August 1, 2023 - The RightLine Report
Notes From The Editor
One of the basic building blocks of successful trading is the stuff you don't do. While best practices such as stop-loss placement and effective risk management sharply improve your ability to grow your trading account, there are also several potential pitfalls to watch out for.
Over the coming weeks we'll take a closer look at several of these trading traps. Let's start by looking at three mistakes that are especially prevalent in the modern age of non-stop, on-demand information.
Mistake #1: Trading stocks that are hyped on message boards and spam emails.
The promise can see be so alluring. A gang of excited traders pumps up a stock on a message board or email, calling for a large move within the near future. Then, over the next few sessions the ticker actually starts to do what they said it would. You jump on the following day, only to have the position dramatically reverse course.
This "pump and dump" is a classic scheme that has continued unabated in the Information Age. However, you can easily avoid this trap by simply ignoring those hype-filled message boards, and by sending those spam emails straight to the delete folder. Also be weary of stocks that trade on very light volume; scheming traders find it much easier to push around low-volume equities.
Mistake #2: Falling in love with a "story."
The stock media loves to shape conventional wisdom. However, this doesn't always match what's really happening in the market. Imagine, for instance, that you turn on the TV and see a report on how stock prices will head lower over the next week. Your favorite mainstream Wall Street websites say the same thing.
Could those reports be right? Absolutely. But before you commit yourself to the story that's being written by the media, verify it with your own knowledge and tools. Do the technicals support the outlook for more weakness? Or are they deeply oversold and ready for a bounce? Trade based on what you see - not on what the media tells you.
Mistake #3: Overloading your screen with too many indicators.
Another classic mistake: analysis paralysis! Technical indicators are a wonderful thing, and a well-groomed daily chart can provide an excellent roadmap to likely price movements. The problem occurs when the chart starts to look more like an overgrown garden, with moving averages, indicators, and numbers creating confusion and contradictions.
The remedy for this mistake is to keep it simple and focused. Use only the technical indicators that you feel most comfortable with. If you're thinking about adding a new indicator to your line-up, give it a trial period first to see if it fits into your current strategy.
Additionally, remember that basic analyses of price action - moving averages and trendlines, for example - tend to be more effective than more obscure indicators. The reason is simple: more market participants watch the price action, and act accordingly.
Here's to profits,
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 08/01 08/01 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
CBUS 20.26 0.26 20.98 18.89 2.09/1.05 5.52
TCMD 22.81 -0.10 23.32 21.74 1.58/0.79 1.92
RAPT 23.50 -0.40 23.99 21.93 2.06/1.03 1.82
APLS 24.22 -1.53 26.19 23.21 2.98/1.49 9.44
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 ended Tuesday with modest losses but not far from the sessions's best levels, as investors eagerly await more earnings reports. While the overall stock averages have been trading in a tight range recently, there have been significant movers following earnings announcements. Industrials, such as CAT and ETN outperformed after their earnings reports, while technology shares managed gains ahead of AMD's earnings in the chip sector.
Treasury yields were a notable factor during Tuesday's trading, with all coupon rates currently at 4% or higher, driven by strong economic data in the USA. With the economy in a better position, the likelihood of a "soft" landing or avoiding a landing altogether has increased. This in turn raises the possibility that the Federal Reserve may continue with interest rate hikes.
August has historically been a weaker month for the markets, with the DJIA showing mixed performance over the past 24 years, rising only 32.0% of the time on the first trading day of August. While there have been several sizable gains during those up years, the median performance has been a more substantial loss. Over the past 12 years, both the DJIA and S&P 500 have declined nine times for the month of August.
As interest rates climb, consumers may face challenges in dealing with the impact. The average interest rate on a new car loan has reached a record 7.2%, while a used car loan's average interest rate is around 11.0%. Additionally, the average new car payment in the U.S. now stands at $750, and the average new mortgage payment is $2,850. This means that an American looking to purchase both a new car and a house would be paying $3,600 per month or $43,200 per year, even after a 20% down payment. These payments amount to 62% of the median household income, raising concerns about the affordability for many families.
Jul 31, 2023 Aug 1, 2023
-------------------- --------------------
Dow 35,559.53 100.24 35,630.68 71.15
Nasdaq 14,346.02 29.37 14,283.91 -62.11
S&P 500 4,588.96 6.73 4,576.73 -12.23
NYSE Volume 4.51B 4.07B
NYSE Advancers 2,150 996
NYSE Decliners 807 1,934
Nasdaq Volume 4.94B 4.65B
Nasdaq Advancers 2,851 1,660
Nasdaq Decliners 1,558 2,755
New Highs/Lows
07/25 07/26 07/27 07/28 07/31 08/01
--------------------------------------------
NYSE New Highs 123 113 151 119 152 107
NYSE New Lows 15 6 17 12 8 17
Nasdaq New Highs 130 123 171 126 149 101
Nasdaq New Lows 106 104 109 85 64 93
Stocks Covered Today Stock Splits
TRADER'S TIP: "No One Knows"
The stock market is a world shaped by human behavior, and no one has the slightest idea of what will happen in the future. Successful traders don't base their actions on what they THINK will happen, but instead they respond to what DOES happen. Price can only do three things; go up, go down, or go sideways. Plan ahead for all three, and you can react intelligently to whatever the market decides to do.
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 - 4576.73 August 1, 2023
52-Week High: 4607.07
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4729.63
Resistance 2: 4651.12
Resistance 1: 4616.67
Pivot: 4572.62
Support 1: 4538.17
Support 2: 4494.11
Support 3: 4415.60
NASDAQ Composite - 14283.91 August 1, 2023
52-Week High: 14446.55
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 14950.80
Resistance 2: 14587.73
Resistance 1: 14452.19
Pivot: 14224.66
Support 1: 14089.12
Support 2: 13861.59
Support 3: 13498.52
Dow Industrials - 35630.68 August 1, 2023
52-Week High: 35679.13
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 36297.94
Resistance 2: 35869.17
Resistance 1: 35664.23
Pivot: 35440.40
Support 1: 35235.46
Support 2: 35011.63
Support 3: 34582.86
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, July 31, 2023: 31-Jul MONDAY, JULY 31 31-Jul 8:30 am Chicago Business Barometer 31-Jul 2:00 pm Fed senior loan survey 31-Jul TUESDAY, AUGUST 1 Tuesday, August 01, 2023: 01-Aug 10:00 am Job openings 01-Aug 10:00 am ISM manufacturing 01-Aug 10:00 am Construction spending 01-Aug WEDNESDAY, AUGUST 2 Wednesday, August 02, 2023: 02-Aug 8:15 am ADP employment 02-Aug THURSDAY, AUGUST 3 Thursday, August 03, 2023: 03-Aug 8:30 am Initial jobless claims 03-Aug 8:30 am U.S. Productivity (prelim) 03-Aug 10:00 am ISM services 03-Aug 10:00 am Factory orders 03-Aug FRIDAY, AUGUST 4 Friday, August 04, 2023: 04-Aug 8:30 am U.S. nonfarm payroll 04-Aug 8:30 am U.S. unemployment rate 04-Aug 8:30 am U.S. hourly wages 04-Aug 8:30 am Hourly wages year over year 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: "Right or Wrong"
Traders who follow trading plans that include risk management are never actually "wrong." If price moves against a position, we just execute the planned stop and move on. Experienced traders don't look at this as being "right" or "wrong" - it's just part of the job of trading.
Stocks Covered in This Issue
HEALTHCARE SECTOR
Cibus, Inc. (CBUS: Healthcare/Biotechnology) - 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. CBUS 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 20.98 and a SELL short trigger at 18.89. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 2.09 which can be tightened to 1.05 on a 5.52 gain. CBUS closed Tuesday at 20.26. Earnings Report Date: Aug 02, 2023. Beta: 1.76. Market-Cap: 451.156M. Optionable.
Tactile Systems Technology, Inc. (TCMD: Healthcare/Medical Devices) - SQUEEZE PLAY. TCMD 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 23.32 and a SELL short trigger at 21.74. When one of the orders is filled, cancel the remaining order and enter a 1.58 trailing stop. When you've reached a 1.92 paper profit, tighten the stop to 0.79. TCMD closed at 22.81 on Tuesday. Earnings Report Date: Aug 07, 2023. Beta: 1.24. Market-Cap: 530.013M. Optionable.
RAPT Therapeutics, Inc. (RAPT: 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. RAPT 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 21.93. When RAPT 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 2.06 trailing stop. After you've got a 1.82 profit, tighten the stop to 1.03. RAPT closed at 23.50 on Tuesday. Earnings Report Date: Aug 09, 2023. Beta: 0.31. Market-Cap: 807.108M. Optionable.
Apellis Pharmaceuticals, Inc. (APLS: Healthcare/Biotechnology) - SQUEEZE PLAY. APLS 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. APLS closed Tuesday at 24.22. The plan is to enter in the right direction by placing a BUY trigger at 26.19 and a SELL short trigger at 23.21. Once APLS establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 2.98. After you've collected a 9.44 profit, tighten the stop to 1.49. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 2.821B. 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.
Disclaimer
The RightLine Report is an information service for investors and traders. It is not a solicitation nor a recommendation or offer to buy or sell securities. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. The publishers of The RightLine Report are not brokers or financial advisors, and are not acting in any way to influence the purchase or sale of any security. Stock picks, entry points and exit points should be considered an information resource to assist the trader in developing a trading plan and it is the sole responsibility of the reader to conduct his or her own due diligence before executing a trade. Trading securities should be considered speculative with a high degree of volatility and risk.
The publishers of The RightLine Report recommend that anyone trading securities should do so with caution, exercise prudent trading discipline and have a personal risk management strategy in place before doing so. It is possible at this or some subsequent date, the publishers and staff of The Pro Right Line Corp. may own, buy or sell securities presented. The Pro Right Line Corp. is not a financial advisory service. Its publishers, owners or investors, are not liable for any losses or damages, monetary or otherwise, that result from the content of The RightLine Report. Past RightLine Report performance may not be indicative of future performance.
All subscriptions and/or use of the RightLine.net website are subject to RightLine's "Terms of Use" and "Subscriber Terms & Conditions" which are posted at www.rightline.net.
Any REDISTRIBUTION of the above information, without The RightLine's written consent, is STRICTLY PROHIBITED.
Copyright / The Pro Right Line Corporation - All Rights Reserved
Click Here To Unsubscribe