February 2, 2023 - The RightLine Report 

 
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                      NOTES FROM THE EDITOR
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Charts: An Important Key To Successful Stock Trading

Technical trading is a powerful method used by many successful stock traders. However, the idea of trading the stock market using charts and indicators doesn't always make sense to newbies. A close look at what actually takes place in the "real world" makes it easy to see how price and volume action on a stock chart reveals more information than most people would ever imagine.

Let's start with the concept that sooner or later all news and fundamentals about a company are reflected in the stock price. The stock market accomplishes this process relatively fast, especially now that most investors are going online for information.

Company insiders are the first to know when events are underway that will impact the company's stock - THEIR stock. Although SEC regulations do govern what insiders can say and do with the information they obtain, the fact remains that people do talk and bend the rules.

What starts out as quiet chatter among key employees soon spreads beyond the company's inner circle. These conversations quickly make their way to friends and acquaintances, who in turn share this inside news with others. As more and more people hear about these "secrets" many will buy or sell the stock to take advantage. As a result the stock chart begins to signal that something significant is taking place.

Serious chart readers learn to recognize the signs of change. They watch closely to see if an opportunity exists to profit from the developing situation. This group includes what is commonly referred to as "smart money," traders with deep pockets who recognize what is going on and take action. Due to the size involved, their stock trading always shows up on the charts.

Also involved in this process are several thousand semi-pro traders who according to CNBC, make up over 80% of the total daily online stock market trading volume. They are extremely active, trading an average of 50 times each session. Their days are spent moving in and out of the market, banging into support and resistance levels to see what, if anything, gives.

After reading the strength of these pivotal chart areas, they quickly decide to either hold onto their stock positions, or reverse and head in the other direction. In one sense they play the role of stock market "scouts" who push and pull at any possible weakness to find which direction prices are willing to go.

These ever-active players are also the oil that lubricates the stock market online trading machine. They create constant price movement at the same time other less-active groups are sitting on the sidelines.

It doesn't take long for the impact on price and volume draws patterns on the charts. These are powerful clues about where a specific stock - and on a larger scale the entire stock market - is ultimately headed.

Anyone trading the stock market online should take note that charting works effectively in all markets in all time frames. This applies to short-term trading and long term investing alike.

There is nothing new about all this. It has been used effectively by Japanese rice traders for hundreds of years. In fact, every major investment firm on Wall Street employs technical analysts to provide their traders with this type of information. Those of us who use stock charts as part of our trading strategy locate the pivotal levels, then go with the flow as price movement unfolds. While it does take effort to learn how to do this, it's certainly one skill that anyone trading the stock market should be aware of.

Trade well!

- Thomas Sutton, Editor 

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                           "QUICK LIST"
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Stock     02/03     02/03      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

BILI      25.66     -0.59     26.34     24.39        1.95/0.98      3.18
PFG       92.87      0.79     94.33                  6.25/3.13      3.58
BMA       21.83      0.28     22.26     20.59        1.67/0.84       2.5
FGEN      24.85      0.46     25.26     23.37        1.89/0.95      2.38
RELL      23.64      0.72      24.3     22.52        1.78/0.89       3.2


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 out Thursday's session mixed, as the S&P 500 and Nasdaq added to Wednesday's rally following a reduced rate hike indicating that the Fed Bank may be close to the end of its tightening cycle. In equities, shares of FaceBook owner Meta Platform (META $189) surged higher after releasing positive guidance, while Eli Lilly and Company (LLY $331) came under pressuer after posting soft revenue growth. The economic calendar contained some positive news, with unemployment claims continuing to decline and productivity showing more strength than expected in the fourth quarter. Oil and gold finished lower, the USD/dollar was higher and treasury yields held steady.


                       Feb 1, 2023            Feb 2, 2023    
                  --------------------   --------------------
Dow                 34,092.96     6.92     34,053.94   -39.02
Nasdaq              11,816.32   231.77     12,200.82   384.50
S&P 500              4,119.21    42.61      4,179.76    60.55

NYSE Volume                      4.87B                  5.67B
NYSE Advancers                   2,227                  2,197
NYSE Decliners                     855                    914

Nasdaq Volume                    6.39B                   7.1B
Nasdaq Advancers                 3,173                  3,306
Nasdaq Decliners                 1,405                  1,291

                                 New Highs/Lows

                   01/26  01/27  01/30  01/31  02/01  02/02
                 --------------------------------------------
NYSE New Highs       117    115     66    104    177    203
NYSE New Lows         11      6      8      4      8      5
Nasdaq New Highs     124    127     89    138    190    199
Nasdaq New Lows       42     40     20     31     34     27

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                              TRADER'S TIP:  
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TRADER'S TIP: "Consolidation Means Anticipation"

The longer a stock trades within a specific range, the more likely it is that a breakout - either up OR down - will result. One reason is that as support and resistance build through regular successful tests, more traders note that a move OUTSIDE of the regular range is a significant event. Consequently, volume tends to pick up and generate momentum in the direction of the breakout when it does finally occur. Also, risk is limited since stops can be placed just inside the trading range in case the breakout fails. It pays to learn how to recognize this powerful charting tactic, which can be very effective in both the long and short terms. 
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                         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 - 4179.76 February 2, 2023

52-Week High: 4637.30
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3096.77
Resistance 2: 2916.88
Resistance 1: 1458.44
Pivot: 2736.99
Support 1: 1278.55
Support 2: 2557.10
Support 3: 2377.21
https://www.prorightline.com/rlch/020223SPX.jpg

NASDAQ Composite - 12200.82 February 2, 2023

52-Week High: 14646.90
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 9648.04
Resistance 2: 8767.03
Resistance 1: 4383.51
Pivot: 7886.03
Support 1: 3502.51
Support 2: 7005.02
Support 3: 6124.01


Dow Industrials - 34053.94 February 2, 2023

52-Week High: 35824.28
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 24145.26
Resistance 2: 23391.98
Resistance 1: 11695.99
Pivot: 22638.70
Support 1: 10942.71
Support 2: 21885.42
Support 3: 21132.14


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                             MARKET CALENDAR
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--ECONOMIC REPORTS AND EVENTS (all times are Eastern): 
Monday, January 30, 2023:
30-Jan          None scheduled

Tuesday, January 31, 2023:
31-Jan  8:30 am   Employment cost index
31-Jan   9 am   
31-Jan   9 am   FHFA home price index (SAAR)
31-Jan  9:45 am   Chicago business barometer
31-Jan  10 am   Consumer confidence index
31-Jan  10 am   Rental vacancy rate

Wednesday, February 01, 2023:
01-Feb  8:15 am   ADP employment report
01-Feb  9:45 am   
01-Feb  10 am   ISM manufacturing index
01-Feb  10 am   Job openings
01-Feb  10 am   Quits
01-Feb  10 am   Construction spending
01-Feb   2 pm   Federal funds rate
01-Feb   2 pm   Federal funds projection
01-Feb  2:30 pm   Fed Chair Jerome Powell news conference
01-Feb  Varies   Motor vehicle sales (SAAR)

Thursday, February 02, 2023:
02-Feb  8:30 am   Initial jobless claims
02-Feb  8:30 am   Continuing jobless claims
02-Feb  8:30 am   Productivity, first estimate (SAAR)
02-Feb  8:30 am   Unit labor costs, first estimate (SAAR)
02-Feb  10 am   Factory orders
02-Feb  8:30 am   Core capital goods orders

Friday, February 03, 2023:
03-Feb  8:30 am   Nonfarm payrolls
03-Feb  8:30 am   Unemployment rate
03-Feb  8:30 am   Average hourly earnings
03-Feb  8:30 am   Labor-force participation rate, 25-54 year-olds
03-Feb  9:45 am   
03-Feb  10 am   ISM services index

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: "In Sync with the Trend = More Winners"

It's much easier to make money when we're in sync with the trend - yet even the best setups don't always produce a profit. A review of the "All Time Top Ten" mechanical trading systems tested by Futures Truth revealed that the best winning rate was 57.5%, while several were less than 50%. The key to the success of these systems is that winning trades outperformed losers by a wide margin. The stock market can be a finicky creature at times. Always use Risk Control to protect your profits and capital. One big winner can offset several small losers, so always cut losses quickly and let the winners grow. 

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                      STOCKS COVERED IN THIS ISSUE    
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COMMUNICATION SERVICES SECTOR

Bilibili Inc. (BILI: Communication Services/Electronic Gaming & Multimedia) - SQUEEZE PLAY. Sometimes when Bulls and Bears face off in the market arena for a typical day-long battle, there is no clear winner. This is evident when the daily price range contracts to an unusually narrow state. BILI found itself in this condition on Thursday when neither buyers or sellers were able to push ahead. This setup provides traders a chance to hop on board the next breakout - whether it's to the upside or down - with little risk of loss. To do this place a BUY order at 26.34 and a SELL short trigger at 24.39. When BILI moves outside of Thursday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 1.95 trailing stop. After you've got a 3.18 profit, tighten the stop to 0.98. BILI closed at 25.66 on Thursday. Earnings Report Date: Mar 01, 2023. Beta: 1.04. Market-Cap: 9.826B. Optionable.

FINANCIAL SERVICES SECTOR

Principal Financial Group, Inc. (PFG: Financial Services/Asset Management) - BULLISH BOUNCE. Some people hear of a stock that's performing nicely and then buy it without any regard for timing the entry. This approach usually leaves money on the table, money that could just as well be added to profits. The Bullish Bounce setup provides a well timed entry and reduces exposure to risk by placing both the entry trigger and exit stop near the bottom of the bounce. We have an opportunity to use this approach with PFG which met our setup criteria on Thursday. The BUY trigger for this trade is at 94.33, and the trailing stop is sized at 6.25. Resize the stop to 3.13 upon collecting a 3.58 point gain. PFG closed Thursday at 92.87. Earnings Report Date: Apr 26, 2023. Beta: 1.30. Market-Cap: 22.614B. Optionable.

Banco Macro S.A. (BMA: Financial Services/Banks-Regional) - SQUEEZE PLAY. Thursday's trading session left BMA 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 22.26 and your SELL short trigger at 20.59. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.67 trailing stop. Once you have a 2.5 profit, reduce the stop to 0.84. Earnings Report Date: N/A. Beta: 1.77. Market-Cap: 2.876B. Optionable.

HEALTHCARE SECTOR

FibroGen, Inc. (FGEN: Healthcare/Biotechnology) - SQUEEZE PLAY. FGEN shareholders know what it feels like to be squeezed. Thursday's slim price range reveals uncertainty on both sides of the table, a situation which often resolves itself by either Bears or Bulls quickly gaining a clear advantage. The question is "who will win?" Near-term market action tell us whether we should sell short or we should buy shares instead. FGEN closed Thursday at 24.85. The plan is to enter in the right direction by placing a BUY trigger at 25.26 and a SELL short trigger at 23.37. Once FGEN establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.89. After you've collected a 2.38 profit, tighten the stop to 0.95. Earnings Report Date: Feb 27, 2023. Beta: 0.72. Market-Cap: 2.335B. Optionable.

TECHNOLOGY SECTOR

Richardson Electronics, Ltd. (RELL: Technology/Electronic Components) - SQUEEZE PLAY. The ticker for Thursday's session shows RELL 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 24.3 and a SELL short trigger at 22.52. When RELL 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 1.78 trailing stop. Upon reaching a 3.2 profit, resize the stop to 0.89. Earnings Report Date: Apr 04, 2023. Beta: 0.79. Market-Cap: 332.726M. 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/ 

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                           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/ 
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Best of luck and have a Great Week!
 
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