cyclical/Specialty Retail) - SQUEEZE PLAY. Trader indecision has put GME squarely in the center of a Bull versus Bear standoff. This tight spot should soon give way to a clear winner in the short-term, and we want to be in position for the move. To do that we've set a BUY entry at 23.13 and a SELL short entry at 21.66. Now it's up to GME to show us which entry will be filled. Once the trade is underway place a 1.47 trailing stop, which can be tightened to 0.74 after you achieve a 2.92 profit. GME closed on Thursday at 22.55. Earnings Report Date: May 30, 2023. Beta: -0.12. Market-Cap: 6.87B. Optionable.
HEALTHCARE SECTOR
Surmodics, Inc. (SRDX: Healthcare/Medical Devices) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in SRDX's narrowest trading range of the past seven sessions. With neither group able to take complete control on Thursday, 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 24.32 and a SELL order at 22.66. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.66 trailing stop. Tighten the stop to 0.83 once you have a 2.56 gain. SRDX closed Thursday at 23.88. Earnings Report Date: Apr 25, 2023. Beta: 0.96. Market-Cap: 337.305M. Optionable.
INDUSTRIALS SECTOR
ZIM Integrated Shipping Services Ltd. (ZIM: Industrials/Marine Shipping) - SQUEEZE PLAY. ZIM is caught in a dilemma. The stock's compressed price range on Thursday 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. ZIM is now at 20.35. We can capture price action either way by placing a BUY trigger at 21.02 and a SELL short trigger at 19.52. Once ZIM 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 1.5. When you acquire a 2.7 profit, tighten the stop to 0.75. Earnings Report Date: May 15, 2023. Beta: 2.01. Market-Cap: 2.446B. Optionable.
TECHNOLOGY SECTOR
C3.ai, Inc. (AI: Technology/Software-Application) - SQUEEZE PLAY. One interesting trait of price volatility is that it cycles back and forth through periods of expansion and contraction. Stocks that have recently seen their daily price range shift from an average or wide range to an extremely contracted state are ideal candidates for expansive price moves. In many cases the next move is relatively fast and covers a sizable amount of territory. To take advantage of these trades we use both a BUY and a SELL entry. This allows us to enter in whichever direction the breakout takes. In AI's case we will enter a BUY should it reach the 23.44 level, or a SELL short trade if it drops to 21.06. As usual a trailing stop is essential, 2.38 which should be tightened to 1.19 on a 3.62 gain. AI closed Thursday at 22.29. Earnings Report Date: May 30, 2023. Beta: 1.40. Market-Cap: 2.501B. 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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