August 3, 2023 - The RightLine Report
Notes From The Editor
We recently covered three common pitfalls that can trap traders, making it more difficult to succeed over the long-run. Let's look at two more of these mistakes. What are their causes, and how can they be avoided?
Mistake #4: Failing to control your emotions.
Unless you happen to be a robot with an unfeeling CPU brain, your trading successes and failures will produce an emotional reaction. For example, imagine that you're on a nice winning streak. You've had three winning trades in a row, each producing a larger profit than the last. You feel excited and even a bit elated. Your trading strategy is paying off! However, the problem emerges when your start to become careless. You feel a bit invincible, as if you suddenly have this all figured out. You start to let greed influence your decisions, jumping into less-than-promising trades and failing to use solid risk management. The resulting carelessness quickly leads to a string of losing trades - and before you know it, your winnings have been erased.
Dangers also arise when fear enters the equation; it clouds your decision-making and leads to trading that is based on your emotions, rather than the price action. Thinking less rationally, you might bail out of profitable positions before they've realized their full potential, or sell a position for a loss even though it hasn't triggered your stop. Not a good state of affairs.
The solution is to have a trading system that's emotion-proof. There's tremendous value in setting rules for yourself. Always use risk management strategies, regardless of how you're feeling at the time. And always, always honor your stops.
Also make it a point to become more self-aware; it's okay to feel those fundamental emotions (hey, that's what makes us human!), as long as you remember to insulate them from your trading.
Mistake #5: Holding on to losing positions.
One of the most frustrating aspects of trading is when you sell out of a position for a loss, only to see it snap back and move in the direction you originally thought it would. "Arrgh," you think, "if I just would've held on a bit longer, I would've been fine!"
This line of thinking can get you into a heap of trouble.
While some trades will bounce back after you're stopped out, there are also cases where a stock will keep moving against you. As you continue to hold out for a rebound and recovery, your losses mount. What was a manageable loss may turn into a sizeable hit to your account.
The cure to this malady is simple: don't hold on to losers! Start each and every trade with a clearly-defined stop. If that level is violated, you're out of the position with your skin intact, ready to move on. Also consider placing that stop-loss with your brokerage - what's known as a "hard stop" - to remove all guesswork from the equation.
In the next RightLine Report we'll explore more of these common trading traps. While the market landscape is littered with obstacles, the good news is that you can spot them on the horizon, steer clear, and continue your journey to lasting success.
Here's to profits,
Kent Barton Senior Analyst
Editorial
Quick List
Market Summary
Technical Analyst
Market Calendar
Stocks Covered Today
Stock Splits
Quick List
Stock 08/03 08/03 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
INBK 22.45 0.37 22.96 21.26 1.7/0.85 1.46
HROW 21.42 0.29 21.73 1.37/0.69 2.32
TWST 20.67 -0.72 21.78 19.85 1.93/0.97 2.92
ASAN 22.06 -0.53 22.99 21.38 1.61/0.81 2.08
EBIX 27.07 -0.75 28 25.67 2.33/1.17 4.32
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.
Editorial
Quick List
Market Summary
Technical Analyst
Market Calendar
Stocks Covered Today
Stock Splits
Market Summary
On Thursday, the major US stock indexes faced another challenging day as traders refocused on quarterly earnings and anticipated Friday's jobs report. The recent surprise credit rating downgrade for the USA by Fitch Ratings added to market volatility, and 10-year Treasury yields reached their highest level in almost 10 months. Interestingly, US government bonds were still perceived as a safe haven despite the credit-rating agency's assessment of the country's debt.
The July Employment Report from the Labor Department, set to be released on Friday, will be crucial for determining the market's short-term direction. The wage data in the report will be closely analyzed for clues about potential future interest rate hikes by the Federal Reserve. If the job growth and unemployment numbers grab headlines, the wage data could also play a significant role in shaping the market's reaction. Positive wage numbers might raise concerns about more aggressive rate hikes from the Fed.
Energy emerged as one of the strongest sectors on Thursday, fueled by nearly a 3% surge in crude oil futures. Consumer Discretionary shares and regional bank stocks also recovered from the previous day's losses. However, Utilities were among the weakest sectors, with the Philadelphia Utility Index (UTY) reaching a near four-week low.
Aug 2, 2023 Aug 3, 2023
-------------------- --------------------
Dow 35,282.52 -348.16 35,215.89 -66.63
Nasdaq 13,973.45 -310.47 13,959.72 -13.73
S&P 500 4,513.39 -63.34 4,501.89 -11.50
NYSE Volume 4.28B 4.15B
NYSE Advancers 664 1,117
NYSE Decliners 2,280 1,820
Nasdaq Volume 5.5B 6.06B
Nasdaq Advancers 1,223 1,987
Nasdaq Decliners 3,141 2,403
New Highs/Lows
07/27 07/28 07/31 08/01 08/02 08/03
--------------------------------------------
NYSE New Highs 151 119 152 107 65 76
NYSE New Lows 17 12 8 17 33 46
Nasdaq New Highs 171 126 149 101 56 60
Nasdaq New Lows 109 85 64 93 123 108
Editorial
Quick List
Market Summary
Technical Analyst
Market Calendar
Stocks Covered Today
Stock Splits
TRADER'S TIP: "Mistakes"
"The greatest mistake you can make in life is to be continually fearing you will make one."
~ Elbert Hubbard
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 - 4501.89 August 3, 2023
52-Week High: 4607.07
52-Week Low: 3491.58
Daily Trend: DOWN
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 - 13959.72 August 3, 2023
52-Week High: 14446.55
52-Week Low: 10088.83
Daily Trend: DOWN
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 - 35215.89 August 3, 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
Editorial
Quick List
Market Summary
Technical Analyst
Market Calendar
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
Editorial
Quick List
Market Summary
Technical Analyst
Market Calendar
Stocks Covered Today
Stock Splits
TRADER'S TIP: "Monthly Stock Options Expirations"
US stock options expire at 11:59AM on the third Saturday of each month. Since most retail traders can't trade options on Saturday, this equates to 4:00pm Eastern Time closing bell. This date changes to the third Thursday at 4:00pm whenever Friday is a holiday.
Stocks Covered in This Issue
FINANCIAL SERVICES SECTOR
First Internet Bancorp (INBK: Financial Services/Banks-Regional) - SQUEEZE PLAY. Thursday's narrow price range has created a potentially profitable setup in INBK, 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 22.96 and a SELL short entry at 21.26. Let INBK's price action determine your long or short entry. Once the order is filled, place a 1.7 trailing stop, and tighten it to 0.85 upon getting a 1.46 gain. INBK closed Thursday at 22.45. Earnings Report Date: Oct 17, 2023. Beta: 0.61. Market-Cap: 199.928M. Optionable.
HEALTHCARE SECTOR
Harrow Health, Inc. (HROW: Healthcare/Drug Manufacturers-Specialty & Generic) - BULLISH BOUNCE. This trader-friendly setup turns repetitive stock behavior into real profits. Based on the tendency for up-trending stocks to drop briefly and then resume the up-trend, the Bullish Bounce places traders into excellent stocks when conditions are primed for more skyward movement. HROW's current price action near moving average support signals a potential BUY entry at 21.73, followed by a 1.37 trailing stop which can be tightened to 0.69 upon earning 2.32. HROW closed Thursday at 21.42. Earnings Report Date: Aug 09, 2023. Beta: 0.19. Market-Cap: 728.309M. Optionable.
Twist Bioscience Corporation (TWST: Healthcare/Diagnostics & Research) - SQUEEZE PLAY. TWST 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 21.78 and a SELL short entry at 19.85. Once your trade is filled, enter a 1.93 trailing stop. Tighten it to 0.97 after a 2.92 gain. TWST closed on Thursday at 20.67. Earnings Report Date: Aug 04, 2023. Beta: 1.25. Market-Cap: 1.181B. Optionable.
TECHNOLOGY SECTOR
Asana, Inc. (ASAN: Technology/Software-Application) - SQUEEZE PLAY. Traders are feeling the pressure as ASAN's intra-day price range on Thursday 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 22.99 and a SELL short entry at 21.38. ASAN's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.61 trailing stop. Tighten it to 0.81 after you get a 2.08 gain. ASAN closed Thursday at 22.06. Earnings Report Date: Sep 05, 2023. Beta: 1.21. Market-Cap: 4.783B. Optionable.
Ebix, Inc. (EBIX: Technology/Software-Application) - SQUEEZE PLAY. A look at EBIX'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 28 and a SELL short trigger at 25.67. Once EBIX shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 2.33 and tighten to 1.17 on a 4.32 gain. EBIX closed Thursday at 27.07. Earnings Report Date: Aug 09, 2023. Beta: 2.45. Market-Cap: 836.501M. 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.
Editorial
Quick List
Market Summary
Technical Analyst
Market Calendar
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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