December 13, 2022 - The RightLine Report
Notes From The Editor
The market is often impulsive, and every trader has experienced the g-forces applied when stocks act like roller coasters. Here are a few suggestions that will help you stay on track no matter what route the market decides to take ...
- Check Your Emotions. The market is much more powerful than any individual. Though you have no control over what it does, you do have control over how you respond to its actions. Getting emotional when the market goes down doesn't make it go back up. On the other hand, the stress could cause you to make unwise decisions. Avoid this sort of self-sabotage. Remember - although your actions won't change the market, they WILL determine how much money you make.
- Be Sure Of Your Time Horizon. Most people buy stocks without first considering the time frame that suits them best. Are your plans short-term or long-term? It makes a big difference. A teenager that opens her first trading account has a much different time horizon than a sixty-five year old that plans to retire next year. Before entering a position, always consider which time frame will best serve your needs.
- Use Risk Management. Losing trades are a fact of life. Applying risk control tactics will quickly eliminate losers and insure they don't hurt you. Your advanced winners can provide the gains to offset any minor losses AND leave you with a good profit. You also have the option to stand aside when nothing seems to work. Just bear in mind that while the sidelines offer a temporary safe refuge, you have to be in the market to make money.
- Choose Your Attitude. Success in the stock market requires more than just a proven trading strategy. Winning is a reflection of your state of mind. Never let the negative attitude of others cause you unnecessary grief. Genuine confidence in your ability and your method dissolves fear, paving the way to a prosperous future.
Trade well,
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 12/13 12/13 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
INSE 12.47 0.07 12.74 0.89/0.45 1.42
CWH 24.35 -0.24 23.31 2.76/1.38 2.42
LKNCY 23.46 1.22 24.19 22.54 1.65/0.83 2.04
CALM 57.26 -1.18 54.88 5.26/2.63 3.52
ITOS 20.94 0.67 21.36 19.67 1.69/0.85 2.4
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
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Stocks Covered Today Stock Splits
Market Summary
US stocks were lower on Tuesday despite the November CPI report being less inflationary than expected. The report seemed to initially calm concerns regarding how aggressive the Fed will be going forward in its rate hike campaign, but then traders began selling into the news as the session continued. The decline comes ahead of Wednesday's Fed monetary policy decision, with the markets expecting a 50-basis point increase to the target fed funds rate. In other economic news, the NFIB Small Business Optimism Index suprisingly shifted higher. In light equity news, Raytheon Technologies (RTX $101) authorized a $6 billion share repurchase program, and Oracle (ORCL $80) beat quarterly earnings estimates. Treasury yields and the USD/dollar were lower, gold and oil prices moved sharply higher.
Dec 12, 2022 Dec 13, 2022
-------------------- --------------------
Dow 34,005.04 528.58 34,108.64 103.60
Nasdaq 11,143.74 139.12 11,256.81 113.08
S&P 500 3,990.56 56.18 4,019.65 29.09
NYSE Volume 3.92B 5.19B
NYSE Advancers 2,006 2,227
NYSE Decliners 1,135 936
Nasdaq Volume 4.85B 6.21B
Nasdaq Advancers 2,690 2,769
Nasdaq Decliners 1,872 1,888
New Highs/Lows
12/06 12/07 12/08 12/09 12/12 12/13
--------------------------------------------
NYSE New Highs 37 38 49 43 48 91
NYSE New Lows 114 102 71 63 90 56
Nasdaq New Highs 68 70 111 68 87 123
Nasdaq New Lows 312 327 254 248 295 249
Stocks Covered Today Stock Splits
TRADER'S TIP: "No Retro-Trading Allowed"
No one sells at the "top" all of the time, so don't fret over selling a stock that goes up even higher after you get out. Trust your planned exit strategy and never punish yourself for selling "too early." There's always another trade around the corner.
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 - 4019.65 December 13, 2022
52-Week High: 4818.62
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4236.52
Resistance 2: 4102.46
Resistance 1: 4018.42
Pivot: 3968.40
Support 1: 3884.36
Support 2: 3834.34
Support 3: 3700.28
NASDAQ Composite - 11256.81 December 13, 2022
52-Week High: 15901.47
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 12143.36
Resistance 2: 11628.47
Resistance 1: 11316.54
Pivot: 11113.58
Support 1: 10801.65
Support 2: 10598.69
Support 3: 10083.80
Dow Industrials - 34108.64 December 13, 2022
52-Week High: 36952.65
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 35577.87
Resistance 2: 34660.73
Resistance 1: 34068.59
Pivot: 33743.59
Support 1: 33151.45
Support 2: 32826.45
Support 3: 31909.31
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, December 12, 2022: 12-Dec 11 am NY Fed 1-year inflation expectations 12-Dec 11 am NY Fed 5-year inflation expectations 12-Dec 2 pm Federal budget (compared with Nov. 2021) Tuesday, December 13, 2022: 13-Dec 6 am NFIB small-business index 13-Dec 8:30 am Consumer price index 13-Dec 8:30 am Core CPI 13-Dec 8:30 am CPI (year-on-year) 13-Dec 8:30 am Core CPI (year-on-year) 13-Dec 8:30 am CPI excluding shelter (3-month rolling annualized rate) Wednesday, December 14, 2022: 14-Dec 8:30 am Import price index 14-Dec 2 pm Federal funds rate announcement 14-Dec 2 pm SEP median federal funds rate for end of 2023 14-Dec 2:30 pm Fed Chair Jerome Powell news conference Thursday, December 15, 2022: 15-Dec 8:30 am Initial jobless claims 15-Dec 8:30 am Continuing jobless claims 15-Dec 8:30 am Retail sales 15-Dec 8:30 am Retail sales excluding motor vehicles 15-Dec 8:30 am Empire state manufacturing index 15-Dec 8:30 am Philadelphia Fed manufacturing index 15-Dec 9:15 am Industrial production index 15-Dec 9:15 am Capacity utilization rate 15-Dec 10 am Business inventories Friday, December 16, 2022: 16-Dec 9:45 am 16-Dec 9:45 am 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: "Too Flexible?"
As traders we need to be flexible, yet that doesn't mean we should attempt too many methods at the same time. The best approach is to use a relatively simple strategy that contains enough tactical setups to take advantage of price movement in any market environment. For example, a good place to start is with a combination of Bullish Bounces for uptrends, Bearish U-Turns for downtrends, and Squeeze Plays for sideways or choppy market periods. While you can always add additional types of setups as your trading skills improve, it's always wise to start with the basics. And repetition is the key, so remember to practice, practice, practice!
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
Inspired Entertainment, Inc. (INSE: Consumer Cyclical/Gambling) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Tuesday INSE seemed intent on initiating a rebound. With moving average support nearby, INSE is at a logical place for Bulls to regroup and extend the familiar uptrend that shareholders have become accustomed to. On continued buying, plan on taking long entries with a BUY at 12.74. Manage risk with a 0.89 stop. Tighten your stop to 0.45 when you have a 1.42 profit. INSE ended the day at 12.47. Earnings Report Date: Mar 09, 2023. Beta: 1.62. Market-Cap: 322.564M. Optionable.
Camping World Holdings, Inc. (CWH: Consumer Cyclical/Auto & Truck Dealerships) - BEARISH U-TURN. The weight of CWH's declining weekly trend was lightened recently when shares began to move upward. However, like a swimmer against the tide CWH encountered strong resistance on Tuesday. Price action indicates a likely return to the previous downtrend, so plan to short CWH upon reaching our SELL trigger at 23.31. Set a 2.76 trailing stop which can be tightened to 1.38 after you have a 2.42 gain. CWH ended the latest session at 24.35. Earnings Report Date: Feb 20, 2023. Beta: 2.58. Market-Cap: 1.036B. Optionable.
Luckin Coffee Inc. (LKNCY: Consumer Cyclical/Restaurants) - SQUEEZE PLAY. Trader indecision has put LKNCY 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 24.19 and a SELL short entry at 22.54. Now it's up to LKNCY to show us which entry will be filled. Once the trade is underway place a 1.65 trailing stop, which can be tightened to 0.83 after you achieve a 2.04 profit. LKNCY closed on Tuesday at 23.46. Earnings Report Date: N/A. Beta: -0.69. Market-Cap: 6.219B. Not Optionable.
CONSUMER DEFENSIVE SECTOR
Cal-Maine Foods, Inc. (CALM: Consumer Defensive/Farm Products) - BEARISH U-TURN. CALM's chronic decline over the past weeks was relieved by a recent upward bounce that has boosted hope for weary shareholders. Unfortunately for them, Tuesday's price action near moving average support indicates the bullish rebound may be over. If this turns out to be the case, short-sellers can enter a SELL position at 54.88. Control risk with a 5.26 stop that can be resized to 2.63 on a gain of 3.52. CALM closed at 57.26 on Tuesday. Earnings Report Date: Dec 26, 2022. Beta: -0.14. Market-Cap: 2.802B. Optionable.
HEALTHCARE SECTOR
iTeos Therapeutics, Inc. (ITOS: Healthcare/Biotechnology) - 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 ITOS's case we will enter a BUY should it reach the 21.36 level, or a SELL short trade if it drops to 19.67. As usual a trailing stop is essential, 1.69 which should be tightened to 0.85 on a 2.4 gain. ITOS closed Tuesday at 20.94. Earnings Report Date: N/A. Beta: 1.42. Market-Cap: 744.947M. 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
---------------- ------- -------- ------- ------ -------
Copart CPRT 11/4/2022 11/4/2022 2-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.
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