January 26, 2023 - The RightLine Report
Notes From The Editor
Rightline delivers a simple formula for winning in the market: optimal trade selection combined with rock-solid risk management. While these two factors are closely related, they each represent a different mindset.
Risk management, with its adherence to stop-losses and position sizing, is a distinctly "left-brain" process. The hard numbers of controlling potential losses determine what decisions are made; it's essential for long-term success, but not a very creative process.
Trade selection, on the other hand, involves more "right-brain" action.
With literally thousands of stocks to choose from and a ceaseless flow of potential set-ups, this aspect largely reflects a trader's individual goals and risk tolerance. Deciding which set-ups are worthy of your money, time and attention is the name of the game.
Daytraders face this decision countless times every day. For those who take a swing-trade approach, the selection process is more important.
When trading just once or twice a week, it's crucial that your money isn't tied up in sideways stocks or poor performers.
Attention to detail goes a long way when it comes to finding optimal set-ups. It really pays to take a few minutes every weeknight to find the best opportunities - not just the ones that looking most inviting from a profit standpoint, but the ones that most aptly fit your own trading style. Once a set-up is determined, it's simply a matter of placing an order with your broker the following morning - and of course, a stop-loss if you get filled.
Traders who aren't able to devote every weeknight to strategizing can focus on the days of the week when they have more time available, while sitting out other sessions. As for open positions, it's simply a matter of noting any daily changes, then making appropriate changes every evening.
Another piece of advice applies to all variety of traders: never be afraid to take positions in opposite directions. Having a winning long position might bias you against taking a short entry in a promising bearish set-up. Remember to view each trade as its own distinct entity. This is especially important during sideways periods when the broader market has no overall bias.
Trading can be as time-intensive or relaxed as you want. Tailor your approach to suit your own needs, and never be afraid to wait for the ideal trade. After all, every session is brimming with opportunities, and the market isn't going anywhere!
Here's to Profits,
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 01/26 01/26 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
LOVE 25.77 0.11 26.54 24.55 1.99/1 2.58
SRDX 26.35 -0.29 27.32 25.32 2/1 3.2
INBX 26.80 0.20 27.27 25.49 1.78/0.89 3.36
CYRX 22.50 0.37 22.97 21.38 1.59/0.8 2.18
INTA 29.08 0.17 29.56 27.77 1.79/0.9 1.9
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 Thursday following a healthy round of economic and earnings data. In equity news, electric automaker Tesla (TSLA $158) outperformed quarterly earnings estimates and presented positive guidance, while International Business Machines (IBM $133) also topped expectations. In other news, Chevron (CVX $187) upped its dividend and announced a new $75-billion stock buyback plan, while Dow Corp (DOW $58) fell short of analysts' predictions. Oil prices were up, treasury yields were mostly higher, gold was down, and the USD/dollar finished the session in a mixed fashion.
Jan 25, 2023 Jan 26, 2023
-------------------- --------------------
Dow 33,743.84 9.88 33,949.41 205.57
Nasdaq 11,313.36 -20.91 11,512.41 199.06
S&P 500 4,016.22 -0.73 4,060.43 44.21
NYSE Volume 3.73B 3.83B
NYSE Advancers 1,656 2,116
NYSE Decliners 1,399 961
Nasdaq Volume 5.52B 5.77B
Nasdaq Advancers 2,460 2,717
Nasdaq Decliners 2,084 1,851
New Highs/Lows
01/19 01/20 01/23 01/24 01/25 01/26
--------------------------------------------
NYSE New Highs 40 47 86 98 70 117
NYSE New Lows 18 16 8 25 13 11
Nasdaq New Highs 72 86 116 113 97 124
Nasdaq New Lows 35 28 35 35 43 42
Stocks Covered Today Stock Splits
TRADER'S TIP: "Know WHY To Buy or Sell"
Studies show that most investors buy and sell on emotion instead of reasoning. For example most investors will sell their winning positions to make up for losers, then hold the losers way too long in hopes they will recover. This is the opposite of what should be done, for the winners tend to keep on winning, while losers usually keep losing.
The most common management strategy used by successful traders is pretty simple. Get rid of losers quickly, and keep winners profitable with an exit strategy that includes stop orders. It isn't that difficult to understand intellectually how this approach pays off, but sticking with it is too much of an emotional challenge for most people. The solution comes from the discipline gained through repetitive conditioning.
"Repetitive conditioning?" That's selling any and all losing positions immediately upon their reaching a predetermined level, and holding any and all winners until they meet the specific sell criteria of your exit strategy. Just another term for "good experience!"
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 - 4060.43 January 26, 2023
52-Week High: 4637.30
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4217.54
Resistance 2: 4087.69
Resistance 1: 4030.15
Pivot: 3957.84
Support 1: 3900.30
Support 2: 3827.99
Support 3: 3698.14
NASDAQ Composite - 11512.41 January 26, 2023
52-Week High: 14646.90
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 11893.81
Resistance 2: 11474.97
Resistance 1: 11307.70
Pivot: 11056.13
Support 1: 10888.86
Support 2: 10637.29
Support 3: 10218.45
Dow Industrials - 33949.41 January 26, 2023
52-Week High: 35824.28
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 36342.49
Resistance 2: 34949.04
Resistance 1: 34162.26
Pivot: 33555.60
Support 1: 32768.82
Support 2: 32162.15
Support 3: 30768.70
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, January 23, 2023: 23-Jan 10 am Leading economic indicators Tuesday, January 24, 2023: 24-Jan 9:45 am 24-Jan 9:45 am Wednesday, January 25, 2023: 25-Jan None scheduled Thursday, January 26, 2023: 26-Jan 8:30 am Initial jobless claims 26-Jan 8:30 am Continuing jobless claims 26-Jan 8:30 am Real gross domestic product, first estimate (SAAR) 26-Jan 8:30 am Real final sales to domestic purchasers, first estimate (SAAR) 26-Jan 8:30 am Trade in goods (advance) 26-Jan 8:30 am Durable goods orders 26-Jan 8:30 am Core capital goods orders 26-Jan 8:30 am Chicago Fed national activity index 26-Jan 10 am New home sales (SAAR) Friday, January 27, 2023: 27-Jan 8:30 am Real disposable incomes (SAAR) 27-Jan 8:30 am Real consumer spending (SAAR) 27-Jan 8:30 am PCE price index 27-Jan 8:30 am Core PCE price index 27-Jan 8:30 am PCE price index, year-over-year 27-Jan 8:30 am Core PCE price index, year-over-year 27-Jan 10 am UMich consumer sentiment index (late) 27-Jan 10 am UMich 1-year inflation expectations (late) 27-Jan 10 am UMich 5-year inflation expectations (late) 27-Jan 10 am Pending home sales 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: "Switching Emotions"
Most of us are motivated by a variety of emotions that can be roughly grouped under two headings - hope and fear. For example, when the average investor is caught in a losing position, they usually do nothing other than hope that each day will be the last that the stock goes down. As a result, they end up losing more than if they had not "hoped" as much. On the other hand, when someone holds a winning position, they usually become fearful that the next session will take away their profits, so they get out the trade too soon. In effect, fear keeps them from making as much as they should.
Successful traders know how to reverse their emotions in these circumstances - to use fear when most people would hope, and use hope when most people would fear. It's much more profitable to fear that our losses will grow bigger, and hope that our profits will grow bigger. Research shows that this lesson can be difficult to accept, because it goes against human nature and is the complete opposite of what most people would do. However uncomfortable it may feel when you first attempt it, this simple reversal of emotions during normal trading situations is a valuable "brain tool" that will help you make wise decisions - sell losing positions and hold on to winners!
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
The Lovesac Company (LOVE: Consumer Cyclical/Furnishings, Fixtures & Appliances) - SQUEEZE PLAY. The ticker for Thursday's session shows LOVE 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 26.54 and a SELL short trigger at 24.55. When LOVE 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 1.99 trailing stop. Upon reaching a 2.58 profit, resize the stop to 1. Earnings Report Date: Mar 27, 2023. Beta: 2.45. Market-Cap: 391.508M. Optionable.
HEALTHCARE SECTOR
Surmodics, Inc. (SRDX: Healthcare/Medical Devices) - SQUEEZE PLAY. SRDX 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 27.32 and a SELL short entry at 25.32. Once your trade is filled, enter a 2 trailing stop. Tighten it to 1 after a 3.2 gain. SRDX closed on Thursday at 26.35. Earnings Report Date: Feb 06, 2023. Beta: 0.97. Market-Cap: 372.217M. Optionable.
Inhibrx, Inc. (INBX: Healthcare/Biotechnology) - SQUEEZE PLAY. Traders are feeling the pressure as INBX's intra-day price range on Thursday 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 27.27 and a SELL short entry at 25.49. INBX's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.78 trailing stop. Tighten it to 0.89 after you get a 3.36 gain. INBX closed Thursday at 26.80. Earnings Report Date: Feb 27, 2023. Beta: 3.11. Market-Cap: 1.167B. Optionable.
INDUSTRIALS SECTOR
Cryoport, Inc. (CYRX: Industrials/Integrated Freight & Logistics) - SQUEEZE PLAY. Thursday's trading session left CYRX 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 22.97 and your SELL short trigger at 21.38. 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 2.18 profit, reduce the stop to 0.8. Earnings Report Date: Feb 22, 2023. Beta: 1.24. Market-Cap: 1.102B. Optionable.
TECHNOLOGY SECTOR
Intapp, Inc. (INTA: Technology/Software-Application) - SQUEEZE PLAY. Thursday's narrow price range has created a potentially profitable setup in INTA, as sellers and buyers find themselves in a near tie for control of price direction. The next short-term trend could go either way, so prepare for a move out of the draw within the next day or so. Set a BUY entry at 29.56 and a SELL short entry at 27.77. Let INTA's price action determine your long or short entry. Once the order is filled, place a 1.79 trailing stop, and tighten it to 0.9 upon getting a 1.9 gain. INTA closed Thursday at 29.08. Earnings Report Date: Feb 06, 2023. Beta: N/A. Market-Cap: 1.832B. 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.
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