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July 1, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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A Traders Mind - Using Charts To Boost Your Trading Skills
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"QUICK LIST"
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Stock 06/30 06/30 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
BLBD 22.48 0.42 22.88 21.42 1.46/0.73 3.06
DFH 24.59 0.46 25.16 23.39 1.77/0.89 1.98
BMEA 21.95 0.29 22.94 20.88 2.06/1.03 4.7
XMTR 21.18 -0.18 22.26 20.36 1.9/0.95 3
ASAN 22.04 0.00 22.72 21.16 1.56/0.78 3.02
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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Equity markets were sharply higher on Friday across the board, with the S&P 500 rising by over 1.0%. As the first half of the year officially comes to an end, the index tracking the top 500 US public companies has gained about 15%, the technology-heavy Nasdaq is up an impressive 31%, while the more value and cyclically tilted Dow Jones is up over 3.5% in the first half of the year. Bond markets experienced more modest performance, as Treasury bond yields climbed higher over the past quarter. As we look out into the second half of the year, we would expect markets to continue to move higher, although bouts of volatility remain likely along this path, particularly if the economy shows signs of cooling. The personal consumption expenditure (PCE) inflation metrics for the month of May came in in-line or slightly below expectations on Friday. Headline PCE inflation was up 3.8% year-over-year, below last month's 4.4% reading and in-line with forecasts. While inflation has moved lower, these levels remain above the Fed's 2.0% target. We continue to believe that the Federal Reserve will likely raise rates one more time and remain very data-dependent thereafter, likely leaning towards a pause in rate hikes through year-end. We see indications that the US economy is still resilient. GDP growth data for the first quarter was revised upwards on Thursday with economic growth coming in at 2.0% annualized versus the prior reading of 1.3%. This was driven by a robust consumption figure. For the second quarter, the Fed's GDP-Now tracker is pointing to a healthy growth rate of 1.8%, still above trend levels and not indicating an economic downturn. Leading indicators continue to point to a softening in the economy ahead, including metrics like the inverted yield curve and soft ISM manufacturing and services indexes, but we do not see a deep or prolonged contraction ahead. We would expect the economy to soften sometime in the second half of the year, but markets tend to be forward-looking and could look past this softness towards a more sustainable period of recovery. Friday On The Week
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Dow 34,407.60 285.18 +680.17 2.02%
Nasdaq 13,787.92 196.59 +295.4 2.19%
S&P 500 4,450.38 53.94 +102.05 2.35%
NYSE Volume 3.96B
NYSE Advancers 2,100
NYSE Decliners 855
Nasdaq Volume 4.68B
Nasdaq Advancers 2,590
Nasdaq Decliners 1,746
New Highs/Lows
06/23 06/26 06/27 06/28 06/29 06/30
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NYSE New Highs 52 58 107 115 149 225
NYSE New Lows 47 31 32 34 19 16
Nasdaq New Highs 49 58 87 86 111 169
Nasdaq New Lows 153 171 168 126 120 76
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TRADER'S TIP:
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TRADER'S TIP: "Get A Groove Going" Most companies will announce stock splits concurrent with a "major" event, such as an earnings release or during an annual shareholder's meeting. When a corporation breaks from this pattern and announces a split just before one of these events, it many times is a good "tip off" that further good news is just around the corner. **************************
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 - 4450.38 June 30, 2023 52-Week High: 4458.48 52-Week Low: 3491.58 Daily Trend: UP Weekly trend: UP Weekly Pivot Levels Resistance 3: 4673.11 Resistance 2: 4542.71 Resistance 1: 4496.54 Pivot: 4412.31 Support 1: 4366.14 Support 2: 4281.91 Support 3: 4151.51 https://www.prorightline.com/rlch/063023SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, July 03, 2023: 03-Jul 10:00 am ISM manufacturing 03-Jul 10:00 am Construction spending 03-Jul All markets close early Tuesday, July 04, 2023: 04-Jul July 4 holiday, all markets closed Wednesday, July 05, 2023: 05-Jul 8:15 am ADP employment 05-Jul 10:00 am Factory orders 05-Jul 2:00 pm Minutes of Fed's June FOMC meeting Thursday, July 06, 2023: 06-Jul 8:30 am Initial jobless claims 06-Jul 8:30 am U.S. trade deficit 06-Jul 10:00 am Job openings 06-Jul 10:00 am ISM services Friday, July 07, 2023: 07-Jul 8:30 am U.S. employment report 07-Jul 8:30 am U.S. unemployment rate 07-Jul 8:30 am U.S. hourly wages 07-Jul 8:30 am Hourly wages year over year 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: "Slippage" "Price slippage" is the difference in the price of the stock that appears on the ticker at the time you place a trade, and the price at which your order is actually filled. "Transaction slippage" is the difference between estimated and actual transaction costs. To control slippage, always trade liquid stocks, avoid low volume issues, and use limit orders whenever possible. ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR Blue Bird Corporation (BLBD: Consumer Cyclical/Auto Manufacturers) - SQUEEZE PLAY. Friday's trading session left BLBD 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 22.88 and your SELL short trigger at 21.42. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.46 trailing stop. Once you have a 3.06 profit, reduce the stop to 0.73. Earnings Report Date: Aug 08, 2023. Beta: 1.36. Market-Cap: 721.446M. Optionable. Dream Finders Homes, Inc. (DFH: Consumer Cyclical/Residential Construction) - SQUEEZE PLAY. DFH 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 25.16 and a SELL short entry at 23.39. Once your trade is filled, enter a 1.77 trailing stop. Tighten it to 0.89 after a 1.98 gain. DFH closed on Friday at 24.59. Earnings Report Date: Aug 02, 2023. Beta: 1.47. Market-Cap: 2.29B. Optionable. HEALTHCARE SECTOR Biomea Fusion, Inc. (BMEA: Healthcare/Biotechnology) - 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. BMEA found itself in this condition on Friday 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 22.94 and a SELL short trigger at 20.88. When BMEA moves outside of Friday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 2.06 trailing stop. After you've got a 4.7 profit, tighten the stop to 1.03. BMEA closed at 21.95 on Friday. Earnings Report Date: N/A. Beta: -1.06. Market-Cap: 777.054M. Optionable. INDUSTRIALS SECTOR Xometry, Inc. (XMTR: Industrials/Specialty Industrial Machinery) - SQUEEZE PLAY. XMTR shareholders know what it feels like to be squeezed. Friday'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. XMTR closed Friday at 21.18. The plan is to enter in the right direction by placing a BUY trigger at 22.26 and a SELL short trigger at 20.36. Once XMTR establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.9. After you've collected a 3 profit, tighten the stop to 0.95. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.013B. Optionable. TECHNOLOGY SECTOR Asana, Inc. (ASAN: Technology/Software-Application) - SQUEEZE PLAY. The ticker for Friday's session shows ASAN 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 22.72 and a SELL short trigger at 21.16. When ASAN 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 1.56 trailing stop. Upon reaching a 3.02 profit, resize the stop to 0.78. Earnings Report Date: Sep 18, 2023. Beta: 1.30. Market-Cap: 4.779B. 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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"How To Draft A Trading Plan" "Plan Your Trade and Trade Your Plan" is a mantra that we repeat on a regular basis. Why? Because we have found that traders who carefully plan each trade have a much better chance of winning in the stock market than those who don't. In fact, properly planning a trade can literally be the difference between making money and losing money. A successful Trading Plan doesn't have to be complicated. Many traders draft their trading plans in a notebook or on index cards, while others use word processors and spreadsheets. Regardless of the method you choose, every trading plan must contain certain components to be effective. But before we get into the "essentials," let's take a quick look at a few dynamics behind "Planning Your Trade." Before drafting a plan of action, traders will want to decide what style of trading they prefer. A broad generalization of "buy and sell stocks" doesn't work - the criteria needs to be specific. Successful traders make money in different ways, but each has a well-defined method. On the other hand, a losing trader's plan is always vague and ambiguous. In trading, it pays to be precise, so decide what you like to do and build your plan around that style. Don't worry about getting locked in to a certain approach; you can always change it later as you gain experience. You can even draft more than one plan if you enjoy different types of trading. The best plans include a set of solid rules that never get broken, and a few elastic rules that allow for real-time decisions to be made when managing live trades. Our judgment improves as we gain experience, so it's good to allow some flexibility in less critical areas of your plan. At the same time, maintain unyielding rules in the more sensitive parts - such as Risk Control. Okay, now let's layout the essential ingredients to include in your personal trading plan. ~ Determine Your Time Frame The type of trading you prefer usually defines the time frame. Short term traders who enjoy a fast paced style won't find much action in weekly or monthly time frames, while less active traders generally find that the extremely short time horizons require too much time at the computer. Decide which style best suits your personality, and then select the corresponding time frame. It's usually a good idea to start by spending a few minutes each day. Begin by managing the trades using daily charts, then see if you want to shorten or lengthen the time frame. The RightLine Report offers a variety of stocks in different time frames. Due to the way these stocks are selected and the type of exit strategy used, most of the picks will work for traders who plan to hold positions anywhere from a few hours to a few weeks. ~ Locate The Best Stocks to Trade Choose a method to determine which stocks to trade. If you are experienced in the markets you probably already have a number of ideas and sources. To make it easier for our subscribers, the Right Line Report presents a wide variety of good stock choices in every issue. They are based on an assortment of trading strategies and tactics that take advantage of predictable market behaviors. You may also want to develop your own new methods for locating stocks. The educational section on our website at www.rightline.net presents numerous market concepts to help traders understand the nature of price movement, identify trends in every time frame, and choose the tools needed to capture profits. ~ Determine Entry Points This can be a challenge, for there are almost as many different ways to determine entries, as there are stocks. Again, in an effort to make it easier for our subscribers, the Right Line Report presents specific entry points for every stock in each issue. The exact level to buy or sell short is based on a wide range of technical factors used by our analysts to reduce risk and optimize the potential gain. If you choose to select your own entry points, we provide a large assortment of articles to assist you in developing your own personal methods. ~ Use An Intelligent Method to Select the Number of Shares to Trade Very few traders and investors realize the importance of balanced "Position Sizing." Most make the mistake of ignoring the size of their trading account when taking on new positions. As a result, many unknowingly join the ranks of high-risk over-traders, and soon find themselves in big trouble. Don't worry, it's easy to avoid when you have the RightLine Risk Manager to help! This simple tool is free to subscribers, but if you prefer to do the math yourself, here are the basics: "Never risk more than 2% of your trading capital in a single trade or more than 6% of your capital at a time. For example, if you have $100,000 in your trading account, the most you should be willing to risk is $2,000. Before buying a stock, review the chart to locate the best place to put a stop loss order. If you determine that the stock requires 5-points to keep you in the trade while it is trending up, the maximum number of shares that you can afford is 400. ($2,000 maximum risk divided by 5-points = 400 shares.)" You can see that although doing the calculation isn't terribly hard, the Risk Manager makes the job a whole lot easier! ~ Manage Risk With Stops You may already know, but a "stop" is an order to buy at a price above or sell at a price below the current market price. Stops, or stop orders, are used to protect our capital and lock in profits. Placing stops is easy, but locating the best place to put them can be quite challenging. To assist traders with stop placement, every stock entry in the RightLine Report includes a suggested stop level. And of course, we offer plenty of help on our website for anyone who wants to learn more about managing risk with stops. ~ Determine Your Exit Strategy After you've entered a position in a stock and it starts moving, then what? Traders have a lot of different choices when it comes to exiting trades, and the method used can make a world of difference. Some traders routinely use "trailing" stops as their exit strategy of choice, while others choose to exit when the stock hits a certain price, or breaks through a support level, or approaches a resistance level. Other traders will choose to exit based on intra-day swings or expected news releases. Some traders sell half when their target is met and let the other half ride with a trailing stop. Others sell to recover all invested capital, and only keep the stock earned with profits - essentially called free stock. This one is a wealth builder, but results in a lot of positions to manage. When making a trading plan, remember to plan not only for the upside, but the downside too. The exit strategy is one of the most important parts of any trading plan, and it is fundamental for traders to select an exit plan before entering a trade. Trade Planning is one of the most important skills that a trader can learn. Make it your strength and you will be well on your way to trading successfully. ======================================================================
Best of luck and have a Great Week!
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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 To Unsubscribe, send an email to cs@prorightline.com or call 1-312-248-4241. |