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August 8, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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The Trader's Mind
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"QUICK LIST"
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Stock 08/08 08/08 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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BOOT 97.58 -0.51 99.06 7.82/3.91 5.04
JWN 22.38 0.26 22.68 1.82/0.91 1.5
XP 26.25 0.07 26.6 2.21/1.11 1.86
EH 21.30 1.11 21.73 2.94/1.47 2.94
ASAN 21.55 -0.52 21.88 20.41 1.47/0.74 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" at https://prorightline.com/index.php/rightline-report-quick-list/. In addition,always use the RightLine Risk Calculator before entering any position. For access to the Risk Calculator, go to https://prorightline.com/index.php/risk-calculator/. To learn more about controlling risk go to the RightLine Risk Control System at https://prorightline.com/index.php/rightline-risk-control-system/ For a glossary of terms unique to The RightLine Report go to: https://prorightline.com/index.php/glossary/ Questions? Send us an email using our contact form at: https://prorightline.com/index.php/contact-us/
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MARKET SUMMARY
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On Tuesday the S&P 500 (SPX) and Nasdaq Composite (COMP) briefly reached their lowest points in four weeks. This drop was triggered by Moody's, a company that rates financial stability, lowering the credit ratings of several US regional banks. Moody's mentioned that these banks were struggling with "growing profitability pressures" due to interest rates and their involvement in commercial real estate. This raised concerns about smaller and medium-sized banks, especially because there have been bank closures in the sector recently. This downgrade came just a week after Fitch Ratings unexpectedly lowered its rating on US Treasuries. This surprise move had a negative impact on the stock market. Although the downgrade initially caused stocks to fall, the declines were limited by strong earnings reports from other industries. Health care stocks were the leaders in the market throughout the day. Financial and technology sectors were weaker, with the KBW Regional Banking Index (KRX) dropping by around 1.5%. In contrast, energy stocks performed well as crude oil futures increased by more than 1%. The VIX, which measures market volatility, spiked to its highest level since late May before decreasing later in the session. The USD/Dollar Index (DXY) gained strength due to expectations that domestic interest rates would remain higher than those in other countries. Aug 7, 2023 Aug 8, 2023
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Dow 35,473.13 407.51 35,314.49 -158.64
Nasdaq 13,994.40 85.16 13,884.32 -110.07
S&P 500 4,518.44 40.41 4,499.38 -19.06
NYSE Volume 3.5B 3.89B
NYSE Advancers 1,851 1,089
NYSE Decliners 1,074 1,814
Nasdaq Volume 4.91B 5.3B
Nasdaq Advancers 2,046 1,674
Nasdaq Decliners 2,272 2,599
New Highs/Lows
08/01 08/02 08/03 08/04 08/07 08/08
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NYSE New Highs 107 65 76 111 102 64
NYSE New Lows 17 33 46 38 36 65
Nasdaq New Highs 101 56 60 69 74 62
Nasdaq New Lows 93 123 108 114 175 204
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TRADER'S TIP:
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TRADER'S TIP: "Position Size: Finding The Right Fit" "Many people believe that in order to make healthy profits in the market that they need to own a large position (a thousand shares or whatever your big block is for you) or more. I have found repeatedly that this is not the case. In fact, it may even work against you. Trading is tremendously psychological. When you have a position that is large enough that normal fluctuations, a point or two movement in the wrong direction causes you to start to mentally calculate how much money you have lost, you begin to make decisions out of fear. Big block positions also are a leading cause of ulcers (don't worry - I made that up). When you make your trading decisions from a basis of fear and greed - you betcha, they are lousy decisions. Think in these terms. A 200-share position, that moves 20 points made you a $4,000 profit. You were able to keep a 3 or 4 point trailing stop loss on the stock meaning you were only at risk $600 to $800 at any time. An aura of tranquility pervades. When you have this feeling of tranquility is when you make your better decisions. I guarantee it. The rule of thumb is this. If your stock goes down a couple of points and your mind becomes a mental calculator, constantly calculating that you are now down two grand, then your block size is probably bigger than necessary. If you think about the trade calmly and in terms of the boundaries of your trading plan, then you are likely on track." ~ Roger Perry **************************
THE TECHNICAL ANALYST
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This section contains important technical data for the three major market averages -- the S&P 500, the Nasdaq Comp Index, and the Dow Industrial Average. For guidance on how to use this information, go to: https://prorightline.com/index.php/technical-analyst-section-rightline-report/ S&P 500 - 4499.38 August 8, 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 https://www.prorightline.com/rlch/080823SPX.jpg--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" at this link: https://prorightline.com/index.php/economic-indicator-effects/
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TRADER'S TIP:
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TRADER'S TIP: "Looking for a Good Fortune Teller?" You don't really need a psychic if you plan each position with a "what if" approach. Before entering any trade always ask - "What will I do if price moves in my favor, and what will I do if it moves against me?" Since most traders and investors never consider these questions at all, simply writing down specific answers will put you WAY ahead of the game. Remember to set any bias aside, and play the hand that's dealt. ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR Boot Barn Holdings, Inc. (BOOT: Consumer Cyclical/Apparel Retail) - NEW HIGH DIP. BOOT is still showing the bullish strength that gave this stock a new 12-month high just a few days ago. Tuesday's intra-day price action near moving average support tells us that another run to the high-mark may be in the works. Get ready to BUY shares if BOOT reaches our trigger price of 99.06, and enter a 7.82 trailing stop. The stop can be resized to 3.91 once you have a 5.04 profit. BOOT closed Tuesday at 97.58. Earnings Report Date: Oct 24, 2023. Beta: 2.36. Market-Cap: 2.924B. Optionable. Nordstrom, Inc. (JWN: Consumer Cyclical/Department Stores) - BULLISH BOUNCE. Another bullish bouncer, JWN appears ready to resume trading in an uptrend after recent selling forced the stock lower for several days. Tuesday's positive price action near Moving Average support says it's time to BUY shares if JWN reaches our entry trigger set at 22.68. Also place a 1.82 trailing stop which can be narrowed to 0.91 when you reach a 1.5 profit. JWN closed Tuesday at 22.38. Earnings Report Date: Aug 24, 2023. Beta: 2.32. Market-Cap: 3.614B. Optionable. FINANCIAL SERVICES SECTOR XP Inc. (XP: Financial Services/Capital Markets) - BULLISH BOUNCE. Positive price behavior near moving average support on Tuesday qualifies XP for a Bullish Bounce setup. After several sessions of declining prices, XP should soon begin trading in step with its established weekly uptrend. Tell your broker to BUY shares if XP moves up to our entry trigger set at 26.6. You can also enter a 2.21 trailing stop, to be replaced with a 1.11 trailing stop when you obtain a 1.86 profit. XP closed Tuesday at 26.25. Earnings Report Date: Aug 14, 2023. Beta: 1.65. Market-Cap: 14.357B. Optionable. INDUSTRIALS SECTOR EHang Holdings Limited (EH: Industrials/Aerospace & Defense) - BULLISH BOUNCE. Entering a position in the early stages of a bounce is great way to get on board an up-trending stock. The "Bullish Bounce" setup identifies probable candidates by evaluating the trading action that takes place near support levels. EH's behavior on Tuesday could very well be a sign that a new bounce is underway. Place a BUY trigger at 21.73. In the event your trigger is met, also place a 2.94 trailing stop which can be trimmed down to 1.47 when you have a 2.94 profit. EH closed Tuesday at 21.30. Earnings Report Date: Aug 16, 2023. Beta: 0.79. Market-Cap: 1.286B. Optionable. TECHNOLOGY SECTOR Asana, Inc. (ASAN: Technology/Software-Application) - SQUEEZE PLAY. One interesting trait of price volatility is that it cycles back and forth through periods of expansion and contraction. Stocks that have recently seen their daily price range shift from an average or wide range to an extremely contracted state are ideal candidates for expansive price moves. In many cases the next move is relatively fast and covers a sizable amount of territory. To take advantage of these trades we use both a BUY and a SELL entry. This allows us to enter in whichever direction the breakout takes. In ASAN's case we will enter a BUY should it reach the 21.88 level, or a SELL short trade if it drops to 20.41. As usual a trailing stop is essential, 1.47 which should be tightened to 0.74 on a 2.24 gain. ASAN closed Tuesday at 21.55. Earnings Report Date: Sep 05, 2023. Beta: 1.21. Market-Cap: 4.673B. Optionable. IMPORTANT: Before entering any recommended positions, always use the RightLine "Risk Control System" to determine the level of acceptable risk and the maximum number of shares to buy. Link: https://prorightline.com/index.php/rightline-risk-control-system/ Use "Gap Adjusted Entries" to reset the Entry Price for stocks that gap beyond recommended entry levels. Link: https://prorightline.com/index.php/gap-adjusted-entries-increase-profits/ ***********************************
STOCK SPLIT SUMMARY
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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 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. For a closer look at the different stages of a Stock Split go to: https://prorightline.com/index.php/trading-stock-splits-stages/ ======================================================================
Best of luck and have a Great Week!
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