January 3, 2023 - The RightLine Report
Notes From The Editor
Trading Stocks With The RightLine Report
Earning consistent profits from trading doesn't happen by accident. While simple good luck can lead to a nice winning streak, growing your account over time requires a formula for success that includes very specific rules.
When it comes to following these rules, the details are important. Listed below are a few common questions that we receive from subscribers on subjects that can sometimes be tricky to grasp:
- How long are trade set-ups valid?
Trade entries are valid for 2 weeks from the date they're recommended.
- When are entry points triggered?
Trade entries can be activated at any time during the day. Simply place a buy order with your broker at the entry price. If the stock reaches this level during intra-day trading, the order will be sent.
- What about when a stock gaps above or below an entry?
In this situation we employ our gap-adjusted strategy. This forces a stock to continue its directional move before the trade is activated. Be sure to discuss this with your broker so that your order isn't filled when a stock gaps up or down at the opening bell. If you use an automated trading platform, consult with your provider about how to set up your orders. A detailed tutorial on Gap Adjusted Entries can be found here: https://prorightline.com/gap-adjusted-entries-increase-profits/
- Should I hold my position through the quarterly earnings report?
We don't usually recommend it, as the likelihood of a post-earnings gap often makes this a crapshoot. In those rare instances where we're planning on holding over earnings, the write-up will clearly state this. Otherwise, active trades should be exited before the closing bell on the day before earnings.
- Why don't you list a profit target price with your set-ups?
We usually prefer to "let the winners run" instead of closing out profitable trades at a pre-determined level. Though we do occasionally include a profit target in the stock writeup, the exits for most trades are accomplished with a trailing stop strategy.
- What exactly is a trailing stop?
Simply put, it's a stop-loss that follows a stock if it moves in the expected direction. This allows us to protect gains while still maintaining an open position.
- What is a Blue Sky Breakout?
This is a play that involves a stock that's just hit an all-time high. The absence of overhead congestion or resistance makes these equities good candidates for long plays.
Have any questions of your own? Don't hesitate to send us an e-mail via our online contact form at https://prorightline.com/contact-us/
Here's to profits!
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 01/03 01/03 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
CAH 76.73 -0.14 77.76 4.71/2.36 3.5
EMBC 25.31 0.01 26.17 24.28 1.89/0.95 3.24
ANIK 29.48 -0.12 30.26 28.18 2.08/1.04 1.9
XMTR 32.33 0.10 33.45 30.7 2.75/1.38 5.06
DOCN 25.55 0.07 24.48 2.55/1.28 3.5
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
The major US stock indexes were lower on Tuesday as traders returned from a long holiday weekend to the first session of 2023, highlighted by light economic and equity news. On the equities front, shares of Tesla (TSLA $108) dropped after the electric auto company failed to meet fourth quarter delivery expectations due to logistical challenges and rising competition. Economic headlines included an unexpected rise in construction spending, while domestic manufacturing activity remained in the contraction zone. Oil prices and treasury yields were lower, gold and the USD/dollar moved higher.
Jan 2, 2023 Jan 3, 2023
-------------------- --------------------
Dow Closed 0 33,136.37 -10.88
Nasdaq Closed 0 10,386.98 -79.50
S&P 500 Closed 0 3,824.14 -15.36
NYSE Volume 0 4B
NYSE Advancers 0 1,891
NYSE Decliners 0 1,254
Nasdaq Volume 0 4.83B
Nasdaq Advancers 0 2,532
Nasdaq Decliners 0 2,107
New Highs/Lows
12/27 12/28 12/29 12/30 01/02 01/03
--------------------------------------------
NYSE New Highs 65 62 56 49 0 71
NYSE New Lows 137 180 84 72 0 36
Nasdaq New Highs 103 99 89 101 0 107
Nasdaq New Lows 536 504 209 181 0 94
Stocks Covered Today Stock Splits
TRADER'S TIP: "Profits Improve With Technical Timing"
Regardless of the reasons you decide to buy a stock, Technical Analysis is always helpful when it comes to timing entries. Support and resistance on the charts may be unfamiliar to most investors, but they have a huge impact on stock price movement.
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 - 3824.14 January 3, 2023
52-Week High: 4818.62
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 3980.97
Resistance 2: 3903.56
Resistance 1: 3871.53
Pivot: 3826.15
Support 1: 3794.12
Support 2: 3748.74
Support 3: 3671.33
NASDAQ Composite - 10386.98 January 3, 2023
52-Week High: 15852.14
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 11010.84
Resistance 2: 10703.54
Resistance 1: 10585.01
Pivot: 10396.24
Support 1: 10277.70
Support 2: 10088.93
Support 3: 9781.63
Dow Industrials - 33136.37 January 3, 2023
52-Week High: 36952.65
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 34263.64
Resistance 2: 33689.99
Resistance 1: 33418.62
Pivot: 33116.34
Support 1: 32844.97
Support 2: 32542.69
Support 3: 31969.04
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, January 09, 2023: 02-Jan New Year holiday. None scheduled. Tuesday, January 10, 2023: 03-Jan 9:45 am 03-Jan 10 am Construction spending Wednesday, January 04, 2023: 04-Jan 10 am ISM manufacturing index 04-Jan 10 am Job openings 04-Jan 10 am Quits 04-Jan 2 pm FOMC minutes 04-Jan Varies Motor vehicle sales (SAAR) Thursday, January 05, 2023: 05-Jan 8:15 am ADP employment report 05-Jan 8:30 am Initial jobless claims 05-Jan 8:30 am Continuing jobless claims 05-Jan 8:30 am Trade deficit 05-Jan 9:45 am Friday, January 06, 2023: 06-Jan 8:30 am Nonfarm payrolls 06-Jan 8:30 am Unemployment rate 06-Jan 8:30 am Average hourly earnings 06-Jan 8:30 am Labor force participation rate, ages 25-54 06-Jan 10 am ISM services index 06-Jan 10 am Factory orders 06-Jan 10 am Core equipment orders 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: "Earnings Conference Calls"
Since the SEC implemented the Fair Disclosure laws, most companies have begun allowing individual shareholders to listen in on earnings conference calls that were previously limited to analysts only. If you are tracking a stock as it approaches its scheduled earnings announcement, always look for the related conference call and mark it on your calendar. The behavior of the stock during the call can telegraph early reaction to management's explanation of earnings related events. If you can't find any mention of the call, give the firm's Investor Relations department a ring and ask when or if a call will be held.
Stocks Covered in This Issue
HEALTHCARE SECTOR
Cardinal Health, Inc. (CAH: Healthcare/Medical Distribution) - 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 76.73. Anticipate the rebound to continue, and be ready to buy CAH at 77.76. Follow your entry with a trailing stop of 4.71 which can be tightened to 2.36 on a 3.5 profit. Earnings Report Date: Feb 02, 2023. Beta: 0.83. Market-Cap: 20.114B. Optionable.
Embecta Corp. (EMBC: Healthcare/Drug Manufacturers-Specialty & Generic) - SQUEEZE PLAY. The ticker for Tuesday's session shows EMBC 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 26.17 and a SELL short trigger at 24.28. When EMBC 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 1.89 trailing stop. Upon reaching a 3.24 profit, resize the stop to 0.95. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.448B. Optionable.
Anika Therapeutics, Inc. (ANIK: Healthcare/Medical Devices) - SQUEEZE PLAY. Tuesday's trading session left ANIK 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 30.26 and your SELL short trigger at 28.18. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 2.08 trailing stop. Once you have a 1.9 profit, reduce the stop to 1.04. Earnings Report Date: Mar 06, 2023. Beta: 0.98. Market-Cap: 430.694M. Optionable.
INDUSTRIALS SECTOR
Xometry, Inc. (XMTR: Industrials/Specialty Industrial Machinery) - SQUEEZE PLAY. XMTR 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 33.45 and a SELL short entry at 30.7. Once your trade is filled, enter a 2.75 trailing stop. Tighten it to 1.38 after a 5.06 gain. XMTR closed on Tuesday at 32.33. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.534B. Optionable.
TECHNOLOGY SECTOR
DigitalOcean Holdings, Inc. (DOCN: Technology/Software-Infrastructure) - BEARISH U-TURN. DOCN's reaction after running into moving average resistance on Tuesday sets up this stock for a Bearish U-Turn trade. Having spent the past few days of moving higher, DOCN is now likely to revert back to its dominant weekly downtrend. Get ready to SELL short shares if DOCN drops to our entry at 24.48. Once in the trade, place a 2.55 trailing stop, which should be tightened to 1.28 after a 3.5 profit. DOCN closed Tuesday at 25.55. Earnings Report Date: Feb 22, 2023. Beta: N/A. Market-Cap: 2.46B. 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
---------------- ------- -------- ------- ------ -------
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.
Disclaimer
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