April 4, 2023 - The RightLine Report
Notes From The Editor
Do you have a list of "favorite" stocks? Are there certain equities you watch every day, regardless of what the market is doing? If so, you're not alone. Even beginner traders with just a few months of experience will quickly develop an affinity for certain tickers. But did you know this can also help you become a better trader?
Imagine that you're highly familiar with five different stocks. You're well-versed on not only how the stock tends to move, but also the company itself. You know it like the back of your hand - everything from their core products/services to recent earnings history to all their latest news. Now imagine the advantage this information might give you when you're trading that equity.
Let's say that a biotech company is expecting a ruling from the FDA regarding a potential blockbuster drug - a real "make-or-break" scenario. Looking around the company's website, you see that they've already scheduled another series of trials for the drug. This would be a strong indication that the company is expecting government approval. On the other hand, if there's nothing planned for the drug, they may be expecting the worst. Savvy traders can read between the lines and position themselves accordingly.
This is a big factor in why stocks often suffer a "sell on the news" reaction. "Smart money" prices in likely events before they happen - whether it's an upside earnings surprise, a big contract, or anything else that has a substantial impact on the company. By digging deeper into a company's website - especially their investor relations section, which all publicly-traded corporations are required to have - you can uncover details that might impact a stock's direction before the news is actually announced.
One of Wall Street's biggest secrets is that just about anyone can be a reasonably good equity analyst. In this day and age of instant information, the playing field has been leveled quite a bit. You can sit in on the same conference calls as those institutional analysts. You can obtain the same information on news sites and corporate websites. So if you've got a few of those "pet stocks," make it a point to learn everything you can about them. Knowledge is power!
Here's to profits,
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 04/04 04/04 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
RVLV 26.23 0.30 26.8 25.08 1.72/0.86 2.48
GNLX 27.60 0.00 27.2 1.16/0.58 14.42
ARGX 367.47 7.32 372.38 21.96/10.98 18.1
CUTR 23.05 -0.45 24.01 22.24 1.77/0.89 3.82
DNLI 23.66 0.28 23.99 22.39 1.6/0.8 2.26
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 as measured by the S&P 500 closed lower for the first time in five sessions after new labor market data elevated concerns about the economy and uncertainty over the next move by the Federal Reserve Bank. The number of job openings across the nation dropped in February to the lowest level in almost two years, raising hopes that the Fed might reconsider its aggressive campaign of rate increases intended to lower inflation. Oil futures were above $80 a barrel Tuesday after jumping higher on an announcement from OPEC members stating they would be cutting production. Higher oil prices will add to inflation, potentially to the point where the Fed feels the need to continue raising interest rates. This obvious dissonance will resolve itself in time, but for now it's a toss up as to how the FOMC - Federal Open Market Comittee - will respond. In other news, gold futures leaped to a new 13-month high, the USD/dollar ended the day lower.
Apr 3, 2023 Apr 4, 2023
-------------------- --------------------
Dow 33,601.15 327.00 33,402.38 -198.77
Nasdaq 12,189.45 -32.45 12,126.33 -63.13
S&P 500 4,124.51 15.20 4,100.60 -23.91
NYSE Volume 4.3B 4.24B
NYSE Advancers 1,548 911
NYSE Decliners 1,481 2,087
Nasdaq Volume 4.85B 4.31B
Nasdaq Advancers 2,147 1,370
Nasdaq Decliners 2,355 3,117
New Highs/Lows
03/28 03/29 03/30 03/31 04/03 04/04
--------------------------------------------
NYSE New Highs 27 41 44 65 58 48
NYSE New Lows 50 20 16 19 11 39
Nasdaq New Highs 43 68 75 95 96 82
Nasdaq New Lows 147 143 153 142 131 233
Stocks Covered Today Stock Splits
TRADER'S TIP: "Limiting Losses? Don't Over Do It"
One key element in successful trading is the ability to keep losses under control. While this consideration should certainly be included in any trading strategy, don't go overboard with the idea of keeping losses small. Your initial stop-loss should permit a realistic rise and fall in prices. If you attempt to keep losses TOO small you will end up taking unnecessary losses. Protecting your trading account should always be a priority, but don't over do it. Give each trade some room, and you'll increase the odds of success. Remember that you can always compensate for wider stops by entering with a smaller position size.
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 - 4100.60 April 4, 2023
52-Week High: 4593.45
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4375.63
Resistance 2: 4216.41
Resistance 1: 4162.86
Pivot: 4057.19
Support 1: 4003.64
Support 2: 3897.97
Support 3: 3738.75
NASDAQ Composite - 12126.33 April 4, 2023
52-Week High: 14500.29
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 13214.08
Resistance 2: 12621.18
Resistance 1: 12421.54
Pivot: 12028.29
Support 1: 11828.64
Support 2: 11435.39
Support 3: 10842.49
Dow Industrials - 33402.38 April 4, 2023
52-Week High: 35492.22
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 34975.85
Resistance 2: 33961.57
Resistance 1: 33617.86
Pivot: 32947.29
Support 1: 32603.58
Support 2: 31933.01
Support 3: 30918.73
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, April 3 8:30 am St. Louis Fed President Bullard speaks 9:45 am S&P final U.S. manufacturing PMI 10:00 am ISM manufacturing 10:00 am Construction spending 4:15 pm Fed Gov. Cook speaks TUESDAY, April 4 10.00 am Factory orders 10:00 am Job openings 6:00 pm Cleveland Fed President Mester speaks WEDNESDAY, April 5 8:15 am ADP employment 8:30 am U.S. trade balance 9:45 am S&P final U.S. services PMI 10:00 am ISM services THURSDAY, April 6 8:30 am Initial jobless claims 8:30 am Continuing jobless claims 10:00 am St. Louis Fed President Bullard speaks FRIDAY, April 7 8:30 am U.S. employment report 8:30 am U.S. unemployment rate 8:30 am Average hourly wages 8:30 am Average hourly wages (year over year) 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
Stocks Covered Today Stock Splits
TRADER'S TIP: "More Winners, or More Profits?"
It's always nice to have a winning trade, yet a large number of winners don't always guarantee a large amount of profits. A review of the top ten most profitable mechanical trading systems of all time revealed that the best winning rate was 57.5%. Surprisingly, several of the top performers had more losers than winners. The key to the success of these systems is that winning trades outperformed losers by a wide margin. The stock market can be a finicky at times, so make sure to use risk control to protect your profits and capital. One big winner can offset several small losers. Always cut losses quickly and let the winners grow. And remember, profits matter more than the percentage of winners.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
Revolve Group, Inc. (RVLV: Consumer Cyclical/Internet Retail) - SQUEEZE PLAY. RVLV shareholders know what it feels like to be squeezed. Tuesday'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. RVLV closed Tuesday at 26.23. The plan is to enter in the right direction by placing a BUY trigger at 26.8 and a SELL short trigger at 25.08. Once RVLV establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.72. After you've collected a 2.48 profit, tighten the stop to 0.86. Earnings Report Date: May 01, 2023. Beta: 2.15. Market-Cap: 1.953B. Optionable.
HEALTHCARE SECTOR
Genelux Corporation (GNLX: Healthcare/Biotechnology) - BULLISH BOUNCE. Here is another example of a stock in an established uptrend that has recently experienced a counter-trend drop. The sliding price action has now found support near a moving average zone, bouncing upward during Tuesday's session to close at 27.60. Anticipate the rebound to continue, and be ready to buy GNLX at 27.2. Follow your entry with a trailing stop of 1.16 which can be tightened to 0.58 on a 14.42 profit. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 653.356M. Not Optionable.
argenx SE (ARGX: Healthcare/Biotechnology) - BULLISH BOUNCE. Up-trending stocks like ARGX have a tendency to bounce their way skyward rather than travel higher in a straight line. After touching down to a moving average support level on Tuesday, ARGX is poised to lift off again. To take advantage of this setup, prepare to BUY shares at 372.38 if positive price action occurs. As always, follow your entry with a trailing stop. A 21.96 trailer should work well with ARGX. Tighten it to 10.98 on a 18.1 gainer. Earnings Report Date: N/A. Beta: 0.48. Market-Cap: 21.02B. Optionable.
Cutera, Inc. (CUTR: Healthcare/Medical Devices) - SQUEEZE PLAY. CUTR 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 24.01 and a SELL short trigger at 22.24. When one of the orders is filled, cancel the remaining order and enter a 1.77 trailing stop. When you've reached a 3.82 paper profit, tighten the stop to 0.89. CUTR closed at 23.05 on Tuesday. Earnings Report Date: May 08, 2023. Beta: 1.58. Market-Cap: 454.445M. Optionable.
Denali Therapeutics Inc. (DNLI: Healthcare/Biotechnology) - 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. DNLI found itself in this condition on Tuesday 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 23.99 and a SELL short trigger at 22.39. When DNLI moves outside of Tuesday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 1.6 trailing stop. After you've got a 2.26 profit, tighten the stop to 0.8. DNLI closed at 23.66 on Tuesday. Earnings Report Date: May 03, 2023. Beta: 1.38. Market-Cap: 3.234B. 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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