|
July 2, 2022 - The RightLine Report
**********************************
NOTES FROM THE EDITOR
**********************************
The terms "conservative" and "aggressive" are familiar to most investors. Mutual funds often have these words in their descriptions, and financial advisors will talk about the various strategies you can use. The basic premise is simple: risk more with the potential to make more money, or reap smaller gains with less risk.
***********************************
"QUICK LIST"
***********************************
Stock 07/01 07/01 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
FL 25.10 -0.15 25.89 23.8 2.09/1.05 2.12
EDU 20.23 -0.13 21.15 19.08 2.07/1.04 3.12
BPT 21.24 0.77 22 19.57 2.43/1.22 4.28
NOAH 20.33 0.10 20.79 1.78/0.89 1.82
LSPD 22.68 0.38 23.42 21.42 2/1 3.28
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
*****************************
US stocks kicked off the third quarter with a bullish session on Friday ahead of a long Independence Day Holiday weekend. Traders continue to wrestle with recession concerns, which have increased as monetary policies tighten and economic data suggests slowing activity. On that note, reports show that manufacturing activity slowed in June, while construction spending surprisingly decreased in May. In equities, shares of Kohl's Corporation (KSS $29) dropped after the retailer called off takeover negotiations with Franchise Group (FRG $32), and Micron Technology (MU $52) beat earnings estimates but released guidance well below expectations. The USD/dollar, oil prices and treasuries were higher, gold finished near even. Friday On The Week
-------------------- --------------------
Dow 31,097.26 321.83 -403.42 -1.28%
Nasdaq 11,127.85 99.11 -479.77 -4.13%
S&P 500 3,825.33 39.95 -86.41 -2.21%
NYSE Volume 4.1B
NYSE Advancers 2,412
NYSE Decliners 805
Nasdaq Volume 4.89B
Nasdaq Advancers 2,755
Nasdaq Decliners 1,719
New Highs/Lows
06/24 06/27 06/28 06/29 06/30 07/01
--------------------------------------------
NYSE New Highs 10 14 12 9 12 12
NYSE New Lows 68 65 89 199 342 205
Nasdaq New Highs 33 26 34 13 18 15
Nasdaq New Lows 147 145 191 346 535 318
***********************************
TRADER'S TIP:
***********************************
TRADER'S TIP: "Trends vs. Trading Ranges" "Money management tactics are different in trends and trading ranges. It pays to put on a smaller position in a trend but use a wider stop. Then you will be less likely to get shaken out by reactions while you keep risk under control. You may put on a bigger position in a trading range but use a tighter stop." ~ Alex Elder **************************
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 - 3825.33 July 1, 2022 52-Week High: 4818.62 52-Week Low: 3636.85 Daily Trend: DOWN Weekly trend: DOWN Weekly Pivot Levels Resistance 3: 4251.00 Resistance 2: 4043.81 Resistance 1: 3934.57 Pivot: 3836.62 Support 1: 3727.38 Support 2: 3629.43 Support 3: 3422.24 https://www.prorightline.com/rlch/070122SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, July 04, 2022: 04-Jul Independence Day holiday. None scheduled Tuesday, July 05, 2022: 05-Jul 10 am Factory orders 05-Jul 10 am Core capital equipment orders revision Wednesday, July 06, 2022: 06-Jul 9:45 am 06-Jul 10 am ISM services index 06-Jul 10 am Job openings 06-Jul 10 am Quits Thursday, July 07, 2022: 07-Jul 8:15 am ADP employment report (monthly change) 07-Jul 8:30 am Initial jobless claims 07-Jul 8:30 am Continuing jobless claims 07-Jul 8:30 am Foreign trade balance Friday, July 08, 2022: 08-Jul 8:30 am Nonfarm payrolls (monthly change) 08-Jul 8:30 am Unemployment rate 08-Jul 8:30 am Average hourly earnings 08-Jul 8:30 am Labor force participation rate, 25-54 08-Jul 10 am Wholesale inventories revision 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: "The Bigger The Profit, The Tighter The Stop" As your profits in a trade grow, be sure to tighten up your stops. However this doesn't mean that you should attempt to guess where the "top" is. To consistently get the most out of each trade, be willing to stay in a position until your stop takes you out of the trade. It's okay to be slightly late to take profits, just be sure to set your stops to allow for normal intra-day price fluctuations. A good exit strategy doesn't usually get you out at the "perfect" moment. Why? Because a properly set trailing stop is always wide enough to keep you in the trade long enough to get NEAR the top. Keep in mind that if you do get shaken out too early, you can always get back in if conditions merit. ***********************************
STOCKS COVERED IN THIS ISSUE
***********************************
CONSUMER CYCLICAL SECTOR Foot Locker, Inc. (FL: Consumer Cyclical/Apparel Retail) - SQUEEZE PLAY. FL 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. FL closed Friday at 25.10. The plan is to enter in the right direction by placing a BUY trigger at 25.89 and a SELL short trigger at 23.8. Once FL establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 2.09. After you've collected a 2.12 profit, tighten the stop to 1.05. Earnings Report Date: Aug 18, 2022. Beta: 1.26. Market-Cap: 2.372B. Optionable. CONSUMER DEFENSIVE SECTOR New Oriental Education & Technology Group Inc. (EDU: Consumer Defensive/Education & Training Services) - 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. EDU traders reached this state of stand-off on Friday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 21.15 and a SELL short trigger at 19.08. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 2.07 which can be tightened to 1.04 on a 3.12 gain. EDU closed Friday at 20.23. Earnings Report Date: Sep 12, 2022. Beta: 0.79. Market-Cap: 3.433B. Optionable. ENERGY SECTOR BP Prudhoe Bay Royalty Trust (BPT: Energy/Oil & Gas Refining & Marketing) - SQUEEZE PLAY. BPT traders on both sides of the fence are now locked in a head-to-head shootout. Friday'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 22 and a SELL short trigger at 19.57. When one of the orders is filled, cancel the remaining order and enter a 2.43 trailing stop. When you've reached a 4.28 paper profit, tighten the stop to 1.22. BPT closed at 21.24 on Friday. Earnings Report Date: N/A. Beta: 0.11. Market-Cap: 454.536M. Optionable. FINANCIAL SERVICES SECTOR Noah Holdings Limited (NOAH: Financial Services/Asset Management) - BULLISH BOUNCE. If you are looking for another bouncer with profits in mind, NOAH 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 20.33, plan to buy shares at 20.79 and use a 1.78 trailing stop. Tighten the stop to 0.89 on a 1.82 gain. Earnings Report Date: Aug 15, 2022. Beta: 1.33. Market-Cap: 1.224B. Optionable. TECHNOLOGY SECTOR Lightspeed Commerce Inc. (LSPD: Technology/Software-Application) - 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. LSPD 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 23.42 and a SELL short trigger at 21.42. When LSPD 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 trailing stop. After you've got a 3.28 profit, tighten the stop to 1. LSPD closed at 22.68 on Friday. Earnings Report Date: Aug 03, 2022. Beta: 3.19. Market-Cap: 3.387B. 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 ---------------- ------- -------- ------- ------ ------- Amazon AMZN 3/9/2022 6/6/2022 20-for-1 Yes 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
**********************************
"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!
**********
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 800-737-4518. |