July 20, 2023 - The RightLine Report
Notes From The Editor
In the age of instant information, technical traders have an abundance of data at their fingertips to aid in decision-making. Stock charts, while retaining their basic features, continue to offer an ever-expanding array of indicators each year. However, the choice of chart intervals can be a bit overwhelming at times.
For swing trading, we have found the daily chart to be highly effective, as smaller intervals like the 30-minute or 15-minute may show short-lived trends that are challenging to capitalize on unless you are a daytrader.
While many short-term traders think weekly charts are more suitable for long-term traders and investors, swing traders can also benefit from the weekly interval. This is especially true during strong Bull markets, where numerous stocks are reaching all-time highs on the daily chart. Spotting such equities can be an opportunity.
Alternatively, a stock might trade near multi-year highs but just below significant historical resistance. These congestion or reversal zones may not be evident on a daily chart due to their earlier creation. Yet, the weekly chart reveals these levels from the past, providing a clear understanding of potential risk/reward and estimating upside targets.
For a long play in a stock near a 52-week peak, it's wise to refer back to the weekly chart to gauge its potential. Even when a stock isn't breaking to long-term highs, a quick glance at the weekly or monthly chart can be beneficial during trade set-ups. During pullbacks, price action may approach a key moving average, like the 50-week and 200-week MA's, where stocks often witness strong reversals. Especially when these levels coincide with horizontal support or a rising trendline, they become bounce points worth noting.
While momentum oscillators like the MACD and stochastics can be predictive on weekly charts, swing traders should pay more attention to their behavior on the daily interval. A weekly stochastic reversal might take a relatively long time to unfold, whereas a daily stochastic reversal can lead to results in a matter of days.
Wishing you profitable trading!
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 07/20 07/20 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
OPRA 20.77 -0.67 21.28 19.33 1.95/0.98 2.98
QFIN 18.43 0.25 18.92 1.58/0.79 1.76
IMVT 23.04 -0.12 23.57 22.06 1.51/0.76 1.46
INTT 22.30 0.67 23.05 21.25 1.8/0.9 2.7
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
US stocks experienced a significant decline on Thursday, with the Nasdaq dropping as much as 2% in the final hour of trading. The decrease was mainly driven by Netflix (NFLX), which fell over 8% due to weaker revenues and guidance, despite a surge in subscribers. Additionally, Tesla (TSLA) witnessed a decline of over 9% due to lower operating income and weaker margins, negatively impacting both the Nasdaq and S&P 500. Semiconductor stocks also faced a sharp downturn of 3.6% after TSM's softer guidance.
On the positive side, the Dow Jones Industrial Average achieved its best winning streak in over four years, rising for the 9th consecutive day. Strong earnings and guidance from JNJ, TRV, and IBM contributed to the index's upward movement. Dow Transports remained relatively unchanged, with airlines finishing mixed, as United Airlines (UAL) rose on positive results, while American Airlines (AAL) shares declined after earnings (into CSX, KNX earnings tonight).
The S&P 500 declined by around 0.6%, maintaining a remarkable streak of not falling by more than 1% for 38 consecutive sessions, a bullish trend last seen in late 2021 during the run-up to its all-time high. As second-quarter earnings reports continue, Refinitiv data showed that with 77 S&P 500 companies reporting, earnings are expected to have declined by 7.9%, surpassing the 5.7% fall projected at the start of the month.
The Nasdaq, which has led the gains in 2023, experienced a significant drop in large-cap tech stocks, which some analysts believe was long overdue. Next week's earnings are crucial, with major companies like Amazon (AMZN), Meta Platforms (META), Microsoft (MSFT), and Alphabet (GOOGL) expecting to report.
Jul 19, 2023 Jul 20, 2023
-------------------- --------------------
Dow 35,061.21 109.28 35,225.18 163.97
Nasdaq 14,358.02 4.38 14,063.31 -294.71
S&P 500 4,565.72 10.74 4,534.87 -30.85
NYSE Volume 4.12B 3.77B
NYSE Advancers 1,919 1,231
NYSE Decliners 1,018 1,694
Nasdaq Volume 5.13B 5.14B
Nasdaq Advancers 2,529 1,524
Nasdaq Decliners 1,911 2,864
New Highs/Lows
07/13 07/14 07/17 07/18 07/19 07/20
--------------------------------------------
NYSE New Highs 174 112 138 202 162 101
NYSE New Lows 12 24 21 16 8 10
Nasdaq New Highs 275 185 222 275 275 87
Nasdaq New Lows 47 77 88 100 70 75
Stocks Covered Today Stock Splits
TRADER'S TIP: "Efficient Execution"
How well do you execute your trading plan? You can judge your effectiveness by how skillfully you move in and out of the market each time you act on an entry or exit signal. Preparation and practice is necessary to avoid delays or mistakes at the point of action. It is helpful to write down the exact required steps in advance, so you will know exactly what to do before you need to do it.
When the time arrives, don't wait; always be decisive. Keep records of your results so you can correct any glitches that may arise. This disciplined approach keeps you focused on a repetitive process to prevent execution errors and produce favorable results over time.
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 - 4534.87 July 20, 2023
52-Week High: 4578.43
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
NASDAQ Composite - 14063.31 July 20, 2023
52-Week High: 14446.55
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 15271.37
Resistance 2: 14624.13
Resistance 1: 14368.91
Pivot: 13976.89
Support 1: 13721.67
Support 2: 13329.65
Support 3: 12682.41
Dow Industrials - 35225.18 July 20, 2023
52-Week High: 35372.77
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 36042.15
Resistance 2: 35155.57
Resistance 1: 34832.29
Pivot: 34268.99
Support 1: 33945.71
Support 2: 33382.40
Support 3: 32495.82
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): 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 18-Jul WEDNESDAY, JULY 19 Wednesday, July 19, 2023: 19-Jul 8:30 am Housing starts 19-Jul THURSDAY, JULY 20 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 20-Jul FRIDAY, JULY 21 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
Stocks Covered Today Stock Splits
TRADER'S TIP: "Using The Gap Open Tactic When Selling Short"
The Gap Open Tactic works as well when we sell short as it does when we buy a stock. If the stock gaps down at the open, wait for it to take out its low of the first half-hour then enter 0.25 below that point. For more on the Gap Open Tactic go to:http://www.rightline.net/education/gapopen.html
Stocks Covered in This Issue
COMMUNICATION SERVICES SECTOR
Opera Limited (OPRA: Communication Services/Internet Content & Information) - SQUEEZE PLAY. Trader indecision has put OPRA 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 21.28 and a SELL short entry at 19.33. Now it's up to OPRA to show us which entry will be filled. Once the trade is underway place a 1.95 trailing stop, which can be tightened to 0.98 after you achieve a 2.98 profit. OPRA closed on Thursday at 20.77. Earnings Report Date: Aug 28, 2023. Beta: 1.02. Market-Cap: 1.868B. Optionable.
FINANCIAL SERVICES SECTOR
Qifu Technology, Inc. (QFIN: Financial Services/Credit Services) - BULLISH BOUNCE. Another bullish bouncer, QFIN appears ready to resume trading in an uptrend after recent selling forced the stock lower for several days. Thursday's positive price action near Moving Average support says it's time to BUY shares if QFIN reaches our entry trigger set at 18.92. Also place a 1.58 trailing stop which can be narrowed to 0.79 when you reach a 1.76 profit. QFIN closed Thursday at 18.43. Earnings Report Date: Aug 16, 2023. Beta: 0.49. Market-Cap: 2.976B. Optionable.
HEALTHCARE SECTOR
Immunovant, Inc. (IMVT: Healthcare/Biotechnology) - SQUEEZE PLAY. IMVT 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 23.57 and a SELL short trigger at 22.06. When one of the orders is filled, cancel the remaining order and enter a 1.51 trailing stop. When you've reached a 1.46 paper profit, tighten the stop to 0.76. IMVT closed at 23.04 on Thursday. Earnings Report Date: Aug 03, 2023. Beta: 0.93. Market-Cap: 3.239B. Optionable.
TECHNOLOGY SECTOR
inTEST Corporation (INTT: Technology/Semiconductor Equipment & Materials) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in INTT'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 23.05 and a SELL order at 21.25. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.8 trailing stop. Tighten the stop to 0.9 once you have a 2.7 gain. INTT closed Thursday at 22.30. Earnings Report Date: Aug 04, 2023. Beta: 2.01. Market-Cap: 248.23M. 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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