|
July 15, 2023 - The RightLine Report
**********************************
NOTES FROM THE EDITOR
**********************************
The fear of losing money often causes traders to make detrimental mistakes. Dealing with this fear is crucial for success in the trading world. While eliminating fear entirely may not be realistic, understanding how normal trading concerns can escalate into paralyzing fear is key to overcoming this dilemma.
***********************************
"QUICK LIST"
***********************************
Stock 07/14 07/14 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
REX 35.01 -0.03 35.6 2.03/1.02 1.48
IPI 24.10 0.15 24.57 22.91 1.66/0.83 1.64
MUSA 310.08 4.72 314.78 20.31/10.16 12.7
SNBR 30.45 -0.48 31.31 29.25 2.06/1.03 2.3
ARVN 24.16 -0.47 25.06 23.38 1.68/0.84 4.12
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/
*****************************
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. Friday On The Week
-------------------- --------------------
Dow 34,509.03 113.89 +774.15 2.29%
Nasdaq 14,113.70 -24.87 +452.98 3.32%
S&P 500 4,505.42 -4.62 +106.47 2.42%
NYSE Volume 3.65B
NYSE Advancers 734
NYSE Decliners 2,224
Nasdaq Volume 5.37B
Nasdaq Advancers 1,339
Nasdaq Decliners 3,104
New Highs/Lows
07/07 07/10 07/11 07/12 07/13 07/14
--------------------------------------------
NYSE New Highs 54 81 148 216 174 112
NYSE New Lows 21 25 9 10 12 24
Nasdaq New Highs 57 73 145 227 275 185
Nasdaq New Lows 67 58 49 52 47 77
***********************************
TRADER'S TIP:
***********************************
TRADER'S TIP: "When Your Indicators Contradict The Trend" Due to their overly sensitive nature, some technical indicators will turn in one direction while the price trend remains in the other. A rule of thumb - whenever a price trend and indicators are in conflict, always go with price until the trend is broken. **************************
THE TECHNICAL ANALYST
**************************
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 - 4505.42 July 14, 2023 52-Week High: 4527.76 52-Week Low: 3491.58 Daily Trend: UP Weekly trend: UP Weekly Pivot Levels Resistance 3: 4750.04 Resistance 2: 4612.20 Resistance 1: 4558.81 Pivot: 4474.36 Support 1: 4420.97 Support 2: 4336.52 Support 3: 4198.68 https://www.prorightline.com/rlch/071423SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, July 17, 2023: 17-Jul 8:30 am Empire State manufacturing survey Tuesday, July 18, 2023: 18-Jul 8:30 am U.S. retail sales 18-Jul 8:30 am Retail sales minus autos 18-Jul 9:15 am Industrial production 18-Jul 9:15 am Capacity utilization 18-Jul 10:00 am Business inventories 18-Jul 10:00 am Home builder confidence index Wednesday, July 19, 2023: 19-Jul 8:30 am Housing starts Thursday, July 20, 2023: 20-Jul 8:30 am Initial jobless claims 20-Jul 8:30 am Philadelphia Fed manufacturing survey 20-Jul 10:00 am Existing home sales 20-Jul 10:00 am U.S. leading economic indicators Friday, July 21, 2023: 21-Jul None scheduled 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/
***********************************
TRADER'S TIP:
***********************************
TRADER'S TIP: "Trendlines & Volume" When expanding volume accompanies price action in the direction of a trendline, it confirms the trend. The same is true when volume dries up as prices retreat back to the trendline. However, if volume increases as prices pull back to a trendline, or if volume drops when prices pull away from a trendline, consider it a warning that the trendline may be in trouble. ***********************************
STOCKS COVERED IN THIS ISSUE
***********************************
BASIC MATERIALS SECTOR REX American Resources Corporation (REX: Basic Materials/Chemicals) - BULLISH BOUNCE. Among other strengths, the Bullish Bounce protects traders from buying a stock "at the top" of its current cycle. The entry into this setup always takes place in upward-moving stocks that have retreated a bit under normal conditions. Now sitting at 35.01, REX is on our radar for a BUY entry at 35.6. If you purchase shares of REX, be sure to also place a trailing stop of 2.03. Snug it up to 1.02 on a 1.48 gain. Earnings Report Date: Aug 28, 2023. Beta: 0.93. Market-Cap: 609.517M. Optionable. Intrepid Potash, Inc. (IPI: Basic Materials/Agricultural Inputs) - SQUEEZE PLAY. IPI 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 24.57 and a SELL short entry at 22.91. Once your trade is filled, enter a 1.66 trailing stop. Tighten it to 0.83 after a 1.64 gain. IPI closed on Friday at 24.10. Earnings Report Date: Aug 02, 2023. Beta: 2.09. Market-Cap: 317.122M. Optionable. CONSUMER CYCLICAL SECTOR Murphy USA Inc. (MUSA: Consumer Cyclical/Specialty Retail) - BULLISH BOUNCE. Everyone familiar with price charts knows that a stock tends to bounce its way higher rather than move in a straight line. The lower levels of these short-term rebounds offer a safe and often early entry into stocks that are in the process of establishing longer-term uptrends. MUSA's reaction to support on Friday created a Bullish Bounce setup with a BUY entry trigger at 314.78. Use a 20.31 trailing stop, which should work well with MUSA's typical daily range. Tighten it to 10.16 on a 12.7 profit. MUSA closed at 310.08 on Friday. Earnings Report Date: Aug 02, 2023. Beta: 0.82. Market-Cap: 6.755B. Optionable. Sleep Number Corporation (SNBR: Consumer Cyclical/Furnishings, Fixtures & Appliances) - SQUEEZE PLAY. Friday's narrow price range has created a potentially profitable setup in SNBR, as sellers and buyers find themselves in a near tie for control of price direction. The next short-term trend could go either way, so prepare for a move out of the draw within the next day or so. Set a BUY entry at 31.31 and a SELL short entry at 29.25. Let SNBR's price action determine your long or short entry. Once the order is filled, place a 2.06 trailing stop, and tighten it to 1.03 upon getting a 2.3 gain. SNBR closed Friday at 30.45. Earnings Report Date: Jul 27, 2023. Beta: 1.96. Market-Cap: 702.384M. Optionable. HEALTHCARE SECTOR Arvinas, Inc. (ARVN: Healthcare/Biotechnology) - SQUEEZE PLAY. Traders are feeling the pressure as ARVN's intra-day price range on Friday shrunk to the narrowest spread in over a week. The tension between buyers and sellers should provide enough pent-up engergy for a breakout move in the days ahead, so get ready to trade with the new trend. To achieve that, place a BUY entry at 25.06 and a SELL short entry at 23.38. ARVN's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.68 trailing stop. Tighten it to 0.84 after you get a 4.12 gain. ARVN closed Friday at 24.16. Earnings Report Date: Aug 02, 2023. Beta: 1.76. Market-Cap: 1.29B. 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
***********************************
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
**********************************
"Market Breadth" Have you ever noticed that just a few stocks can have a huge affect on the overall market? Both the Dow and the NASDAQ are susceptible to making a big move based on just a few moving stocks. The Dow contains only 30 stocks, so a large drop in one of its components can really affect this index. Similarly, since the NASDAQ gives more weight to its largest companies, a big move by just a few heavy hitters can dramatically change the index's end of the day result. So how can we quickly find out whether a move in the market was driven by just a few stocks or by a majority of stocks? In other words, how can we determine market "breadth?" The most common measurement of market breadth compares the number of advancing stocks to the number of declining stocks. There are several indicators that present the results in various formats, but they all basically deliver the same data. Each of them is based on how many stocks were up on the day, and how many were down. The undisputed king of advancing and declining indicators is the Advance/Decline Line, or "A/D Line". When compared to the movement of a market index like the Dow or S&P 500, the A/D Line has proven to be an effective gauge of the stock market's breadth and strength. When more stocks are advancing than declining, the A/D Line moves up, and when decliners outnumber advancers, the A/D Line moves down. Many traders feel that the A/D Line is a better indication of market strength than more frequently used indices such as the Nasdaq, Dow, or S&P 500 Index. Charting the trend of the A/D Line allows you to determine if the strength of the overall market is rising or falling. One common way to use the A/D Line is to look for a difference of opinion between an index like the Dow and the A/D Line. Often, an end to a bear market can be anticipated when the A/D Line begins to flatten out and turn upward at the same time the Dow is still making new lows. Chart: https://prorightline.com/rlr/TC-NYAdvanceDecline_515Wx412H.jpg In the past, when a divergence develops between the Dow and the A/D Line, the Dow has typically reversed and followed the direction of the A/D Line. Sometimes a military example is used to explain the relationship between the A/D Line and the Dow. The idea is that when the soldiers (the A/D Line) refuse to follow their leaders (new highs in the Dow), then the leaders will follow the direction of the soldiers. Sort of a broad based mutiny! A typical case of the troops refusing to follow their leaders occurred in 1987. While the Dow was making new highs during the 12 months prior to the market crash in October, the A/D Line was unable to reach new highs. This type of sustained divergence usually results in the index price realigning with the A/D Line. Although there are AD lines for the Nasdaq and the Amex, the New York Stock Exchange (NYSE) is the most commonly used measure of market breadth. Keep in mind that the specific level of the AD line isn't important, it's the trend of the line that matters. Always check to see if it is trending in the same direction and a similar rate as the underlying market index. If the two lines aren't in sync, consider it a sign that a trend reversal may be in the near future. The A/D Line also helps to confirm whether the market has already bottomed. If the line stays flat while the market moves higher, the rally may just be a relief rally. In the best scenario, the line will rise too. Like all other indicators the A/D Line isn't fool proof. A market bottom may move in step with the A-D line, or it may not occur for months. The A/D Line certainly has value as a timing tool, but shouldn't be used as a stand-alone decision maker. It is always wise to consider a broad body of evidence when anticipating future price direction. ======================================================================
Best of luck and have a Great Week!
**********
If you prefer to receive this report in html with color and
graphics, or have any questions, send us an email using our contact
form at:https://prorightline.com/index.php/contact-us/
======================================================================
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. |