August 10, 2023 - The RightLine Report
Notes From The Editor
Understanding the significance of purchasing a stock at the ideal price and timing is common knowledge. However, when the decisive moment arrives, traders frequently find themselves uncertain about whether they should take action.
This type of uncertainty causes some folks to just sit on their hands and watch the action from the sidelines. Despite a longing desire to trade stocks profitably, they can't seem to press the BUY or SELL button. Fortunately there's a simple way to deal with this common problem.
First instead of worrying about whether the time is really "right," spend a few minutes planning what to do if it DOES turn out to be the right time, or if it DOESN'T. In other words, what will you do if the trade moves in your favor? And what will you do if the price moves in the wrong direction?
You can easily answer these questions by asking a few more. Do you plan to use an initial stop? Where will you set it? If the trade moves to your advantage, at what point will you move the stop up? If the trade moves against your position, are you willing to exit without hesitation at the pre-planned level?
Carefully pre-planning "what you will do" and "when you will do it" before you get into a position is much more important than finding exactly the "right" entry. But how do you get past the uncertainty at the moment of truth, that exact moment when you have to click the order button?
Luckily today's online brokerage technology allows us to implement our trading plans without having to "pull the trigger." We can now automate our entries and exits by setting the exact price to enter and exit well in advance of the actual entry. Many brokerages also allow clients to set trailing stops, so there's no reason for to worry about losing a lot of money on a bad trade.
Entering the details of a trade into your brokerage account and then letting the system take care of managing the trade is a good way to begin dealing with the uncertainty that keeps some of us from fulfilling our desires.
One final thought. Whenever you have lingering doubts about entering a trade that meets your criteria, just reduce the number of shares in the position to a bare minimum. This will compensate for any possible over-sensitivity to risk. In time it will also increase your confidence as profits accumulate.
Trade Well!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 08/10 08/10 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
OSTK 31.13 0.20 32.3 30.03 2.27/1.14 3.56
SIBN 20.67 0.45 20.97 19.4 1.57/0.79 1.9
BHVN 21.20 -0.05 21.94 20.29 1.65/0.83 2.72
RVMD 29.81 0.18 30.7 28.56 2.14/1.07 1.42
AVID 26.66 0.11 27.06 25.7 1.36/0.68 1.98
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
Equity markets ended Thursday with little change, as the latest US Consumer Price Index (CPI) inflation data indicated a continued slowdown. The headline CPI data for July was at 3.2%, slightly below the expected 3.3%. Meanwhile, the core CPI data, which excludes volatile food and energy prices, stood at 4.7%, aligning with expectations but slightly lower than the previous month's 4.8%. Despite starting the day with a decline, Treasury bond yields managed to rise by 0.1% to reach 4.1%. This trajectory of inflation data moving in a favorable direction has led the market to anticipate that the Federal Reserve will maintain its pause on raising interest rates for the rest of the year, although there will be one more CPI data release before the Fed's September 20 meeting.
The latest weekly jobless claims figures revealed early indications of a cooling labor market. While the jobless claims data remains generally healthy, a trend of increase is evident. The US labor market has been a strength for the economy, with low unemployment driving consumer demand. However, it's likely that the labor market will cool in the upcoming months, as leading indicators, including jobless claims and job openings, have displayed signs of moderation. Nevertheless, we anticipate that the unemployment rate won't increase as significantly as in past cycles, given the current labor market's tightness.
Aug 9, 2023 Aug 10, 2023
-------------------- --------------------
Dow 35,123.36 -191.13 35,176.15 52.79
Nasdaq 13,722.02 -162.31 13,737.99 15.97
S&P 500 4,467.71 -31.67 4,468.83 1.12
NYSE Volume 3.81B 4.52B
NYSE Advancers 1,289 1,282
NYSE Decliners 1,597 1,609
Nasdaq Volume 5.62B 5.31B
Nasdaq Advancers 1,624 1,994
Nasdaq Decliners 2,710 2,310
New Highs/Lows
08/03 08/04 08/07 08/08 08/09 08/10
--------------------------------------------
NYSE New Highs 76 111 102 64 77 72
NYSE New Lows 46 38 36 65 37 31
Nasdaq New Highs 60 69 74 62 78 79
Nasdaq New Lows 108 114 175 204 188 181
Stocks Covered Today Stock Splits
TRADER'S TIP: "Turning Hunter-Gatherers Into Investors"
Studies show that when it comes to intelligent investing, human beings just aren't wired very well. Investors are emotionally driven, and are usually unaware of their own self-destructive behavior. The instinctive "fight or flight" response in each of us serves an important purpose, but it doesn't lend itself to the capital markets. For example, in one study the majority of investors sold their winning positions to make up for losers, then held the losers way too long in hopes they would recover. This is the opposite of what should be done. Winning stocks tend to keep on winning, while losers usually keep losing. The most common management strategy used by successful traders is pretty simple. Get rid of losers quickly, and keep winners profitable with a stop order based exit strategy.
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 - 4468.83 August 10, 2023
52-Week High: 4607.07
52-Week Low: 3491.58
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4754.93
Resistance 2: 4635.26
Resistance 1: 4556.64
Pivot: 4515.59
Support 1: 4436.97
Support 2: 4395.92
Support 3: 4276.25
NASDAQ Composite - 13737.99 August 10, 2023
52-Week High: 14446.55
52-Week Low: 10088.83
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 15032.95
Resistance 2: 14543.39
Resistance 1: 14226.31
Pivot: 14053.83
Support 1: 13736.75
Support 2: 13564.27
Support 3: 13074.71
Dow Industrials - 35176.15 August 10, 2023
52-Week High: 35679.13
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 36550.24
Resistance 2: 35904.87
Resistance 1: 35485.24
Pivot: 35259.50
Support 1: 34839.87
Support 2: 34614.13
Support 3: 33968.76
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, August 07, 2023: 07-Aug 3:00 pm Consumer credit 07-Aug TUESDAY, AUGUST 8 Tuesday, August 08, 2023: 08-Aug 6:00 am NFIB optimism index 08-Aug 8:30 am U.S. trade balance 08-Aug 10:00 am U.S. wholesale inventories Wednesday, August 09, 2023: 09-Aug None scheduled Thursday, August 10, 2023: 10-Aug 8:30 am Initial jobless claims 10-Aug 8:30 am Consumer price index 10-Aug 8:30 am Core CPI 10-Aug 8:30 am CPI (year-over-year) 10-Aug 8:30 am Core CPI (year-over-year) 10-Aug 2:00 pm Treasury budget Friday, August 11, 2023: 11-Aug 8:30 am Producer price index 11-Aug 8:30 am Core PPI 11-Aug 8:30 am PPI (year-over-year) 11-Aug 8:30 am Core PPI (year-over-year) 11-Aug 10:00 am Consumer sentiment (prelim) 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: "Profits"
Most profits usually come from a relatively few big winning trades, while the remaining positions are made up of numerous small gainers and losers. This comes as a surprise to many traders, for most assume that a very high win-to-loss ratio is necessary to succeed in the markets. In fact, trying to maintain a high win-to-loss ratio usually results in traders taking small gainers too early, before the position can develop into it's full potential.
At the same time there is a tendency to ignore losers, to hope that they will reverse and turn into winners. While this is a common strategy for beginners, professionals know that it just doesn't work. All it takes is one big loser to undo several positive trades, so concentrate first on minimizing losses, then look to maximize gains by locking in profits as they accumulate.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
Overstock.com, Inc. (OSTK: Consumer Cyclical/Internet Retail) - 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. OSTK 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 32.3 and a SELL short trigger at 30.03. When OSTK 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 2.27 trailing stop. After you've got a 3.56 profit, tighten the stop to 1.14. OSTK closed at 31.13 on Thursday. Earnings Report Date: Oct 25, 2023. Beta: 3.55. Market-Cap: 1.407B. Optionable.
HEALTHCARE SECTOR
SI-BONE, Inc. (SIBN: Healthcare/Medical Devices) - SQUEEZE PLAY. Trader indecision has put SIBN 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 20.97 and a SELL short entry at 19.4. Now it's up to SIBN to show us which entry will be filled. Once the trade is underway place a 1.57 trailing stop, which can be tightened to 0.79 after you achieve a 1.9 profit. SIBN closed on Thursday at 20.67. Earnings Report Date: Nov 06, 2023. Beta: 0.93. Market-Cap: 799.646M. Optionable.
Biohaven Ltd. (BHVN: Healthcare/Biotechnology) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in BHVN'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 21.94 and a SELL order at 20.29. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.65 trailing stop. Tighten the stop to 0.83 once you have a 2.72 gain. BHVN closed Thursday at 21.20. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.446B. Optionable.
Revolution Medicines, Inc. (RVMD: Healthcare/Biotechnology) - SQUEEZE PLAY. RVMD traders on both sides of the fence are now locked in a head-to-head shootout. Thursday'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 30.7 and a SELL short trigger at 28.56. When one of the orders is filled, cancel the remaining order and enter a 2.14 trailing stop. When you've reached a 1.42 paper profit, tighten the stop to 1.07. RVMD closed at 29.81 on Thursday. Earnings Report Date: Nov 06, 2023. Beta: 1.43. Market-Cap: 3.169B. Optionable.
TECHNOLOGY SECTOR
Avid Technology, Inc. (AVID: Technology/Software-Application) - 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. AVID traders reached this state of stand-off on Thursday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 27.06 and a SELL short trigger at 25.7. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.36 which can be tightened to 0.68 on a 1.98 gain. AVID closed Thursday at 26.66. Earnings Report Date: Nov 06, 2023. Beta: 1.19. Market-Cap: 1.171B. 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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