July 11, 2023 - The RightLine Report
Notes From The Editor
One of the best parts about being a trader is that it gives you a front-row seat to the market's daily happenings, and puts you in touch with its ever-changing pulse. But the knowledge and insight you gain from observing stocks isn't limited to short-term trades; it can also help you with longer-term trading, or even with investing.
In the course of pursuing daytrading, swing trading, or other short- term set-ups, you'll inevitably run across stocks that also look great from a longer-term perspective. This is powerful stuff! When you find one of those stocks, make it a point to keep an eye on it - not just over the coming days, but for several weeks or months.
For example, let's say a stock has been trading in a large ascending channel for a few months. You first notice the stock when it's in the middle of that channel. Although that's not the best place to jump onboard, you know that a pullback and rebound from the bottom of the channel could afford a great longer-term entry point - especially if the market is in Bull mode. Similarly, a rollover from the top of the channel might offer a bearish entry point.
Using this simple observational technique, you can gradually build an evolving list of potential set-ups. This will add a powerful element to your trading strategy: time. Using longer-term set-ups, you can take advantage of gradually-evolving trends and underlying market tendencies that unfold over weeks and months, rather than days.
And what about stop placement? As a general rule of thumb, it's a good idea to give these trades much more room to breathe; you don't want to get stopped out by intraday "noise." One idea is to take a look at the stock's typical trading range over the course of a week, and then double it. This would be your initial stop. Also be aware of any upcoming earnings reports or other scheduled news announcements that might influence price action.
The market is as flexible as you want it to be. Customize your trading strategy to your own personal goals and preferences. Work with the flow of the market, rather than against it. Your account will thank you!
Here's to profits,
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 07/11 07/11 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
FOX 31.70 0.09 32.23 1.64/0.82 1.08
BMEA 21.00 -0.68 21.76 20.17 1.59/0.8 6
HQI 25.59 -0.08 26.37 24.63 1.74/0.87 2.98
VSH 28.82 0.11 29.3 1.69/0.85 1.02
INTT 23.64 0.38 24.15 22.46 1.69/0.85 2.82
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
Equity markets closed higher on Tuesday as investors awaited the release of the CPI report on Wednesday and the unofficial start of the second-quarter earnings season on Friday, particularly with the banks. The market received a boost from a significant drop in the Manheim used-car price index and a decline in the New York Fed's survey of consumer expectations, which support the disinflationary narrative and led to a decrease in bond yields. The 10-year Treasury yield dipped below 4.0%, and the dollar experienced its fourth consecutive day of decline.
Ahead of the CPI release, more signs of disinflation have emerged. The Manheim Used Vehicle Value Index, which tends to precede the used-car price component of the official CPI by a couple of months, recorded a 4.2% drop in June compared to the previous month and a 10.3% decrease from a year ago. This significant monthly decline indicates a decrease in price pressures for a key driver of core inflation. Additionally, the New York Fed's consumer survey revealed a continued decline in inflation expectations, with the one-year expectation reaching its lowest level since April 2021 at 3.8%. However, despite these disinflationary signals, core inflation remains elevated, prompting several Fed officials in the past two days to emphasize the need for further tightening this year. Nonetheless, we anticipate that policymakers will maintain a data-dependent approach.
Looking at the one-year outlook, headline CPI is expected to drop to 3.1%, marking the lowest level since March 2021. This deceleration in inflation is supported by easier year-over-year comparisons, known as base effects, as we approach the anniversary of the June 2022 reading, which marked the peak of the inflation cycle at 9.1%. Core CPI is also projected to decrease modestly to 5%, reaching its lowest level since November 2021.
Lower used-vehicle prices and a slowdown in rents are expected to contribute to the downward trajectory of core prices, although stronger wage data could exert some upward pressure on services inflation. Barring any significant surprises in this week's data, it is likely that the Fed will proceed with a quarter-point rate hike in July. However, market expectations indicate that the central bank is approaching the end of its tightening cycle.
Jul 10, 2023 Jul 11, 2023
-------------------- --------------------
Dow 33,944.40 209.52 34,261.42 317.02
Nasdaq 13,685.48 24.77 13,760.70 75.22
S&P 500 4,409.53 10.58 4,439.26 29.73
NYSE Volume 3.43B 3.63B
NYSE Advancers 2,049 2,280
NYSE Decliners 899 691
Nasdaq Volume 5.28B 4.86B
Nasdaq Advancers 2,930 2,839
Nasdaq Decliners 1,436 1,565
New Highs/Lows
07/04 07/05 07/06 07/07 07/10 07/11
--------------------------------------------
NYSE New Highs 0 53 29 54 81 148
NYSE New Lows 0 13 34 21 25 9
Nasdaq New Highs 0 67 36 57 73 145
Nasdaq New Lows 0 66 140 67 58 49
Stocks Covered Today Stock Splits
TRADER'S TIP: "Try a Few Diamonds and Spiders!"
If you are new to shorting, a good place to start is with index "stocks" like QQQ (NASDAQ 100 Trust), DIA (Dow Diamonds), or SPY (Spiders). While they aren't actually "stocks," these popular instruments are widely traded in virtually the same fashion.
However, there is one distinct advantage. Unlike individual stocks, each index "stock" represents a broad list of securities. The DIA includes 30 stocks, the QQQ contains 100, and the SPY consists of 500. As a result, trading this type of index security lowers the risk associated with holding positions in specific companies.
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 - 4439.26 July 11, 2023
52-Week High: 4458.48
52-Week Low: 3491.58
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3089.99
Resistance 2: 3018.58
Resistance 1: 1509.29
Pivot: 2947.17
Support 1: 1437.88
Support 2: 2875.76
Support 3: 2804.35
NASDAQ Composite - 13760.70 July 11, 2023
52-Week High: 13864.06
52-Week Low: 10088.83
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 9691.88
Resistance 2: 9414.57
Resistance 1: 4707.28
Pivot: 9137.26
Support 1: 4429.97
Support 2: 8859.95
Support 3: 8582.65
Dow Industrials - 34261.42 July 11, 2023
52-Week High: 34712.28
52-Week Low: 28660.94
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 35470.25
Resistance 2: 34721.34
Resistance 1: 34228.11
Pivot: 33972.43
Support 1: 33479.19
Support 2: 33223.51
Support 3: 32474.60
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, July 10, 2023: 10-Jul 10:00 am Wholesale inventories 10-Jul 10:00 am Fed Vice Chair Michael Barr 10-Jul 11:00 am San Francisco Fed President Mary Daly speaks 10-Jul 11:00 am Cleveland Fed President Mester speaks 10-Jul 3:00 pm Consumer credit Tuesday, July 11, 2023: 11-Jul 6:00 am NFIB optimism index Wednesday, July 12, 2023: 12-Jul 8:30 am Consumer price index 12-Jul 8"30 am Core CPI 12-Jul 8:30 am CPI year over year 12-Jul 8:30 am Core CPI year over year 12-Jul 8:30 am Richmond Fed President Barkin speaks 12-Jul 1:00 pm Atlanta Fed President Bostic speaks 12-Jul 2:00 pm Fed Beige Book Thursday, July 13, 2023: NONE Friday, July 14, 2023: 14-Jul 10:00 am Consumer sentiment 14-Jul 8:30 am Import price index 14-Jul 8:30 am Import price index minus fuel 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: "Hurry, Hurry, Step Right Up!"
Don't pay much attention to all the hype from brokerage analysts or the business media. Brokerage firms usually have more than just a casual interest in stocks they tout, and many times so does the media.
Stocks Covered in This Issue
COMMUNICATION SERVICES SECTOR
Fox Corporation (FOX: Communication Services/Entertainment) - BULLISH BOUNCE. FOX has charted an upward weekly trend until recently when sellers showed up to push prices lower. On Tuesday the selling ran into solid support. A potential bounce up from this level should attract buyers and likely return FOX to the previously established uptrend. The Bullish Bounce set-up is the basis for our BUY entry, so be ready to go long on a rise to our trigger at 32.23. Set a trailing stop of 1.64, tightening to 0.82 on a 1.08 profit. FOX closed at 31.70 on Tuesday. Earnings Report Date: N/A. Beta: 0.88. Market-Cap: 16.574B. Optionable.
HEALTHCARE SECTOR
Biomea Fusion, Inc. (BMEA: Healthcare/Biotechnology) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in BMEA's narrowest trading range of the past seven sessions. With neither group able to take complete control on Tuesday, the stock's short term destiny is up for grabs. You can capitalize on this unusually tight condition by placing both a BUY order at 21.76 and a SELL order at 20.17. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.59 trailing stop. Tighten the stop to 0.8 once you have a 6 gain. BMEA closed Tuesday at 21.00. Earnings Report Date: N/A. Beta: -1.38. Market-Cap: 751.311M. Optionable.
INDUSTRIALS SECTOR
HireQuest, Inc. (HQI: Industrials/Staffing & Employment Services) - SQUEEZE PLAY. HQI traders on both sides of the fence are now locked in a head-to-head shootout. Tuesday's price range was the narrowest in over a week, as neither Bears or Bulls have been able to clearly gain the upper hand. This gives us an opportunity to catch the next directional move with little risk of loss. To do this we'll place both a long and a short trigger with a BUY at 26.37 and a SELL short trigger at 24.63. When one of the orders is filled, cancel the remaining order and enter a 1.74 trailing stop. When you've reached a 2.98 paper profit, tighten the stop to 0.87. HQI closed at 25.59 on Tuesday. Earnings Report Date: Aug 07, 2023. Beta: 1.07. Market-Cap: 355.701M. Not Optionable.
TECHNOLOGY SECTOR
Vishay Intertechnology, Inc. (VSH: Technology/Semiconductors) - BULLISH BOUNCE. If you are looking for another bouncer with profits in mind, VSH fits the bill. Shares have been in retreat-mode lately, but now this stock is in the process of bouncing from support. Currently priced at 28.82, plan to buy shares at 29.3 and use a 1.69 trailing stop. Tighten the stop to 0.85 on a 1.02 gain. Earnings Report Date: Jul 31, 2023. Beta: 1.31. Market-Cap: 4.026B. Optionable.
inTEST Corporation (INTT: Technology/Semiconductor Equipment & Materials) - SQUEEZE PLAY. In certain stocks a tightly constricted price range is a sign that neither bulls nor bears are confident of winning in the near term. This often means that the side that gives up first causes a quick move in the opposite direction. In these fear dominated skirmishes, opposing traders always benefit from the retreat. In the Squeeze Play setup you can actually play both sides of the inevitable surge. INTT traders reached this state of stand-off on Tuesday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 24.15 and a SELL short trigger at 22.46. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.69 which can be tightened to 0.85 on a 2.82 gain. INTT closed Tuesday at 23.64. Earnings Report Date: Aug 02, 2023. Beta: 2.01. Market-Cap: 263.146M. 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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