August 25, 2022 - The RightLine Report
Notes From The Editor
One of the best parts about being a trader is that it gives you a front-row seat to the market's daily happenings, and puts you in touch with its ever-changing pulse. But the knowledge and insight you gain from observing stocks isn't limited to short-term trades; it can also help you with longer-term trading, or even with investing.
In the course of pursuing daytrading, swing trading, or other short-term set-ups, you'll inevitably run across stocks that also look great from a longer-term perspective. This is powerful stuff! When you find one of those stocks, make it a point to keep an eye on it - not just over the coming days, but for several weeks or months.
For example, let's say a stock has been trading in a large ascending channel for a few months. You first notice the stock when it's in the middle of that channel. Although that's not the best place to jump onboard, you know that a pullback and rebound from the bottom of the channel could afford a great longer-term entry point - especially if the market is in Bull mode. Similarly, a rollover from the top of the channel might offer a bearish entry point.
Using this simple observational technique, you can gradually build an evolving list of potential set-ups. This will add a powerful element to your trading strategy: time. Using longer-term set-ups, you can take advantage of gradually-evolving trends and underlying market tendencies that unfold over weeks and months, rather than days.
And what about stop placement? As a general rule of thumb, it's a good idea to give these trades much more room to breathe; you don't want to get stopped out by intraday "noise." One idea is to take a look at the stock's typical trading range over the course of a week, and then double it. This would be your initial stop. Also be aware of any upcoming earnings reports or other scheduled news announcements that might influence price action.
The market is as flexible as you want it to be. Customize your trading strategy to your own personal goals and preferences. Work with the flow of the market, rather than against it. Your account will thank you!
Here's to profits,
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 08/25 08/25 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
NOTV 21.55 0.65 22.09 1.87/0.94 2.52
KDNY 22.41 0.03 23.07 21.41 1.66/0.83 2.14
VRDN 23.99 -0.57 24.86 22.92 1.94/0.97 1.44
PUBM 20.88 0.59 21.26 1.47/0.74 2.24
GDYN 21.99 0.50 22.46 20.75 1.71/0.86 2.24
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 on Thursday as the market maintained watch on the Federal Reserve Bank Symposium in Jackson Hole, Wyoming, where several Fed officials are delivering commentary. The annual event will end on Friday with a keynote address from Chairman Jerome Powell, so investors are looking for any signs that the Central Bank may slow down its recent monetary tightening campaign. In economic headlines, inflation is at a new 40-year high, while unemployment claims unexpectedly declined. On the equities front, Salesforce (CRM $170) reported upbeat quarterly earnings and announced a share repurchase program, yet lowered its full-year outlook, while home furnishings retailer Williams-Sonoma (WSM $164) also beat earnings predictions and reiterated its guidance. The USD/dollar dropped from multi-decade highs, oil prices were also lower, gold moved upwards and treasuries were mixed.
Aug 24, 2022 Aug 25, 2022
-------------------- --------------------
Dow 32,969.23 59.64 33,291.78 322.55
Nasdaq 12,431.53 50.23 12,639.27 207.74
S&P 500 4,140.77 12.04 4,199.12 58.35
NYSE Volume 3.63B 3.59B
NYSE Advancers 2,037 2,550
NYSE Decliners 1,193 661
Nasdaq Volume 3.91B 4.31B
Nasdaq Advancers 2,810 3,134
Nasdaq Decliners 1,811 1,501
New Highs/Lows
08/18 08/19 08/22 08/23 08/24 08/25
--------------------------------------------
NYSE New Highs 55 26 20 29 38 43
NYSE New Lows 30 57 88 62 75 34
Nasdaq New Highs 79 46 42 65 54 53
Nasdaq New Lows 73 109 195 175 144 99
Stocks Covered Today Stock Splits
TRADER'S TIP: "Sizing Up a Bounce"
When looking for a new uptrend to emerge after a decline, consider the time and distance of the drop. There is usually a relationship between the amount of the decline and how long it will take for a rebound to get underway. Although a technical support such as a moving average or trend line may pinpoint the specific end of a "fall," you shouldn't expect a stock to rocket higher immediately after dropping for six weeks in a row.
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 - 4199.12 August 25, 2022
52-Week High: 4818.62
52-Week Low: 3636.85
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4470.64
Resistance 2: 4364.06
Resistance 1: 4296.27
Pivot: 4257.48
Support 1: 4189.69
Support 2: 4150.90
Support 3: 4044.32
NASDAQ Composite - 12639.27 August 25, 2022
52-Week High: 16212.23
52-Week Low: 10565.14
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 13866.16
Resistance 2: 13359.94
Resistance 1: 13032.58
Pivot: 12853.72
Support 1: 12526.36
Support 2: 12347.50
Support 3: 11841.28
Dow Industrials - 33291.78 August 25, 2022
52-Week High: 36952.65
52-Week Low: 29653.27
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 35253.82
Resistance 2: 34555.42
Resistance 1: 34131.07
Pivot: 33857.01
Support 1: 33432.67
Support 2: 33158.61
Support 3: 32460.21
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, August 22, 2022: 22-Aug 8:30 am Chicago Fed national activity index Tuesday, August 23, 2022: 23-Aug 9:45 am 23-Aug 9:45 am 23-Aug 10 am New home sales (SAAR) Wednesday, August 24, 2022: 24-Aug 8:30 am Durable goods orders 24-Aug 8:30 am Core capital equipment orders 24-Aug 10 am Pending home sales index Thursday, August 25, 2022: 25-Aug 8:30 am Initial jobless claims 25-Aug 8:30 am Continuing jobless claims 25-Aug 8:30 am Real gross domestic product. revision (SAAR) 25-Aug 8:30 am Real gross domestic income (SAAR) 25-Aug 8:30 am Real final sales to domestic purchasers, revision (SAAR) Friday, August 26, 2022: 26-Aug 8:30 am PCE price index monthly 26-Aug 8:30 am Core PCE price index monthly 26-Aug 8:30 am PCE price index year-over-year 26-Aug 8:30 am Core PCE price index year-over-year 26-Aug 8:30 am Real disposable incomes 26-Aug 8:30 am Real consumer spending 26-Aug 8:30 am Nominal personal incomes 26-Aug 8:30 am Nominal consumer spending 26-Aug 8:30 am Trade in goods, advance 26-Aug 10 am UMich consumer sentiment index (final) 26-Aug 10 am UMich 5-year inflation expectations (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: "Earnings: Holding Through or Getting Back In"
It's no secret that we believe in avoiding undue risk. Because earnings reports often end up surprising traders, we often suggest closing out positions before the company announces earnings. However, if a stock is moving in a solid trend (long or short) and earnings estimates support that trend, experienced traders will often elect to drastically reduce the number of shares in their position and hold them through the earnings announcement.
In some cases traders jump back into the trade after the company reports better than expected earnings. This can be profitable at times, but don't chase the stock. If it has jumped more than 5% beyond your exit point, you're probably better off waiting for price to pull back to a moving average support level.
Stocks Covered in This Issue
HEALTHCARE SECTOR
Inotiv, Inc. (NOTV: Healthcare/Diagnostics & Research) - 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. NOTV's reaction to support on Thursday created a Bullish Bounce setup with a BUY entry trigger at 22.09. Use a 1.87 trailing stop, which should work well with NOTV's typical daily range. Tighten it to 0.94 on a 2.52 profit. NOTV closed at 21.55 on Thursday. Earnings Report Date: N/A. Beta: 2.77. Market-Cap: 551.561M. Optionable.
Chinook Therapeutics, Inc. (KDNY: Healthcare/Biotechnology) - SQUEEZE PLAY. KDNY shareholders know what it feels like to be squeezed. Thursday'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. KDNY closed Thursday at 22.41. The plan is to enter in the right direction by placing a BUY trigger at 23.07 and a SELL short trigger at 21.41. Once KDNY establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.66. After you've collected a 2.14 profit, tighten the stop to 0.83. Earnings Report Date: Nov 01, 2022. Beta: N/A. Market-Cap: 1.41B. Optionable.
Viridian Therapeutics, Inc. (VRDN: Healthcare/Biotechnology) - SQUEEZE PLAY. The ticker for Thursday's session shows VRDN is now stuck in a tight price band. With the cyclical contraction and expansion nature of volatility in force, we should see a new period of price expansion in the days ahead. To improve the odds of catching the next directional wave, place a BUY trigger at 24.86 and a SELL short trigger at 22.92. When VRDN starts moving out of its narrow range, your order will be triggered. Once you're in the trade, cancel the opposing trigger and set a 1.94 trailing stop. Upon reaching a 1.44 profit, resize the stop to 0.97. Earnings Report Date: Nov 02, 2022. Beta: 1.18. Market-Cap: 913.817M. Optionable.
TECHNOLOGY SECTOR
PubMatic, Inc. (PUBM: Technology/Software-Application) - BULLISH BOUNCE. Among other strengths, the Bullish Bounce protects traders from buying a stock "at the top" of its current cycle. The entry into this setup always takes place in upward-moving stocks that have retreated a bit under normal conditions. Now sitting at 20.88, PUBM is on our radar for a BUY entry at 21.26. If you purchase shares of PUBM, be sure to also place a trailing stop of 1.47. Snug it up to 0.74 on a 2.24 gain. Earnings Report Date: Nov 07, 2022. Beta: N/A. Market-Cap: 1.094B. Optionable.
Grid Dynamics Holdings, Inc. (GDYN: Technology/Information Technology Services) - 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. GDYN 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 22.46 and a SELL short trigger at 20.75. When GDYN 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 1.71 trailing stop. After you've got a 2.24 profit, tighten the stop to 0.86. GDYN closed at 21.99 on Thursday. Earnings Report Date: Nov 02, 2022. Beta: 1.13. Market-Cap: 1.48B. 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
---------------- ------- -------- ------- ------ -------
Nasdaq Inc NDAQ 7/20/2022 8/29/2022 3-for-1 Yes
Tesla TSLA 8/5/2022 8/25/2022 3-for-1 Yes
Palo Alto Net PANW 8/23/22 9/14/22 3-for-1 Yes
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