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December 1, 2022 - The RightLine Report
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NOTES FROM THE EDITOR
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There are a lot of myths and misconceptions about trading, but one is more misleading and damaging than all the others. It's the notion that only "experts" can trade successfully. The market is so complex, according to this line of thinking, that only paid professionals can figure out what's going on. Send your money to a broker or a mutual fund. They know better. Or at least, that's what they'd like you to believe.
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"QUICK LIST"
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Stock 12/01 12/01 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
AVNT 35.16 0.54 35.74 33.46 2.28/1.14 2.94
JILL 25.79 0.35 26.13 1.77/0.89 2.1
DWAC 22.37 -0.44 23.39 21.48 1.91/0.96 5.88
MORF 27.69 0.17 28.27 25.98 2.29/1.15 3.8
TCX 31.03 0.32 32.33 29.71 2.62/1.31 5.1
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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US stocks closed in a mixed fashion on Thursday, as traders continue to obsorb Federal Reserve Bank Chairman Jerome Powell's recent less-hawkish commentary suggesting a slowing of the pace of the central bank's rate hike campaign within the next few weeks. In economic news, the ISM Manufacturing Index slipped into contraction territory for the first time since May of 2020, while construction spending dropped more than expected. In addition, personal income and spending were up, while inflation cooled off though it remains elevated. On the equities front, Costco Wholesale's (COST $504) November sales growth was below forecasts, Dollar General (DG $236) announced disappointing earnings and guidance. Treasury yields and the USD/dollar were down, oil and gold moved upward in price. Nov 30, 2022 Dec 1, 2022
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Dow 34,589.77 737.24 34,395.01 -194.76
Nasdaq 11,468.00 484.22 11,482.45 14.45
S&P 500 4,080.11 122.48 4,076.57 -3.54
NYSE Volume 6.71B 4.57B
NYSE Advancers 2,731 1,746
NYSE Decliners 456 1,395
Nasdaq Volume 6.73B 5.21B
Nasdaq Advancers 3,617 2,476
Nasdaq Decliners 1,129 2,131
New Highs/Lows
11/24 11/25 11/28 11/29 11/30 12/01
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NYSE New Highs 0 63 47 46 82 104
NYSE New Lows 0 30 59 68 66 25
Nasdaq New Highs 0 92 118 85 134 126
Nasdaq New Lows 0 96 189 189 218 107
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TRADER'S TIP:
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TRADER'S TIP: "EMAs, SMAs, or DMAs?" Did you know that EMAs - Exponential Moving Averages - are calculated based on "yesterday's" EMA? That's where the "exponential" part comes in. This means that if you're looking at a 200 Daily EMA based on 500 days of data vs. 2000 days of data, the results will be different. This explains why various charts programs display differing EMAs for the same stock. Though this calculation also affects the shorter moving averages like the 22 and 50 DMA (Daily Moving Average), it is not as dramatic as with the 200 EMA. For daily charts the most widely used 200 MA is the 200 SMA (Simple Moving Average). However, in recent years some traders have begun using 200 EMAs because of the default settings in the charting packages. It pays to know which you are viewing. For the record, at RightLine we use EMAs for all moving averages except the 200 DMA, for which we use the SMA. One powerful feature found in RightLine and some other charting programs is the ability to change the time frame referenced on the chart. While this is a very helpful feature, be aware that changing this setting will affect any displayed EMAs (Exponential Moving Average) lines. **************************
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 - 4076.57 December 1, 2022 52-Week High: 4818.62 52-Week Low: 3491.58 Daily Trend: DOWN Weekly trend: UP Weekly Pivot Levels Resistance 3: 4199.18 Resistance 2: 4098.50 Resistance 1: 4062.31 Pivot: 3997.82 Support 1: 3961.63 Support 2: 3897.14 Support 3: 3796.46 https://www.prorightline.com/rlch/120122SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Wednesday, November 30, 2022: 30-Nov 8:15 am ADP employment report 30-Nov 8:30 am Real GDP (SAAR) revision 30-Nov 8:30 am Real gross domestic income (SAAR) 30-Nov 8:30 am Real domestic final sales (SAAR) revision 30-Nov 8:30 am Trade in goods deficit (advance) 30-Nov 9:45 am Chicago PMI 30-Nov 10 am Job openings 30-Nov 10 am Quits 30-Nov 10 am Pending home sales index 30-Nov 1:30 pm Fed Chair Jerome Powell speaks at the Brookings Institution 30-Nov 2 pm Beige Book Thursday, December 01, 2022: 01-Dec 8:30 am Initial jobless claims 01-Dec 8:30 am Continuing jobless claims 01-Dec 8:30 am PCE price index 01-Dec 8:30 am Core PCE price index 01-Dec 8:30 am PCE price index (year-on-year) 01-Dec 8:30 am Core PCE price index (year-on-year) 01-Dec 8:30 am Real disposable income 01-Dec 8:30 am Real consumer spending 01-Dec 9:45 am S&P U.S. manufacturing PMI 01-Dec 10 am ISM manufacturing index 01-Dec 10 am Construction spending 01-Dec Varies Motor vehicle sales (SAAR) Friday, December 02, 2022: 02-Dec 8:30 am Nonfarm payrolls 02-Dec 8:30 am Unemployment rate 02-Dec 8:30 am Average hourly earnings 02-Dec 8:30 am Labor-force participation rate, 25 to 54-year-olds 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: "Where's the Beta?" Sometimes we list a stock's Beta as "N/A" or Non Applicable. Beta is a measure of a stock's volatility measured against the average S&P stock over the last 5 years when available, and not less than 2.5 years. If a company has not existed for 2.5 years, it has not yet earned "the right" to have a Beta. If two companies with 100-year histories merge, the new company will not receive a Beta until the combined entity has existed for 2.5 years. ***********************************
STOCKS COVERED IN THIS ISSUE
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BASIC MATERIALS SECTOR Avient Corporation (AVNT: Basic Materials/Specialty Chemicals) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in AVNT'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 35.74 and a SELL order at 33.46. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.28 trailing stop. Tighten the stop to 1.14 once you have a 2.94 gain. AVNT closed Thursday at 35.16. Earnings Report Date: Feb 06, 2023. Beta: 1.55. Market-Cap: 3.198B. Optionable. CONSUMER CYCLICAL SECTOR J.Jill, Inc. (JILL: Consumer Cyclical/Apparel Retail) - 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. JILL's current price action near moving average support signals a potential BUY entry at 26.13, followed by a 1.77 trailing stop which can be tightened to 0.89 upon earning 2.1. JILL closed Thursday at 25.79. Earnings Report Date: Dec 06, 2022. Beta: 1.29. Market-Cap: 261.73M. Not Optionable. FINANCIAL SERVICES SECTOR Digital World Acquisition Corp. (DWAC: Financial Services/Shell Companies) - 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 DWAC's case we will enter a BUY should it reach the 23.39 level, or a SELL short trade if it drops to 21.48. As usual a trailing stop is essential, 1.91 which should be tightened to 0.96 on a 5.88 gain. DWAC closed Thursday at 22.37. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 832.493M. Optionable. HEALTHCARE SECTOR Morphic Holding, Inc. (MORF: Healthcare/Biotechnology) - SQUEEZE PLAY. When a stock's daily price range contracts to an unusually low point, you can safely assume that in most cases a breakout from that range will result in a nice price move. To capture a portion of this potential movement we have set both a long and a short entry into MORF. A move to the upside will trigger our BUY entry at 28.27, while a drop to 25.98 will trigger our SELL short entry. Follow your position with a 2.29 trailing stop. Tighten the stop to 1.15 once you have a 3.8 gain. MORF closed Thursday at 27.69. Earnings Report Date: Feb 22, 2023. Beta: 1.26. Market-Cap: 1.068B. Optionable. TECHNOLOGY SECTOR Tucows Inc. (TCX: Technology/Software-Infrastructure) - SQUEEZE PLAY. Trader indecision has put TCX 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 32.33 and a SELL short entry at 29.71. Now it's up to TCX to show us which entry will be filled. Once the trade is underway place a 2.62 trailing stop, which can be tightened to 1.31 after you achieve a 5.1 profit. TCX closed on Thursday at 31.03. Earnings Report Date: Feb 08, 2023. Beta: 0.88. Market-Cap: 334.919M. 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 ---------------- ------- -------- ------- ------ ------- Copart CPRT 11/4/2022 11/4/2022 2-for-1 Yes 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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