Notes From The Editor

Swing traders enjoy the luxury of not having to be overly concerned with the market's long-term direction. When holding a position for a few days or a few weeks, the near-term bias is what's important. That's why we implement a technical strategy that focuses on daily shifts on the major stock indexes. Weekly and monthly intervals come into play only when a historical level rears its head.

All this begs the question: why should swing traders even be concerned with the market's long-term bias? One reason is balance. In a strong uptrending market, traders who prefer to hold a variety of positions would probably want to have most of those skewed towards the bullish side. The inverse is true in a market that's been marching lower for several months or more.

A top-down approach to trading is another reason for monitoring the long-term bias. All rising markets tend to have leadership sectors where buying is particularly strong. Money will rotate in and out of these groups until the underlying uptrend fades, lifting individual stocks that can provide fertile ground for swing trades.

The long-term direction is also closely tied to economic indicators like GDP growth and inflation numbers. Swing traders should be aware of when major indicators are scheduled for release, as well as the expectations surrounding the data. More conservative types prefer to hold off on taking new positions when major indicators are on the horizon.

Swing traders have a lot of information to contend with on a daily basis. The underlying "big picture" doesn't have to be monitored too closely to make informed decisions; just remember keep an eye on these dynamics while focusing the lion's share of your attention on the near-term changes that dictate direction over a shorter timeframe.

Here's to profits!

Kent Barton
Senior Analyst

Quick List

    
Stock     07/13     07/13      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

GME       23.46      0.01     24.29     22.71        1.58/0.79      2.68
SLRN      20.46     -0.12     21.01     19.51         1.5/0.75      3.54
CVLG      44.22      1.00     44.99                  3.05/1.53      2.42
ENVX      20.77      0.72     21.17     19.43        1.74/0.87       2.3
NOVA      21.66      0.74     22.17     20.52        1.65/0.83      1.82

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.

Market Summary

What a great run for US stocks of late, up a 4th straight day, with the S&P 500 topping the 4,500 level on Thursday for the first time since April 2022. The Nasdaq topped and held above the 14,000-level, also the highest since April 2022, as data showed for a second straight day that inflation moderated in June and came in below consensus estimates. With the latest gains, NYSE breadth has been positive by more than 2-1 for five straight days now as the risk-on mood in stocks surged and the dollar weakened to a 15-month low on inflation data.

Big tech stocks continued to charge higher as Amazon advanced on the back of its Prime Day sale, while chipmaker Nvidia also rose to new all-time highs along with the semi-index. All S&P sectors were higher excluding Energy, which is still up 3% on the week.

Market momentum remains clearly to the upside this year with Technology up 41% YTD, Communications up 41% as well and Consumer Discretionary up 35%. With inflation data in the rear view mirror, and a 25-bps hike "baked in" to the July FOMC meeting, earnings are the next market catalyst starting with the big banks on Friday and into next week.

Late day, big news was that St Louis Fed President and well-known "hawk" James Bullard announced he was stepping down in August, giving stocks another lift. Overall, it was just another wild day adding to a wild week going into an options expiration session next Friday during the Fed Bank quiet period.

                        Jul 12, 2023           Jul 13, 2023   
                  --------------------   --------------------
Dow                 34,347.43    86.01     34,395.14    47.71
Nasdaq              13,918.96   158.26     14,138.57   219.61
S&P 500              4,472.16    32.90      4,510.04    37.88

NYSE Volume                      3.93B                  3.84B
NYSE Advancers                   2,137                  2,064
NYSE Decliners                     817                    877

Nasdaq Volume                    5.24B                  5.19B
Nasdaq Advancers                 2,894                  2,906
Nasdaq Decliners                 1,510                  1,521

                                 New Highs/Lows

                   07/06  07/07  07/10  07/11  07/12  07/13
                 --------------------------------------------
NYSE New Highs        29     54     81    148    216    174
NYSE New Lows         34     21     25      9     10     12
Nasdaq New Highs      36     57     73    145    227    275
Nasdaq New Lows      140     67     58     49     52     47
   

TRADER'S TIP: "Up or Down?"

It doesn't matter which way the market goes as long as long as we keep our opinions about direction from blinding us to the opportunity at hand. Traders can increase profitability in all market conditions by following a few time proven guidelines:

1) Locate the trend, and trade in harmony with it. This dramatically shifts the odds of winning into your favor.

2) Never risk more than 2% on any one trade.

3) Use stops to protect against unplanned losses.

4) Be confident, but keep your ego in check. Respect your emotions; yet don't let them prevent you from following your trading plan while you are in a trade.

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 - 4510.04 July 13, 2023

52-Week High: 4517.38
52-Week Low: 3491.58
Daily Trend: UP
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 - 14138.57 July 13, 2023

52-Week High: 14163.80
52-Week Low: 10088.83
Daily Trend: UP
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 - 34395.14 July 13, 2023

52-Week High: 34712.28
52-Week Low: 28660.94
Daily Trend: UP
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
 

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

TRADER'S TIP: "Concentrate on Execution"

"The last thing you should have to worry about during market hours is where the market is going, and whether to be long or short. Your strategy will tell you all of this. You should not be concerned about the news, or even if you are making or losing money. You should not be concerned with analyzing the market, always reserve this for when the market is closed.

The only thing you should be doing during market hours is concentrating on effectively executing your strategy. If you can't execute your strategy effectively, there really is no point in trading. There are two sides to trading, strategy development and trading execution. During market hours is when you should concentrate on execution and nothing else."

~ Charlie Wright, Veteran Trader and Hedge Fund Manager

Stocks Covered in This Issue

CONSUMER CYCLICAL SECTOR

GameStop Corp. (GME: Consumer Cyclical/Specialty Retail) - SQUEEZE PLAY. Thursday's trading session left GME 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 24.29 and your SELL short trigger at 22.71. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.58 trailing stop. Once you have a 2.68 profit, reduce the stop to 0.79. Earnings Report Date: Sep 05, 2023. Beta: -0.28. Market-Cap: 7.149B. Optionable.

HEALTHCARE SECTOR

Acelyrin, Inc. (SLRN: 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. SLRN found itself in this condition on Thursday 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 21.01 and a SELL short trigger at 19.51. When SLRN moves outside of Thursday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 1.5 trailing stop. After you've got a 3.54 profit, tighten the stop to 0.75. SLRN closed at 20.46 on Thursday. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.989B. Optionable.

INDUSTRIALS SECTOR

Covenant Logistics Group, Inc. (CVLG: Industrials/Trucking) - BULLISH BOUNCE. This trader-friendly setup turns repetitive stock behavior into real profits. Based on the tendency for up-trending stocks to drop briefly and then resume the up-trend, the Bullish Bounce places traders into excellent stocks when conditions are primed for more skyward movement. CVLG's current price action near moving average support signals a potential BUY entry at 44.99, followed by a 3.05 trailing stop which can be tightened to 1.53 upon earning 2.42. CVLG closed Thursday at 44.22. Earnings Report Date: Jul 26, 2023. Beta: 1.46. Market-Cap: 571.212M. Optionable.

Enovix Corporation (ENVX: Industrials/Electrical Equipment & Parts) - SQUEEZE PLAY. ENVX shareholders know what it feels like to be squeezed. Thursday'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. ENVX closed Thursday at 20.77. The plan is to enter in the right direction by placing a BUY trigger at 21.17 and a SELL short trigger at 19.43. Once ENVX establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.74. After you've collected a 2.3 profit, tighten the stop to 0.87. Earnings Report Date: Jul 26, 2023. Beta: 1.35. Market-Cap: 3.285B. Optionable.

TECHNOLOGY SECTOR

Sunnova Energy International Inc. (NOVA: Technology/Solar) - SQUEEZE PLAY. The ticker for Thursday's session shows NOVA 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 22.17 and a SELL short trigger at 20.52. When NOVA 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 1.65 trailing stop. Upon reaching a 1.82 profit, resize the stop to 0.83. Earnings Report Date: Jul 26, 2023. Beta: 2.04. Market-Cap: 2.519B. 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.

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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