August 22, 2023 - The RightLine Report
Notes From The Editor
Trading stocks is much more rewarding when you view it as a means of self-improvement rather than just a way to earn money. It makes sense when you think about it. Money is a result of learning to trade well, and the process of learning to trade well requires us to improve on a number of important levels.
This means we have to change the way we think and act.
Most traders would agree that making the changes necessary to be a successful stock trader is desirable. However, just because something is "desirable" doesn't mean we're willing to make the effort necessary to change the way we feel about it.
For instance, the majority of people are of the opinion that a Bull market is the only market where profits can be made. Bull equals good, and bear equals bad, right?
Wrong. While the rest of the world may view the markets this way, you already know it isn't true for traders who have learned how to take advantage of both up and down trends. And though there are plenty of reasons why the majority of investors prefer bull markets, many of these "reasons" are simply one-dimensional beliefs that limit opportunity.
The process of moving beyond our trading limitations involves becoming aware of the false assumptions and bias we each have. Once we become conscious of the mental and emotional limits that exist inside of us, we can go about the business of upgrading our perspectives.
Learning how to view market action as neither good nor bad begins with paying attention to your feelings. Notice and accept how you feel when the market goes up, and when it goes down. Then remind yourself that you can choose to perceive market movement any way you want to.
When the market goes down, focus on the fact that a down market presents just as much opportunity as an up market. Be persistent. It can take months to replace limiting beliefs with new and more effective ones. Realize that although all of us have been taught that "down" is our enemy, "down" is actually is just as much our ally as "up."
The trend really is your friend ... even when the trend is down. It takes practice to accept all price movement as opportunity, yet this is a necessary step toward bringing about the changes in thinking that produce consistent success.
Trade well!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 08/22 08/22 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
BOOM 23.83 -0.25 24.37 22.77 1.6/0.8 1.36
URGN 20.27 -0.07 21.06 19.1 1.96/0.98 4.92
IMVT 20.57 -0.01 21.26 19.78 1.48/0.74 1.68
WLDN 22.99 0.03 23.38 1.5/0.75 2.52
FROG 27.20 0.20 27.76 26.18 1.58/0.79 2.18
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
Stocks concluded the day with losses on Tuesday due to mixed outcomes from US department-store earnings. Macy's, a prominent retailer, reported higher-than-expected credit card delinquencies in the second quarter, raising concerns about the resilience of the consumer. Adding to the dampened sentiment, S&P Global downgraded the ratings of five regional banks on Monday, causing the financials sector to decline by nearly 1% by the close of Tueday's trading session. S&P Global cited elevated funding costs and worries about profitability in the current higher-interest-rate environment as the main reasons for the downgrade.
In the commodities arena, the day witnessed a mix of results, with slight declines in oil prices and modest gains in gold.
Momentum in rates took a pause Tuesday, with the 10-year Treasury yield remaining stable above 4.3% after reaching a 16-year high earlier this week. While the previous year's surge in rates was fueled by substantial inflation, the recent upward trajectory over the past couple of months has been fueled by unexpectedly robust economic performance. This has reinforced the argument for the Federal Reserve to maintain its tight policy stance for an extended period.
All eyes are on Fed Chair Powell's annual speech at Jackson Hole this Friday, as investors seek more clarity on the central bank's intentions regarding future rate decisions. It's our view that there's credible support for the Fed to stay on hold for the remainder of the year given the downward trend in inflation. Nevertheless, considering the distance still to go in bringing inflation back in line with the Fed's 2% target, another rate hike can't be entirely ruled out. This possibility is particularly relevant if wage growth remains high and persistent shelter prices hinder a broader moderation in consumer prices.
Aug 21, 2023 Aug 22, 2023
-------------------- --------------------
Dow 34,463.69 -36.97 34,288.83 -174.86
Nasdaq 13,497.59 206.81 13,505.87 8.28
S&P 500 4,399.77 30.06 4,387.55 -12.22
NYSE Volume 3.75B 3.54B
NYSE Advancers 1,113 1,238
NYSE Decliners 1,804 1,672
Nasdaq Volume 4.38B 4.29B
Nasdaq Advancers 2,074 1,765
Nasdaq Decliners 2,264 2,526
New Highs/Lows
08/15 08/16 08/17 08/18 08/21 08/22
--------------------------------------------
NYSE New Highs 34 42 19 16 31 37
NYSE New Lows 80 95 88 92 87 81
Nasdaq New Highs 66 45 30 32 44 43
Nasdaq New Lows 224 284 291 263 215 242
Stocks Covered Today Stock Splits
TRADER'S TIP: "Staying Focused On What You Need To Learn"
"There is a tremendous difference between focusing on money and focusing on using your trading as an exercise to identify what you need to learn. The first will cause you to focus on what the markets are giving you or are taking away from you. The second perspective causes you to focus your attention on your ability to give yourself money. With the first perspective, you are placing some of the responsibility onto the markets to do something for you. With the second perspective, you assume all the responsibility."
~ Mark Douglas, "The Disciplined Trader"
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 - 4387.55 August 22, 2023
52-Week High: 4607.07
52-Week Low: 3491.58
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4708.48
Resistance 2: 4553.46
Resistance 1: 4461.58
Pivot: 4398.45
Support 1: 4306.57
Support 2: 4243.43
Support 3: 4088.41
NASDAQ Composite - 13505.87 August 22, 2023
52-Week High: 14446.55
52-Week Low: 10088.83
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 14668.70
Resistance 2: 14041.30
Resistance 1: 13666.04
Pivot: 13413.90
Support 1: 13038.64
Support 2: 12786.50
Support 3: 12159.10
Dow Industrials - 34288.83 August 22, 2023
52-Week High: 35679.13
52-Week Low: 28660.94
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 36844.28
Resistance 2: 35772.02
Resistance 1: 35136.34
Pivot: 34699.76
Support 1: 34064.08
Support 2: 33627.50
Support 3: 32555.24
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Wednesday, August 23, 2023: 23-Aug 9:45 am S&P flash U.S. services PMI 23-Aug 9:45 am S&P flash U.S. manufacturing PMI 23-Aug 10:00 am New home sales Thursday, August 24, 2023: 24-Aug 8:30 am Initial jobless claims 24-Aug 8:30 am Durable-goods orders 24-Aug 8:30 am Durable-goods minus transportation Friday, August 25, 2023: 25-Aug 10:00 am U Mich consumer sentiment, final 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: "Use More Than One Indicator"
Instead of relying on just one indicator to make trade decisions, use several as part of your overall strategy. Watch for a convergence of signals because it increases the odds of the expected outcome.
Stocks Covered in This Issue
ENERGY SECTOR
DMC Global Inc. (BOOM: Energy/Oil & Gas Equipment & Services) - SQUEEZE PLAY. Tuesday's narrow price range has created a potentially profitable setup in BOOM, 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 24.37 and a SELL short entry at 22.77. Let BOOM's price action determine your long or short entry. Once the order is filled, place a 1.6 trailing stop, and tighten it to 0.8 upon getting a 1.36 gain. BOOM closed Tuesday at 23.83. Earnings Report Date: Nov 01, 2023. Beta: 1.66. Market-Cap: 470.983M. Optionable.
HEALTHCARE SECTOR
UroGen Pharma Ltd. (URGN: Healthcare/Biotechnology) - SQUEEZE PLAY. URGN is stuck in a Bull/Bear deadlock. Fortunately for traders this impasse should be resolved soon, with one side or the other taking control. We want to be positioned for a potential quick move up or down, so get ready to catch this train with a BUY entry at 21.06 and a SELL short entry at 19.1. Once your trade is filled, enter a 1.96 trailing stop. Tighten it to 0.98 after a 4.92 gain. URGN closed on Tuesday at 20.27. Earnings Report Date: Nov 08, 2023. Beta: 0.91. Market-Cap: 613.834M. Optionable.
Immunovant, Inc. (IMVT: Healthcare/Biotechnology) - SQUEEZE PLAY. Traders are feeling the pressure as IMVT'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 21.26 and a SELL short entry at 19.78. IMVT's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.48 trailing stop. Tighten it to 0.74 after you get a 1.68 gain. IMVT closed Tuesday at 20.57. Earnings Report Date: Nov 02, 2023. Beta: 0.95. Market-Cap: 2.688B. Optionable.
INDUSTRIALS SECTOR
Willdan Group, Inc. (WLDN: Industrials/Engineering & Construction) - BULLISH BOUNCE. Everyone familiar with price charts knows that a stock tends to bounce its way higher rather than move in a straight line. The lower levels of these short-term rebounds offer a safe and often early entry into stocks that are in the process of establishing longer-term uptrends. WLDN's reaction to support on Tuesday created a Bullish Bounce setup with a BUY entry trigger at 23.38. Use a 1.5 trailing stop, which should work well with WLDN's typical daily range. Tighten it to 0.75 on a 2.52 profit. WLDN closed at 22.99 on Tuesday. Earnings Report Date: Nov 01, 2023. Beta: 1.36. Market-Cap: 312.549M. Optionable.
TECHNOLOGY SECTOR
JFrog Ltd. (FROG: Technology/Software-Application) - SQUEEZE PLAY. A look at FROG'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 27.76 and a SELL short trigger at 26.18. Once FROG shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.58 and tighten to 0.79 on a 2.18 gain. FROG closed Tuesday at 27.20. Earnings Report Date: Oct 31, 2023. Beta: 0.55. Market-Cap: 2.823B. 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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