July 25, 2023 - The RightLine Report 

 
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                      NOTES FROM THE EDITOR
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Five Simple Truths About the Stock Market

The last thing most people associate with trading stocks is predictability. Nobody can say for certain which direction the market will head next, and to what degree. Unexpected news developments can throw a wrench in even the best trade set-ups. One year's top-notch stock pickers can turn into the next year's Wall Street failures. However, there are certain unchanging facts that guide the market - elements that you can count on to help guide your trading:

- The market will relentlessly take advantage of carelessness

It's inevitable: careless trading will ultimately lead to major losses. Failing to use proper position sizing - or worse yet, to not use stop- losses - is something all traders need to guard against. The reason carelessness can be so tempting is because occasionally it gets rewarded. A trader may think, "Hey, last time I left that trade open and it all worked out in the end." This may happen a few times, reinforcing the behavior. But eventually you'll encounter a stock that simply keeps heading the opposite direction. A painful loss soon follows.

- You have complete control over entries and exits

While there's no way of knowing what a stock will do once you're in a trade, you do have the luxury of waiting until the most opportune time to jump onboard the most enticing trade set-ups. Similarly, you can determine the precise moment when to exit a position. So contrary to popular belief, you are not at the whim of the market.

- Price and volume rule the roost.

When you boil it down, all the day-to-day hype, media commentary, and brokerage analysis is just hot air. Price and volume tell the real tale of the tape, showing you how the supply/demand relationship is changing. It pays to focus on what a stock is doing, rather than what people are saying about it.

- There will always be contrarians

Bull market or Bear, there's a never-ending chorus of traders and analysts calling for a move in the opposite direction. While eventually they'll be right, one should never take their word for it; let price action confirm a directional shift by waiting for a break of a key level or a violation of a trendline. Until that happens, simply take note of what the contrarians are saying and continue to follow the trend.

- Wall Street wants you to over-trade

The aforementioned hype machine makes traders fearful of missing The Next Big Move. Without this tendency, the profits reaped by the major brokerages wouldn't be quite as massive. Be selective with your money, and don't operate under the pressure of trying to catch every great trade. Rest assured that the market will have plenty of other great set-ups if you choose to wait on the sidelines.

Here's to profits!

Kent Barton
Senior Analyst 

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                           "QUICK LIST"
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Stock     07/25     07/25      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

BLBD      21.16      0.05     21.67     20.26        1.41/0.71      1.98
IMVT      21.75     -0.12     22.35                  1.56/0.78      1.56
MRUS      26.21      0.25     26.79                   1.79/0.9         2
XMTR      20.92     -0.34     21.66     20.11        1.55/0.78      2.46
RUN       20.30     -0.41     21.31     19.67        1.64/0.82      2.08


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/ 
 
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                           MARKET SUMMARY
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The US stock markets showed mostly positive trends on Tuesday, with the Dow Jones enjoying a remarkable 12-day winning streak. The Nasdaq, which is heavily influenced by technology stocks, led the gains. Investors are eagerly anticipating earnings reports from major technology companies like Microsoft, Google, and Amazon, which are expected to be released this week. Treasury yields also saw an increase, with the 10-year US Treasury yield now at 3.88%. The market is anticipating the Federal Reserve to raise rates during this week's FOMC meeting. Similarly, the European Central Bank (ECB) is also scheduled to meet this week, where it is likely to raise rates, potentially marking the end of its current rate-hiking cycle.

All eyes are now focused on the Federal Reserve meeting, which will take place on Wednesday, July 26, with a press conference led by Fed Chair Jerome Powell to follow. It is widely expected that the Fed will raise rates by 0.25%, marking its 11th rate hike since March 2022 and bringing the fed funds rate to 5.25% - 5.5%. Investors will be keenly listening to Powell's remarks, especially regarding the Fed's future plans for rate hikes. While markets have already priced in no further rate increases after the July meeting, Powell is likely to emphasize that the Fed's work on inflation is not yet complete, leaving the possibility of additional rate hikes open. Nevertheless, the Fed appears to be nearing a pause in its aggressive tightening campaign, and Powell is expected to acknowledge the recent easing in inflationary pressures, both in headline and core inflation.

Earnings season is well underway, with about 30% of S&P 500 companies reporting this week. So far, about 24% of companies have reported, and earnings growth is projected to decline by approximately -9% compared to the same quarter last year, which is slightly below the initial expectation of -7.8%. This week will witness the release of earnings reports from several large-cap companies that have been driving the market rally, including Microsoft, Google, Meta (Facebook), and Amazon. While these companies are expected to report strong results, the focus will be on their outlooks as we approach the second half of the year. Expectations for the technology sector, in particular, have risen significantly, with many growth stocks seeing over 30% year-to-date gains. As a result, markets will assess whether the earnings growth of these companies justifies the current expanded valuations.


                       Jul 24, 2023           Jul 25, 2023   
                  --------------------   --------------------
Dow                 35,411.24   183.55     35,438.07    26.83
Nasdaq              14,058.87    26.06     14,144.56    85.69
S&P 500              4,554.64    18.30      4,567.46    12.82

NYSE Volume                      3.87B                  3.83B
NYSE Advancers                   1,810                  1,482
NYSE Decliners                   1,126                  1,421

Nasdaq Volume                     4.1B                  4.53B
Nasdaq Advancers                 2,124                  1,988
Nasdaq Decliners                 2,316                  2,415

                                 New Highs/Lows

                   07/18  07/19  07/20  07/21  07/24  07/25
                 --------------------------------------------
NYSE New Highs       202    162    101     94    103    123
NYSE New Lows         16      8     10      7     10     15
Nasdaq New Highs     275    275     87    106     93    130
Nasdaq New Lows      100     70     75     68     97    106

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                              TRADER'S TIP:  
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TRADER'S TIP: "Earnings: Holding Through or Getting Back In"

It's no secret that we believe in avoiding undue risk. Because earnings reports often end up surprising traders, we often suggest closing out positions before the company announces earnings. However, if a stock is moving in a solid trend (long or short) and earnings estimates support that trend, experienced traders will often elect to drastically reduce the number of shares in their position and hold them through the earnings announcement.

In some cases traders jump back into the trade after the company reports better than expected earnings. This can be profitable at times, but don't chase the stock. If it has jumped more than 5% beyond your exit point, you're probably better off waiting for price to pull back to a moving average support level. 
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                         THE TECHNICAL ANALYST
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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 - 4567.46 July 25, 2023

52-Week High: 4580.62
52-Week Low: 3491.58
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4686.95
Resistance 2: 4613.42
Resistance 1: 4574.88
Pivot: 4539.89
Support 1: 4501.35
Support 2: 4466.35
Support 3: 4392.82
https://www.prorightline.com/rlch/072523SPX.jpg

NASDAQ Composite - 14144.56 July 25, 2023

52-Week High: 14446.55
52-Week Low: 10088.83
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 15018.80
Resistance 2: 14592.70
Resistance 1: 14312.75
Pivot: 14166.60
Support 1: 13886.65
Support 2: 13740.50
Support 3: 13314.40


Dow Industrials - 35438.07 July 25, 2023

52-Week High: 35527.57
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 36914.49
Resistance 2: 35960.44
Resistance 1: 35594.06
Pivot: 35006.39
Support 1: 34640.01
Support 2: 34052.34
Support 3: 33098.29


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                             MARKET CALENDAR
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--ECONOMIC REPORTS AND EVENTS (all times are Eastern): 
Monday, July 24, 2023: 
24-Jul  9:45 am   S&P "flash" U.S. manufacturing PMI
24-Jul  9:45 am   S&P "flash" U.S. services PMI  

Tuesday, July 25, 2023:
25-Jul  9:00 am   
25-Jul  10:00 am   Consumer confidence   

Wednesday, July 26, 2023:
26-Jul  2:00 am   FOMC decision on interest-rate policy
26-Jul  2:30 pm   Fed Chairman Powell press conference   

Thursday, July 27, 2023:
27-Jul  8:30 am   Initial jobless claims
27-Jul  8:30 am   Durable-goods orders
27-Jul  8:30 am   Durable-goods minus transportation
27-Jul  8:30 am   GDP (advanced report)
27-Jul  8:30 am   Advanced U.S. trade balance in goods
27-Jul  8:30 am   Advanced retail inventories
27-Jul  8:30 am   Advanced wholesale inventories
27-Jul  10:00 am   Pending home sales   

Friday, July 28, 2023:
28-Jul  8:30 am   Personal income (nominal)
28-Jul  8:30 am   Personal spending (nominal)
28-Jul  8:30 am   PCE index
28-Jul  8:30 am   Core PCE index
28-Jul  8:30 am   PCE (year-over-year)
28-Jul  8:30 am   Core PCE (year-over-year)
28-Jul  8:30 am   Employment cost index
28-Jul  10:00 am   Consumer sentiment (final)

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/ 
 
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                              TRADER'S TIP: 
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TRADER'S TIP: "One Good Move Deserves Another"

In most cases the further and faster the market moves in one direction, the faster and more intense the reversal will be when the market has used up its energy. 

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                      STOCKS COVERED IN THIS ISSUE    
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CONSUMER CYCLICAL SECTOR

Blue Bird Corporation (BLBD: Consumer Cyclical/Auto Manufacturers) - SQUEEZE PLAY. Tuesday's narrow price range has created a potentially profitable setup in BLBD, 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 21.67 and a SELL short entry at 20.26. Let BLBD's price action determine your long or short entry. Once the order is filled, place a 1.41 trailing stop, and tighten it to 0.71 upon getting a 1.98 gain. BLBD closed Tuesday at 21.16. Earnings Report Date: Aug 08, 2023. Beta: 1.31. Market-Cap: 679.084M. Optionable.

HEALTHCARE SECTOR

Immunovant, Inc. (IMVT: Healthcare/Biotechnology) - BULLISH BOUNCE. The charts for IMVT show that despite the downward pressure from sellers recently, the weekly uptrend is still going strong. Buyers showed up again on Tuesday, resulting in the early stages of a rebound that started near moving average support. The resulting Bullish Bounce set-up offers a potential entry point for a long play. Set your trigger to BUY shares at 22.35, and follow your entry with a trailing stop of 1.56. Tighten it to 0.78 when a 1.56 profit is reached. IMVT ended the latest session at 21.75. Earnings Report Date: Aug 03, 2023. Beta: 0.93. Market-Cap: 2.84B. Optionable.

Merus N.V. (MRUS: Healthcare/Biotechnology) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Tuesday MRUS seemed intent on initiating a rebound. With moving average support nearby, MRUS is at a logical place for Bulls to regroup and extend the familiar uptrend that shareholders have become accustomed to. On continued buying, plan on taking long entries with a BUY at 26.79. Manage risk with a 1.79 stop. Tighten your stop to 0.9 when you have a 2 profit. MRUS ended the day at 26.21. Earnings Report Date: Aug 07, 2023. Beta: 0.81. Market-Cap: 1.305B. Optionable.

INDUSTRIALS SECTOR

Xometry, Inc. (XMTR: Industrials/Specialty Industrial Machinery) - SQUEEZE PLAY. Traders are feeling the pressure as XMTR's intra-day price range on Tuesday 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 21.66 and a SELL short entry at 20.11. XMTR's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.55 trailing stop. Tighten it to 0.78 after you get a 2.46 gain. XMTR closed Tuesday at 20.92. Earnings Report Date: Aug 09, 2023. Beta: -0.07. Market-Cap: 1.001B. Optionable.

TECHNOLOGY SECTOR

Sunrun Inc. (RUN: Technology/Solar) - SQUEEZE PLAY. RUN 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 21.31 and a SELL short entry at 19.67. Once your trade is filled, enter a 1.64 trailing stop. Tighten it to 0.82 after a 2.08 gain. RUN closed on Tuesday at 20.30. Earnings Report Date: Aug 02, 2023. Beta: 2.28. Market-Cap: 4.377B. 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/ 

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                           STOCK SPLIT SUMMARY
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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/ 
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Best of luck and have a Great Week!
 
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