February 7, 2023 - The RightLine Report
Notes From The Editor
Often the most mentally challenging part of a trade is getting to the break-even point. Depending on your time frame this can take hours, days or even weeks. In a typical trade you first make the decision to enter a selected stock after looking at number of setups. Price action triggers your entry, so you place your order, then confirm that it is filled and set your stop. Now there's nothing left to do other than relax and let the trade progress.
Here's where you shift from action to trust - as in trusting your trading method. You've done everything as planned. At this point the trade takes over and begins to dictate what you will do next. This is the challenging part, primarily because the results are determined by price action over which you have no control.
Once price moves favorably you will feel a sense of relief. It's tempting to prematurely move the stop to break-even (your entry point) in order to "lock in" the gains and avoid a possible reversal that might result in a loss. However, resist the temptation to over-tighten your stop.
Though it certainly does feel good to see your stop set at the break-even point, a stop that's too narrow will increase the risk that normal daily price fluctuations will shake you out of the trade too early. Here's a simple rule for setting break-even stops:
Price should move beyond your entry point by at least 1.25 times the average true range for the time frame you are trading.
If you are trading daily setups from the RightLine Report your stop is already calculated to allow for normal price gyrations. If you are trading in a different time frame or calculating your own stops, be sure to allow ample room based on the average price range for the time frame that you are trading.
It takes experience and judgment to arrive at the best stop placement for any method of trading. Setting a stop too tight just to feel the satisfaction of knowing you can't lose will ultimately reduce your overall trading profits. Give each trade enough room to run and you'll get the greater satisfaction of watching bigger winners emerge.
Trade well!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 02/07 02/07 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
HAIN 21.20 0.06 / 0
NEOG 20.39 0.50 20.75 1.73/0.87 1.22
RLAY 21.32 -0.24 21.96 20.46 1.5/0.75 2.52
APG 22.10 0.40 22.42 1.6/0.8 1.18
RELL 23.88 0.17 24.48 22.69 1.79/0.9 3.16
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
Questions? Send us an email using our Contact Form.
Stocks Covered Today Stock Splits
Market Summary
US stocks were higher on Tuesday following comments from Federal Reserve Bank Chairman Jerome Powell who said disinflation has begun but interest rate increases will likely continue. A light economic calendar showed the trade deficit widened at a slower pace than expected, while December consumer credit increased less than forcasts called for. Quarterly earnings announcements included video game company Take-Two Interactive Software (TTWO $114) missing analysts' expectations and warning that net bookings will be lower in the near term, while Dupont (DD $78) beat projections yet offered disappointing guidance. Gold, treasury yields and oil were all higher, the USD/dollar finished lower.
Feb 6, 2023 Feb 7, 2023
-------------------- --------------------
Dow 33,891.02 -34.99 34,156.69 265.67
Nasdaq 11,887.45 -119.50 12,113.79 226.34
S&P 500 4,111.08 -25.40 4,164.00 52.92
NYSE Volume 4.13B 4.4B
NYSE Advancers 773 1,909
NYSE Decliners 2,334 1,154
Nasdaq Volume 5.57B 5.77B
Nasdaq Advancers 1,538 2,666
Nasdaq Decliners 3,030 1,844
New Highs/Lows
01/31 02/01 02/02 02/03 02/06 02/07
--------------------------------------------
NYSE New Highs 104 177 203 121 61 85
NYSE New Lows 4 8 5 4 12 8
Nasdaq New Highs 138 190 199 142 92 103
Nasdaq New Lows 31 34 27 24 32 43
Stocks Covered Today Stock Splits
TRADER'S TIP: "Choose Your Viewpoint"
Successful trading is as much mental as physical. One extremely important skill to acquire is the ability to view "negative" experiences in an empowering way. For example, instead of looking at a "bad" trade as a "loser," simply consider it a trade that didn't work out as you would have preferred. The emotional investment you make in each trade accumulates in your "mental account" over the course of your trading career. As with money, when it comes to your state of mind, always invest wisely.
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 - 4164.00 February 7, 2023
52-Week High: 4637.30
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4475.60
Resistance 2: 4295.71
Resistance 1: 4216.09
Pivot: 4115.82
Support 1: 4036.20
Support 2: 3935.93
Support 3: 3756.04
NASDAQ Composite - 12113.79 February 7, 2023
52-Week High: 14646.90
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 13650.36
Resistance 2: 12769.35
Resistance 1: 12388.15
Pivot: 11888.34
Support 1: 11507.14
Support 2: 11007.33
Support 3: 10126.32
Dow Industrials - 34156.69 February 7, 2023
52-Week High: 35824.28
52-Week Low: 28660.94
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 35453.93
Resistance 2: 34700.65
Resistance 1: 34313.33
Pivot: 33947.37
Support 1: 33560.05
Support 2: 33194.09
Support 3: 32440.81
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, February 06, 2023: 06-Feb None scheduled Tuesday, February 07, 2023: 07-Feb 8:30 am International trade deficit 07-Feb 11 am NY Fed 1-year inflation expectations 07-Feb 11 am NY Fed 5-year inflation expectations 07-Feb 3 pm Consumer credit Wednesday, February 08, 2023: 08-Feb 10 am Wholesale inventories (revision) Thursday, February 09, 2023: 09-Feb 8:30 am Initial jobless claims 09-Feb 8:30 am Continuing jobless claims Friday, February 10, 2023: 10-Feb 10 am UMich consumer sentiment index (early) 10-Feb 10 am UMich 1-year inflation expectations (early) 10-Feb 10 am UMich 5-year inflation expectations (early) 10-Feb 2 pm Federal budget balance 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: "Only Ten Percent"
Although only ten percent of individual traders use "money management," it is by far the most important aspect of any trading plan. Leave it out of any trade and you immediately place that position in a high-risk category. Many people believe they can ignore money management just because they have a small trading account, while in fact these vital concepts can be used successfully with any amount of capital. Establishing good habits with a small account not only allows your money to grow, it also prepares you to trade intelligently when you have a much larger account.
Stocks Covered in This Issue
CONSUMER DEFENSIVE SECTOR
The Hain Celestial Group, Inc. (HAIN: Consumer Defensive/Packaged Foods) - BULLISH BOUNCE. Here is another example of a stock in an established uptrend that has recently experienced a counter-trend drop. The sliding price action has now found support near a moving average zone, bouncing upward during Tuesday's session to close at 21.20. Anticipate the rebound to continue, and be ready to buy HAIN at . Follow your entry with a trailing stop of which can be tightened to on a 0 profit. Earnings Report Date: Feb 07, 2023. Beta: 0.91. Market-Cap: 1.893B. Optionable.
HEALTHCARE SECTOR
Neogen Corporation (NEOG: Healthcare/Diagnostics & Research) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Tuesday NEOG seemed intent on initiating a rebound. With moving average support nearby, NEOG 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 20.75. Manage risk with a 1.73 stop. Tighten your stop to 0.87 when you have a 1.22 profit. NEOG ended the day at 20.39. Earnings Report Date: Mar 22, 2023. Beta: 0.92. Market-Cap: 4.407B. Optionable.
Relay Therapeutics, Inc. (RLAY: Healthcare/Biotechnology) - SQUEEZE PLAY. Tuesday's trading action forced RLAY's daily price range into an abnormally narrow state. This translates into opportunity; for the cyclical nature of price volatility is to shrink extensively, then swell rapidly as shares move in one direction or another. Instead of trying to predict the direction RLAY will take when price volatility begins to increase, we'll set both a BUY (long) and a SELL (short) trigger to get us into the right trade. Be ready to BUY shares at 21.96 if RLAY moves higher, and place your order to SELL short at 20.46 if price declines to that level. As usual follow your entry with a trailing stop, 1.5 should be sufficient. Reduce your stop to 0.75 on a 2.52 gain. RLAY closed Tuesday at 21.32. Earnings Report Date: Feb 22, 2023. Beta: 1.01. Market-Cap: 2.577B. Optionable.
INDUSTRIALS SECTOR
APi Group Corporation (APG: Industrials/Engineering & Construction) - BULLISH BOUNCE. Up-trending stocks like APG have a tendency to bounce their way skyward rather than travel higher in a straight line. After touching down to a moving average support level on Tuesday, APG is poised to lift off again. To take advantage of this setup, prepare to BUY shares at 22.42 if positive price action occurs. As always, follow your entry with a trailing stop. A 1.6 trailer should work well with APG. Tighten it to 0.8 on a 1.18 gainer. Earnings Report Date: Feb 28, 2023. Beta: 1.48. Market-Cap: 5.169B. Optionable.
TECHNOLOGY SECTOR
Richardson Electronics, Ltd. (RELL: Technology/Electronic Components) - SQUEEZE PLAY. RELL is caught in a dilemma. The stock's compressed price range on Tuesday has resulted in a condition comparable to a wound up rubber band. We anticipate that this undecided equity will take off soon, but with the direction still in question we'll let upcoming market action tell us whether to buy shares or sell short. RELL is now at 23.88. We can capture price action either way by placing a BUY trigger at 24.48 and a SELL short trigger at 22.69. Once RELL reveals its direction, enter your triggered order and disregard the other one. As soon as your position is in place, follow up with a trailing stop of 1.79. When you acquire a 3.16 profit, tighten the stop to 0.9. Earnings Report Date: Apr 04, 2023. Beta: 0.79. Market-Cap: 336.104M. 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
---------------- ------- -------- ------- ------ -------
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.
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.
Disclaimer
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
Click Here To Unsubscribe