July 11, 2024 - The RightLine Report
Notes From The Editor
"Use Your Emotions To Improve Your Trading Results"
One skill that every successful trader learns is how to keep negative emotions from causing bad trading decisions. On an emotional level, dealing with money is one of the most consistent and complex emotional challenges we face. We all might as well accept it. Profits make us feel good and losses make us feel bad.
When it comes to trading stocks, emotions continuously influence our results whether we like it or not. It's best to like it, because we can't stop it. Trying to keep our emotions from flowing is like trying to stop breathing, or trying to stop thinking. Any attempt to become completely emotionless for any extended length of time probably does more harm than good.
When you consider the unpredictable nature of the stock market you can never be sure what will happen during a trade. Working in such a volatile environment makes it hard for traders to maintain their sense of logic - especially when tempted to follow emotional impulses. It isn't possible or even desirable to eliminate emotion. What we can do is monitor our emotions and take action to replace negative emotions that can work against us with positive emotions that work with us.
The first step toward learning to manage our emotions productively is to realize that emotions are simply conditioned responses to environmental triggers. Triggers occur everyday. Like when you're driving in traffic and someone swerves in front of you, or a trade that's going great suddenly reverses and begins to eat up your profits.
A trigger is anything that causes an emotional reaction. Since you can't always control these triggers, you can't always stop your initial reactive feelings.
Emotions are in large part an immediate surge of chemicals into your bloodstream. There's no way to prevent this biological process. What you can do is realize what is actually happening and make the necessary adjustments to change how you feel about it.
- How To Replace Negative Emotions With Positive Emotions
1) Changing your emotions is relatively simple. First, make a decision right now that when you are trading you will replace any negative emotions you have with positive emotions. This simple action marks the beginning of a profound change in the way you manage your emotions. Your subconscious will quickly realize that something important is underway.
2) Anytime in the future that you feel a negative emotion, think back to your decision to replace negative emotions with positive emotions. Take several seconds to remember the moment of decision and reflect on the wisdom of your choice. These reflective thoughts help create neuro-transmitters that change negative emotions. Once you feel slightly calmer, move on to step three.
3) Take at least ten to fifteen seconds and imagine you are feeling better. Look up at the ceiling and smile, then chuckle. As you look up, roll your eyes from side to side and laugh out loud. Research shows that that our emotions can be changed just by changing our facial expressions.
4) Once you're feeling better it's relatively easy to engage any positive emotion that you choose. Decide how you want to feel - happy, confident, satisfied - then assume the posture and facial expression that reflects those feelings. Once you're in the desired state of mind, continue trading with the chosen positive disposition.
Here are a few tips for improving your state of mind while trading ...
- Realize that it's okay to fully experience your emotions, both pleasant and unpleasant.
- Use your emotions to provide important information about yourself and ways you can improve your trading.
- Place your main attention on controlling your thoughts and actions rather than controlling your emotions.
- Daydream. Daydreaming is a powerful method of self-guided imagery. Feel the freedom and excitement that comes with trading the market. Enjoy yourself!
Bottom Line: Some people think that a person who controls their emotions doesn't feel any emotion at all. This isn't true. Individuals who learn to replace undesired emotions with emotions they really want experience a wider range of positive emotions than those who don't.
Leave the past behind. Don't dwell on your profits or losses. Apply your experience to the trades you are in at the moment. Know that greed, fear, overconfidence, and self-pity are emotions that lead to bad decisions. Replace them with contentment, confidence, faith and humility. Find strength in knowing that what you learn from trading will help you in every other area of your life.
Trade well!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 07/11 07/11 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
DJT 29.86 1.06 30.7 28.1 2.6/1.3 7.44
HIMS 21.05 0.84 21.64 19.99 1.65/0.83 3.12
SYRE 28.13 0.25 29.88 27.21 2.67/1.34 5.92
RNA 44.31 1.78 45.26 41.56 3.7/1.85 4.78
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 stock indices ended the trading session mixed on Thursday, highlighted by a sharp decline in the technology-heavy Nasdaq and modest gains in the Dow Jones. Early market signals indicated a rotation away from high-flying mega-cap tech stocks towards sectors that had been underperforming, such as small-cap and real estate stocks. This rotation coincided with the release of the consumer price index (CPI) data for June, which showed cooler-than-expected inflation trends. Year-over-year, headline inflation registered at 3.0%, down from last month's 3.3% and below forecasts of 3.1%. Moreover, the monthly CPI figure showed the first negative reading since 2020, indicating broad-based price decreases in June.
Following the release of the inflation data, US Treasury yields saw significant declines, with the 2-year yield falling to a recent low of 4.51%. Additionally, the probability of a Federal Reserve rate cut at its September meeting surged to around 85%, up from about 68% just a week earlier according to CME FedWatch.
In our analysis, while sectors previously lagging may see potential for recovery, especially relative to possibly overstretched mega-cap technology stocks, sustained rotation may necessitate further economic data confirming a softening economy. If economic conditions deteriorate further, the potential for outperformance in sectors like small-caps and cyclicals, which are more closely tied to economic growth, could be constrained.
Jul 10, 2024 Jul 11, 2024
-------------------- --------------------
Dow 39,721.36 429.39 39,753.75 32.39
Nasdaq 18,647.45 218.16 18,283.41 -364.04
S&P 500 5,633.91 56.93 5,584.54 -49.37
NYSE Volume 3.34B 4.03B
NYSE Advancers 2,102 2,433
NYSE Decliners 703 405
Nasdaq Volume 5.24B 6.38B
Nasdaq Advancers 2,702 3,200
Nasdaq Decliners 1,500 1,050
New Highs/Lows
07/04 07/05 07/08 07/09 07/10 07/11
--------------------------------------------
NYSE New Highs 0 124 108 91 141 279
NYSE New Lows 0 58 38 83 54 9
Nasdaq New Highs 0 153 183 149 180 275
Nasdaq New Lows 0 165 123 155 139 65
Stocks Covered Today Stock Splits
TRADER'S TIP: "CAUTION: Options Expiration Just Ahead"
The third Friday of every month is often a turbulent session due to index and stock options expirations. The actual expiration date is Saturday, but all trading has to be finished by Friday's close. So what does it actually mean?
For traders, it means increased volatility as those options and futures become subject to exercise or roll-over, two processes that require trading transactions. While you don't have to trade options to take advantage of the movement in stocks resulting from these "Witching" days, it is wise to at least be aware of when these abnormal market sessions are about to occur.
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".
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, JULY 8 3:00 pm Consumer credit TUESDAY, JULY 9 6:00 am NFIB optimism index WEDNESDAY, JULY 10 10:00 am Wholesale inventories THURSDAY, JULY 11 8:30 am Initial jobless claims 8:30 am Consumer price index 8:30 am CPI year over year 8:30 am Core CPI 8:30 am Core CPI year over year 1:00 pm St. Louis Fed President Alberto Musalem speaks 2:00 pm Monthly U.S. federal budget FRIDAY, JULY 12 8:30 am Producer price index 8:30 am PPI year over year 8:30 am Core PPI 8:30 am Core PPI year over year 10:00 am Consumer sentiment (prelim) 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: "Volatility - Good or Evil?"
Though volatility can be a double-edged sword when trading, a few reminders will help you profit from rapid price movement during volatile periods. First of all, recall that volatility creates trading opportunities. If you focus on the short term, share prices that move by 10% in a day or two should be welcomed. Second, risk management is a must when volatile conditions prevail. Make absolutely certain that you use a pre-planned exit strategy to prevent unwanted losses. And finally, use the gap-open tactic to adjust, or help determine buy and sell points. You'll be glad you did!
Stocks Covered in This Issue
COMMUNICATION SERVICES SECTOR
Trump Media & Technology Group Corp. (DJT: Communication Services/Internet Content & Information) - 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. DJT traders reached this state of stand-off on Thursday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 30.7 and a SELL short trigger at 28.1. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 2.6 which can be tightened to 1.3 on a 7.44 gain. DJT closed Thursday at 29.86. Earnings Report Date: N/A. Beta: 5.98. Market-Cap: 5.672B. Optionable.
CONSUMER DEFENSIVE SECTOR
Hims & Hers Health, Inc. (HIMS: Consumer Defensive/Household & Personal Products) - SQUEEZE PLAY. Trader indecision has put HIMS squarely in the center of a Bull versus Bear standoff. This tight spot should soon give way to a clear winner in the short-term, and we want to be in position for the move. To do that we've set a BUY entry at 21.64 and a SELL short entry at 19.99. Now it's up to HIMS to show us which entry will be filled. Once the trade is underway place a 1.65 trailing stop, which can be tightened to 0.83 after you achieve a 3.12 profit. HIMS closed on Thursday at 21.05. Earnings Report Date: Aug 5, 2024. Beta: 1.07. Market-Cap: 4.521B. Optionable.
HEALTHCARE SECTOR
Spyre Therapeutics, Inc. (SYRE: Healthcare/Biotechnology) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in SYRE's narrowest trading range of the past seven sessions. With neither group able to take complete control on Thursday, 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 29.88 and a SELL order at 27.21. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.67 trailing stop. Tighten the stop to 1.34 once you have a 5.92 gain. SYRE closed Thursday at 28.13. Earnings Report Date: Aug 9, 2024. Beta: 2.94. Market-Cap: 1.429B. Optionable.
Avidity Biosciences, Inc. (RNA: Healthcare/Biotechnology) - SQUEEZE PLAY. RNA traders on both sides of the fence are now locked in a head-to-head shootout. Thursday'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 45.26 and a SELL short trigger at 41.56. When one of the orders is filled, cancel the remaining order and enter a 3.7 trailing stop. When you've reached a 4.78 paper profit, tighten the stop to 1.85. RNA closed at 44.31 on Thursday. Earnings Report Date: Aug 6, 2024. Beta: 0.90. Market-Cap: 4.775B. 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