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February 11, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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Everyone agrees that we should base our trading and investment decisions on rational thinking. However, studies show that the human need to be "right" is usually stronger than the ability to be objective. This common trait is one of the top reasons most folks fail to make money in stocks.
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"QUICK LIST"
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Stock 02/10 02/10 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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ANVS 20.04 0.63 20.3 18.57 1.73/0.87 1.84
FDMT 20.24 -0.07 20.63 19.05 1.58/0.79 2.94
WNC 27.49 0.03 28 1.76/0.88 1.84
NSSC 31.65 0.03 32.67 2.12/1.06 2.48
CYRX 20.51 -0.23 21.33 19.51 1.82/0.91 2.58
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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The top US stock indexes were mixed on Friday, with the Dow & S&P 500 advancing higher for the session, while the Nasdaq finished the day lower. Earnings announcements were mixed as well, as Lyft and Expedia Group (EXPE $108) were well below analysts' expectations, with Lyft (LYFT $10) also disappointing with its first quarter outlook, while PayPal (PYPL $81) topped estimates and offered positive quidance. In light economic news, the single report showed an increase in February consumer sentiment. Oil and the USD/dollar were higher, treasury yields were mixed, gold was lower. Friday On The Week
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Dow 33,869.27 169.39 -56.74 -0.17%
Nasdaq 11,718.12 -71.46 -288.83 -2.41%
S&P 500 4,090.46 8.96 -46.02 -1.11%
NYSE Volume 3.89B
NYSE Advancers 1,611
NYSE Decliners 1,460
Nasdaq Volume 4.89B
Nasdaq Advancers 1,925
Nasdaq Decliners 2,578
New Highs/Lows
02/03 02/06 02/07 02/08 02/09 02/10
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NYSE New Highs 121 61 85 66 87 42
NYSE New Lows 4 12 8 6 10 15
Nasdaq New Highs 142 92 103 100 93 61
Nasdaq New Lows 24 32 43 47 67 82
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TRADER'S TIP:
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TRADER'S TIP: "Measuring Opinion" The largely unpredictable nature of the market is due to the ever-changing consensus of opinion among investors and traders. Every trader should have some specific means of determining when it is likely that the consensus of opinion has changed within their chosen time frame. Technical Analysis can be very helpful in this area. **************************
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 - 4090.46 February 10, 2023 52-Week High: 4637.30 52-Week Low: 3491.58 Daily Trend: DOWN Weekly trend: UP Weekly Pivot Levels Resistance 3: 4340.76 Resistance 2: 4225.01 Resistance 1: 4157.73 Pivot: 4109.26 Support 1: 4041.98 Support 2: 3993.51 Support 3: 3877.76 https://www.prorightline.com/rlch/021023SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, February 13, 2023: 13-Feb 11 am NY Fed 1-year inflation expectations 13-Feb 11 am NY Fed 5-year inflation expectations Tuesday, February 14, 2023: 14-Feb 6 am NFIB small-business index 14-Feb 8:30 am Consumer price index 14-Feb 8:30 am Core CPI 14-Feb 8:30 am CPI (year-over-year) 14-Feb 8:30 am Core CPI (year-over-year) Wednesday, February 15, 2023: 15-Feb 8:30 am Retail sales 15-Feb 8:30 am Retail sales excluding motor vehicles 15-Feb 8:30 am Empire state manufacturing index 15-Feb 9:15 am Industrial production index 15-Feb 9:15 am Capacity utilization rate 15-Feb 10 am NAHB home builders' index 15-Feb 10 am Business inventories Thursday, February 16, 2023: 16-Feb 8:30 am Initial jobless claims 16-Feb 8:30 am Continuing jobless claims 16-Feb 8:30 am Producer price index final demand 16-Feb 8:30 am Building permits 16-Feb 8:30 am Housing starts 16-Feb 8:30 am Philadelphia Fed manufacturing survey 16-Feb 11 am Real household debt (SAAR) Friday, February 17, 2023: 17-Feb 8:30 am Import price index 17-Feb 10 am Index of leading economic indicators 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: "Trends & Countertrends" Individual stocks and the larger market rarely move in a straight line. Even in the strongest trends there will always be countertrends resulting in a "two steps forward and one step back" scenario. Some traders become over anxious during the countertrends, and abandon good positions prematurely. Keep in mind that every favorable price surge deserves a planning session to determine how much profit you're willing to risk when the inevitable countertrends challenge your staying power. ***********************************
STOCKS COVERED IN THIS ISSUE
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HEALTHCARE SECTOR Annovis Bio, Inc. (ANVS: Healthcare/Biotechnology) - SQUEEZE PLAY. Trader indecision has put ANVS 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 20.3 and a SELL short entry at 18.57. Now it's up to ANVS to show us which entry will be filled. Once the trade is underway place a 1.73 trailing stop, which can be tightened to 0.87 after you achieve a 1.84 profit. ANVS closed on Friday at 20.04. Earnings Report Date: N/A. Beta: 1.25. Market-Cap: 163.605M. Not Optionable. 4D Molecular Therapeutics, Inc. (FDMT: Healthcare/Biotechnology) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in FDMT's narrowest trading range of the past seven sessions. With neither group able to take complete control on Friday, 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 20.63 and a SELL order at 19.05. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.58 trailing stop. Tighten the stop to 0.79 once you have a 2.94 gain. FDMT closed Friday at 20.24. Earnings Report Date: Mar 27, 2023. Beta: 2.56. Market-Cap: 655.622M. Optionable. INDUSTRIALS SECTOR Wabash National Corporation (WNC: Industrials/Farm & Heavy Construction Machinery) - NEW HIGH DIP. After setting a recent new 52-week high, WNC shares have since fallen from that peak as traders put some profits in the bank. Friday's intra-day bounce may very signal that the recent decline is over. Prepare for a continuation of this turnaround and "buy-the-dip" if WNC reaches our BUY trigger set at 28. Follow your entry with a trailing stop of 1.76, and tighten to 0.88 on a 1.84 gain. WNC closed Friday at 27.49. Earnings Report Date: Apr 25, 2023. Beta: 1.67. Market-Cap: 1.311B. Optionable. Napco Security Technologies, Inc. (NSSC: Industrials/Security & Protection Services) - NEW HIGH DIP. It's no secret that strong stocks tend to get even stronger. NSSC's recent 52-week high is a clear indication that the ongoing uptrend is still healthy, though traders have taken some profits off the table during the past few sessions. Friday's bounce from support confirms the stock's intention to move even higher. This New High Dip setup takes advantage of the tendency for strong stocks to bounce skyward after pulling back from new highs. Prepare to BUY shares in NSSC should price reach the 32.67 level. Enter a trailing stop of 2.12 as soon as your order is filled, then tighten the stop to 1.06 on a 2.48 gain. Earnings Report Date: May 08, 2023. Beta: 1.10. Market-Cap: 1.163B. Optionable. Cryoport, Inc. (CYRX: Industrials/Integrated Freight & Logistics) - SQUEEZE PLAY. In certain stocks a tightly constricted price range is a sign that neither bulls nor bears are confident of winning in the near term. This often means that the side that gives up first causes a quick move in the opposite direction. In these fear dominated skirmishes, opposing traders always benefit from the retreat. In the Squeeze Play setup you can actually play both sides of the inevitable surge. CYRX traders reached this state of stand-off on Friday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 21.33 and a SELL short trigger at 19.51. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.82 which can be tightened to 0.91 on a 2.58 gain. CYRX closed Friday at 20.51. Earnings Report Date: Feb 22, 2023. Beta: 1.31. Market-Cap: 1.005B. 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/ **********************************
TRADER'S CORNER
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"WISHFUL THINKING: Thoughts from Dr. Alex Elder" If you toss a frog into a pan of warm water and heat it very slowly you can boil it alive. When pain increases bit by bit, our natural tendency to do nothing and wait for an improvement. A sleepwalking trader keeps giving a losing trade more time, while it is slowly boiling him alive. A sleepwalker hopes and dreams. He says, I know, my stock is going to come back, it always did before. Winners accept occasional losses, take them quickly and move on. Losers postpone taking losses, and some are foolish enough to look for a silver lining in a disaster. A broker calls his client and says, "I've got good news and bad news. What's the bad news? That stock you bought at 80 - it is down to 20. And what's the good news? The decline was on low volume." An amateur enters a trade as if buying a lottery ticket. He waits for the wheel of fortune to decide whether he wins or loses. Professionals, on the other hand, have ironclad plans for getting out, either with a profit or a small loss. A key difference between professionals and amateurs is their planning for exits. Beginners dream of profits but are always ready to give a trade "more time to work out." A sleepwalking trader buys a stock at 35 and puts in a stop at 32. The stock begins to sink, he says, 'I will give the market a little more room to breathe,' and moves his stop down to 30. This is a fatal mistake - he has breached his discipline, violated his own plan. You may move your stops only one way - in the direction of the trade. Stops are like a ratchet on a sailboat, designed to take the slack out of your sails. If you start giving your trade "more room to breathe," that extra slack will swing and hurt you. Even if the market rewards you for breaking the rules on one trade, it will lay an even bigger trap for you on the next trade. The best time to make decisions is before you enter a trade. Your money is not at risk, and you can weigh benefits and risks. Once you put on a trade, you begin to form an emotional attachment to it. The market will do its best to hypnotize you and lure you into making emotional decisions. Write down an exit plan and follow it! Turning a losing trade into an "investment" is a disease of small private traders, but some institutional traders can catch it also. Disasters at banks and major financial firms have occurred when poorly supervised traders lost money in short-term trades and stuck them into long-term accounts, hoping that time will bail them out. If you are losing in the beginning, you'll lose in the end. Do not put off the hour of reckoning. The first loss is the best loss - this is the rule of those who trade with their eyes open. A neighbor of mine had struggled with the markets for eight years before he grew into an internationally famous successful trader. Today many of our friends in New York like to reminisce about the days he clerked on one of the smaller exchanges in the city and struggled to make ends meet. An old trader said to me, 'I knew him then, and I thought he would succeed. He had the right combination of being very careful and having this optimism you need to get up in the morning and believe you're going to make money trading the markets.' In order to succeed in trading you need both self-confidence and humility (also known as caution). If you have one but not the other, you're in a dangerous position. If you have self-confidence but no caution, you'll be arrogant, which is deadly for traders. If you have caution but no confidence, you won't be able to pull the trigger on your trades. You need confidence to say - the market is going up, I believe it will continue to rally, I am going to get long and ride this trend. On the other hand, you need humility to accept the uncertainty of the markets - and to run fast when a trade goes against you. It is a hallmark of emotional maturity to be aware of two conflicting feelings at the same time. When you feel a surge of confidence in your trading idea, it is hard to have the humility to think of the downside risk - but if you cannot think of the risk, you cannot handle it. When the market goes against you and hits your predetermined exit level, you have to humbly give a sell order, no matter how confident you feel about your analysis. Being a trader is a journey of self-discovery. Trade long enough, and you will face all your feelings, including anxiety, greed, fear, and anger. But self-discovery is the byproduct, not the primary goal of trading. The main goal is to minimize losses and accumulate equity. Keep asking yourself - "What is my profit target in this trade" and "What will I do to protect my capital in this trade?" A good trader accepts total responsibility for the outcome of every trade - even though he knows that others are trying to take his money. If other traders or even brokers take your money, you are still responsible. You have to keep improving your trading plans. You need to cultivate both self-confidence and humility. EXITING TRADES Whenever you plan a trade, three factors must be crystal-clear in your mind - where to get in, where to take profits, and where to bail out in case of an emergency. Daydreaming about profits will not make you rich. You must know at what point you will collect your winnings or else cut and run if the market turns against you. Professional traders spend a lot of time and energy planning their exits from trades. Where to take profits, when to cut losses, how to maintain a good ratio between them in order to maximize gains and minimize losses - these and related questions are paramount in the pros' minds. When people approach the markets, they go through a natural progression. Their first baby steps are stumbling but overconfident, while a pro is cautious but firm. Beginners keep looking for what to buy (they almost never sell short), like puppies that eat anything they find on the ground, including some very unhealthy stuff. The pros sniff and choose the best morsels. In trading, newbies are eagerly looking for markets to enter, without much thought about the exits. The pros are quite matter-of-factly about entries but very particular about exits. They have discovered the essential truth - you do not get paid for entering trades, you get paid for exiting them. Planning for an exit must begin before you enter a trade. One of the first things we must do when looking at a new stock or a future, is measure the width of its channel. Let us see whether it is wide enough to be worth trading. We know that an "A" trader takes 30% or more out of a channel, while a "C" trader takes 10%. If we begin by accepting the possibility that we may have a C trade, then let us decide whether 10% of that channel is a worthwhile target. If a channel is 20 points wide, even a 10% gain will give us some money, but if the channel is only 5 points wide, then 10% will bring us peanuts, not worth the risk. Exiting trades is more complex than entering them. It is simple to get in using a limit order to minimize slippage; either we are in or we aren't. Exits are much more challenging. We need to have a profit target, which will keep shifting as the trade goes on. We need to have a protective stop with a sensible formula for moving it as the trade moves in our favor. Sophisticated traders who swing large positions have strategies for canceling profit targets when they recognize especially powerful trends or taking only partial profits and carrying the rest of their position with a new exit strategy for runaway trends. Exits sound complex because they are. As one multimillionaire said about trading, 'If this was easy, mermaids would be doing it.' Entering a trade can be as easy as buying a lottery ticket, but then the music starts and exits separate winners from losers. ************** Dr. Elder is the author of several books including the classic "Trading For A Living." He also authored "Come Into My Trading Room: A Complete Guide To Trading" and his newest work "Sell and Sell Short." ======================================================================
Best of luck and have a Great Week!
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The RightLine Report is an information service for investors and traders. It is not a solicitation nor a recommendation or offer to buy or sell securities. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. The publishers of The RightLine Report are not brokers or financial advisors, and are not acting in any way to influence the purchase or sale of any security. Stock picks, entry points and exit points should be considered an information resource to assist the trader in developing a trading plan and it is the sole responsibility of the reader to conduct his or her own due diligence before executing a trade. Trading securities should be considered speculative with a high degree of volatility and risk. The publishers of The RightLine Report recommend that anyone trading securities should do so with caution, exercise prudent trading discipline and have a personal risk management strategy in place before doing so. It is possible at this or some subsequent date, the publishers and staff of The Pro Right Line Corp. may own, buy or sell securities presented. The Pro Right Line Corp. is not a financial advisory service. Its publishers, owners or investors, are not liable for any losses or damages, monetary or otherwise, that result from the content of The RightLine Report. Past RightLine Report performance may not be indicative of future performance. All subscriptions and/or use of the RightLine.net website are subject to RightLine's "Terms of Use" and "Subscriber Terms & Conditions" which are posted at www.rightline.net. Any REDISTRIBUTION of the above information, without The RightLine's written consent, is STRICTLY PROHIBITED. Copyright / The Pro Right Line Corporation - All Rights Reserved To Unsubscribe, send an email to cs@prorightline.com or call 1-312-248-4241. |