Notes From The Editor

Zeroing In: Fine-Tuning with Smaller Chart Intervals

For anyone who used to partake in daytrading, the switch to swing trading can be downright liberating. Gone is the tick-by-tick observing of the market. Gone is the stress that comes with watching seven charts at once, trying to discern what will happen within the next five minutes. Gone is the fist-clenching and the sleepless nights.

Still, there are some lessons to be had from the world of intense short-term trading. Swing traders rely almost exclusively on daily charts - with the occasional look at a weekly - to guide the way. The daily is the interval that's most closely-watched by the major market participants, from the biggest Wall Street giant to the smallest retail trader. Simply put, there's no better way to gauge a stock's technical health and performance. But drill down to smaller timeframes, and you'll see a very different picture.

30, 15, and even 5-minute charts can all reveal helpful details about what a stock or index is doing. For example, a steep uptrend on the daily chart might reveal itself as an ascending channel on the 15- minute chart. A swing trader looking to fine-tune their bullish entry point could wait for a pullback to the bottom of the channel.

5-minute charts can appear chaotic, but they provide a great window into what price action is doing over one session. Flipping between intra-day charts of the Dow, S&P 500, and Nasdaq can help you spot which of the Big Three indices is lagging or leading. And combined with a volume reading, you can use 5-minute charts to gauge the conviction behind the short-term moves of stocks.

Moving averages can also show interesting correlations - particularly the 50 and 200 Mas. Similarly, closely-watched indicators like the MACD and stochastics that we're so familiar with on the daily chart can reveal shorter-term momentum changes. Traders who like to use common chart patterns (head-and-shoulders, cup-and-handle, etc), also run across similar formations on the minute charts.

Smaller timeframes aren't for everyone, and swing trading can be profitable without every looking at those intervals. But if you have the time to do some extra analysis, don't hesitate to take a closer look by drilling down - you just might uncover some hidden clues about the next price shift!

Here's to profits,

Kent Barton
Senior Analyst

Quick List

    
Stock     12/06     12/06      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

VERV      21.07     -0.35     21.66     20.07         1.59/0.8      5.34
OM        21.40     -0.02     21.78     20.19         1.59/0.8      3.14
SEM       24.27     -0.03     24.82     23.28        1.54/0.77      2.62
CMBM      22.53      0.22     22.85     21.31        1.54/0.77      2.48
CNP       30.82      0.36     31.26                  1.83/0.92      1.26

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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Market Summary

US stocks fell for a second day, as traders showed caution over inflation concerns and how aggressive the Fed Bank will be when setting interest rates in the near term. A light economic calendar presented only one notable report, which showed that the trade deficit increased less predicted. In equities, AutoZone (AZO $2,457) topped quarterly earnings estimates, while shares of Meta Platforms (META $114) dropped after the Wall Street Journal reported that European Union regulators said that META should not require users to agree to personalized ads based on their online activity. Oil and treasury yields were lower, the USD/dollar and gold advanced higher.

                        Dec 5, 2022            Dec 6, 2022    
                  --------------------   --------------------
Dow                 33,947.10  -482.78     33,596.34  -350.76
Nasdaq              11,239.94  -221.56     11,014.89  -225.05
S&P 500              3,998.84   -72.86      3,941.26   -57.58

NYSE Volume                      4.29B                  4.38B
NYSE Advancers                     480                    906
NYSE Decliners                   2,693                  2,231

Nasdaq Volume                    4.52B                  4.74B
Nasdaq Advancers                 1,186                  1,388
Nasdaq Decliners                 3,476                  3,226

                                 New Highs/Lows

                   11/29  11/30  12/01  12/02  12/05  12/06
                 --------------------------------------------
NYSE New Highs        46     82    104     89     62     37
NYSE New Lows         68     66     25     44     55    114
Nasdaq New Highs      85    134    126     98    108     68
Nasdaq New Lows      189    218    107    128    169    312
   

TRADER'S TIP: "Free Advice From TV Talking Heads"

When it comes to financial advice, always remember that the brokerage firms who pay the advisors make most of their money from commissions on stock sales. It may only be a few bucks for each transaction, but it adds up to hundreds of billions of dollars. Though many analysts are well intended, a major purpose of their stock picks is to attract customers and generate order flow. Whether the recommendations are profitable or not really isn't that important - the companies make money whenever someone buys or sells shares.

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 - 3941.26 December 6, 2022

52-Week High: 4818.62
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4362.33
Resistance 2: 4199.47
Resistance 1: 4135.59
Pivot: 4036.62
Support 1: 3972.73
Support 2: 3873.76
Support 3: 3710.90

NASDAQ Composite - 11014.89 December 6, 2022

52-Week High: 15901.47
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 12522.34
Resistance 2: 11919.94
Resistance 1: 11690.72
Pivot: 11317.54
Support 1: 11088.32
Support 2: 10715.14
Support 3: 10112.74
        
Dow Industrials - 33596.34 December 6, 2022

52-Week High: 36952.65
52-Week Low: 28660.94
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 36226.53
Resistance 2: 35214.79
Resistance 1: 34822.33
Pivot: 34203.05
Support 1: 33810.59
Support 2: 33191.31
Support 3: 32179.57
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, December 05, 2022:
05-Dec  9:45 am   
05-Dec  10 am   ISM services index
05-Dec  10 am   Factory orders

Tuesday, December 06, 2022:
06-Dec  8:30 am   Trade deficit

Wednesday, December 07, 2022:
07-Dec  8:30 am   Productivity (SAAR) revision
07-Dec  8:30 am   Unit labor costs (SAAR) revision
07-Dec   3 pm   Consumer credit (level change)

Thursday, December 08, 2022:
08-Dec  8:30 am   Initial jobless claims
08-Dec  8:30 am   Continuing jobless claims

Friday, December 09, 2022:
09-Dec  8:30 am   Producer price index final demand
09-Dec  10 am   UMich consumer sentiment index (early)
09-Dec  10 am   UMich 5-year inflation expectations (early)
09-Dec  10 am   Wholesale inventories revision


For a chart of typical Up or Down market reactions to specific major US economic reports 
go to:  Economic Indicator Effects

TRADER'S TIP: "A Trader's Mind: Beliefs"

"You experience what you believe, unless you believe you won't, in which case you don't, which means you did."

- Harry Palmer

Stocks Covered in This Issue

HEALTHCARE SECTOR

Verve Therapeutics, Inc. (VERV: Healthcare/Biotechnology) - SQUEEZE PLAY. The ticker for Tuesday's session shows VERV 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 21.66 and a SELL short trigger at 20.07. When VERV 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 1.59 trailing stop. Upon reaching a 5.34 profit, resize the stop to 0.8. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.298B. Optionable.

Outset Medical, Inc. (OM: Healthcare/Medical Devices) - SQUEEZE PLAY. Tuesday's trading session left OM in a very narrow price range after buyers and sellers fought to a near stalemate. Both sides are looking for some traction, and a breakout either way could provide a nice gain in the short term. To get aboard, set your BUY trigger at 21.78 and your SELL short trigger at 20.19. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.59 trailing stop. Once you have a 3.14 profit, reduce the stop to 0.8. Earnings Report Date: Feb 14, 2023. Beta: 1.79. Market-Cap: 1.034B. Optionable.

Select Medical Holdings Corporation (SEM: Healthcare/Medical Care Facilities) - SQUEEZE PLAY. Traders are feeling the pressure as SEM's intra-day price range on Tuesday 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 24.82 and a SELL short entry at 23.28. SEM's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.54 trailing stop. Tighten it to 0.77 after you get a 2.62 gain. SEM closed Tuesday at 24.27. Earnings Report Date: Feb 22, 2023. Beta: 1.36. Market-Cap: 3.082B. Optionable.

TECHNOLOGY SECTOR

Cambium Networks Corporation (CMBM: Technology/Communication Equipment) - SQUEEZE PLAY. CMBM 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 22.85 and a SELL short entry at 21.31. Once your trade is filled, enter a 1.54 trailing stop. Tighten it to 0.77 after a 2.48 gain. CMBM closed on Tuesday at 22.53. Earnings Report Date: Feb 15, 2023. Beta: 0.89. Market-Cap: 629.583M. Optionable.

UTILITIES SECTOR

CenterPoint Energy, Inc. (CNP: Utilities/Utilities-Regulated Electric) - 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. CNP's behavior on Tuesday could very well be a sign that a new bounce is underway. Place a BUY trigger at 31.26. In the event your trigger is met, also place a 1.83 trailing stop which can be trimmed down to 0.92 when you have a 1.26 profit. CNP closed Tuesday at 30.82. Earnings Report Date: Feb 20, 2023. Beta: 0.87. Market-Cap: 19.402B. 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.

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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