July 28, 2022 - The RightLine Report
Notes From The Editor
Here are a few suggestions that will sharpen your trading skills and give you deeper insight into your psychology as a trader ...
#1 - Draft a Summary of Your Trading Strategy.
Include the details of how you . . .
- Choose the stocks to trade
- Determine your entry and exit points
- Select a time frame for each trade
- Calculate the number of shares for each position
- Control risk
- Manage your trades
#2 - Prepare a Trading Fire Drill.
Write down everything that might go wrong when you are trading. Then list the action you will take in response to each unexpected event. Review the Drill until you are sure that you know exactly what to do in each instance.
#3 - List Your Number One Trading Flaw.
Now, develop a plan of action to eliminate it. Once you are reasonably comfortable that you have it under control, move on to the next one. Be patient with yourself; this important process takes time. As you mature you will acquire new skills and widen your range of positive qualities. Make a permanent commitment to improvement.
#4 - Take Complete Responsibility For Everything.
No matter what happens, YOU are responsible - no exceptions. If your Internet connection goes down, or you lose electrical power, or your broker heads to Tijuana with your trading account, you still accept that you play a role in all situations. Blame no one, simply work toward a solution. Most traders are in self-denial about their actions. By taking full responsibility, you will quickly recognize and correct any hidden problems emanating from you.
#5 - Develop a Personal Wrap-Up Routine.
Depending on the time frame you usually trade, your wrap-up routine can be done daily or weekly, perhaps even monthly. At the end of each trading period, take a few moments to analyze your feelings. Did you stick with your plan? Then give yourself credit for doing a good job - even if you didn't make money. The more you become aware of how you feel, the less negative impact your feelings will have on your performance.
#6 - Measure Your Results.
Review your trading performance at least once a month. Become familiar with your exact Win/Loss Ratio and your Profit/Loss Ratio. To calculate the "Win" part of your Win/Loss Ratio simply divide the number of winners by the total number of trades you entered. Do the same with your losers to find the "Loss" side of the ratio. Your Profit/Loss Ratio is the amount of points - or dollars - in Profits compared to the amount of points or dollars in Losses.
For example, if you win $1.50 for every $1.00 lost, your Profit/Loss Ratio is 1.50/1.00. Also tally your trading commissions and other brokerage fees to determine how much it costs you to trade. Once you know your results, you can conclude how well your methods are working, and adjust your trading rules to improve performance if needed.
Trade well!
Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 07/28 07/28 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
FOX 32.37 0.27 32.85 2.26/1.13 1.52
CDMO 20.36 0.72 20.74 19.07 1.67/0.84 2.22
MRUS 24.36 -0.21 24.93 23.15 1.78/0.89 3.24
EADSY 26.34 0.30 26.76 1.83/0.92 1.08
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" 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
Stocks were solidly higher at the end of Thursday's session as the US Fed Bank's decision to raise rates by 75 basis points motivated bulls to buy shares. The rate hike was expected but Fed Chairman Jerome Powell's comments soothed the markets as he said whether or not rates will be hiked by the same magnitude in September will be "data-dependent." On the economic front, second quarter GDP unexpectedly declined, posting a second-consecutive quarterly contraction - which traditionally indicates a recession is underway - while inflation pressures increased as well. Initial unemployment claims slipped but came in above estimates. Earnings season continues, as Meta Platforms (META $161) missed quarterly projections on slowing advertising spending, and shares of Comcast (CMCSA $40) dropped due to concerns about broadband subscribers, while Ford Motor Company (F $14) and Merck (MRK $90) both delivered upbeat reports. Treasuries and oil prices were mixed, the USD/dollar slipped lower, gold moved higher.
Jul 27, 2022 Jul 28, 2022
-------------------- --------------------
Dow 32,197.59 436.05 32,529.63 332.04
Nasdaq 12,032.42 469.85 12,162.59 130.17
S&P 500 4,023.61 102.56 4,072.43 48.82
NYSE Volume 4.17B 4.41B
NYSE Advancers 2,679 2,448
NYSE Decliners 551 778
Nasdaq Volume 4.6B 4.87B
Nasdaq Advancers 3,464 2,841
Nasdaq Decliners 1,104 1,715
New Highs/Lows
07/21 07/22 07/25 07/26 07/27 07/28
--------------------------------------------
NYSE New Highs 12 16 25 21 33 44
NYSE New Lows 42 45 60 70 45 50
Nasdaq New Highs 34 43 55 52 58 84
Nasdaq New Lows 78 97 149 172 144 131
Stocks Covered Today Stock Splits
TRADER'S TIP: "How to Enter A Running Stock"
After a strong move higher, stocks will often digest the movement by taking small steps down into a narrow range over a three to four day period. The excitement generated by the previous up-move is likely to attract more demand for the stock by the third or fourth session. This can present a good opportunity to enter, but wait for prices to clearly breakout above the previous day's higher before buying.
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 - 4072.43 July 28, 2022
52-Week High: 4818.62
52-Week Low: 3636.85
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4318.52
Resistance 2: 4124.71
Resistance 1: 4043.17
Pivot: 3930.90
Support 1: 3849.36
Support 2: 3737.09
Support 3: 3543.28
NASDAQ Composite - 12162.59 July 28, 2022
52-Week High: 16212.23
52-Week Low: 10565.14
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 13290.35
Resistance 2: 12520.17
Resistance 1: 12177.14
Pivot: 11749.99
Support 1: 11406.96
Support 2: 10979.81
Support 3: 10209.62
Dow Industrials - 32529.63 July 28, 2022
52-Week High: 36952.65
52-Week Low: 29653.27
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 34173.06
Resistance 2: 32936.78
Resistance 1: 32418.03
Pivot: 31700.50
Support 1: 31181.75
Support 2: 30464.22
Support 3: 29227.94
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Tuesday, July 26, 2022: 26-Jul 9 am S&P Case-Shiller national home price index (year-over-year) 26-Jul 10 am Consumer confidence index 26-Jul 10 am New home sales (SAAR) Wednesday, July 27, 2022: 27-Jul 8:30 am Durable goods orders 27-Jul 8:30 am Core capital equipment orders 27-Jul 8:30 am Advance report on trade in goods 27-Jul 10 am Pending home sales index 27-Jul 2 pm Fed funds target rate 27-Jul 2:30 pm Fed Chair Jerome Powell press conference Thursday, July 28, 2022: 28-Jul 8:30 am Gross domestic product, first release (SAAR) 28-Jul 8:30 am Final sales to domestic purchasers (SAAR) 28-Jul 8:30 am Initial jobless claims 28-Jul 8:30 am Continuing jobless claims Friday, July 29, 2022: 29-Jul 8:30 am PCE inflation index 29-Jul 8:30 am Core PCE price index 29-Jul 8:30 am PCE price index (year-over-year) 29-Jul 8:30 am Core PCE price index (year-over-year) 29-Jul 8:30 am Real disposable income 29-Jul 8:30 am Real consumer spending 29-Jul 8:30 am Nominal personal income 29-Jul 8:30 am Nominal consumer spending 29-Jul 8:30 am Employment cost index 29-Jul 9:45 am Chicago PMI 29-Jul 10 am UMich consumer sentiment index (final) 29-Jul 10 am UMich 5-year inflation expectations (final) 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: "Small Stocks & Big Moves"
Studies show that most stocks which increase in price by ten times or more are "small-cap" or "micro-cap." This is due to the relatively low number of shares available. As demand for the stock increases, the price rises dramatically. If you want big explosive moves, think small- cap.
Stocks Covered in This Issue
COMMUNICATION SERVICES SECTOR
Fox Corporation (FOX: Communication Services/Entertainment) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Thursday FOX seemed intent on initiating a rebound. With moving average support nearby, FOX 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 32.85. Manage risk with a 2.26 stop. Tighten your stop to 1.13 when you have a 1.52 profit. FOX ended the day at 32.37. Earnings Report Date: N/A. Beta: 0.95. Market-Cap: 18.835B. Optionable.
HEALTHCARE SECTOR
Avid Bioservices, Inc. (CDMO: Healthcare/Biotechnology) - SQUEEZE PLAY. Traders are feeling the pressure as CDMO's intra-day price range on Thursday 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 20.74 and a SELL short entry at 19.07. CDMO's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.67 trailing stop. Tighten it to 0.84 after you get a 2.22 gain. CDMO closed Thursday at 20.36. Earnings Report Date: Sep 06, 2022. Beta: 2.11. Market-Cap: 1.259B. Optionable.
Merus N.V. (MRUS: Healthcare/Biotechnology) - SQUEEZE PLAY. Thursday's narrow price range has created a potentially profitable setup in MRUS, 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 24.93 and a SELL short entry at 23.15. Let MRUS's price action determine your long or short entry. Once the order is filled, place a 1.78 trailing stop, and tighten it to 0.89 upon getting a 3.24 gain. MRUS closed Thursday at 24.36. Earnings Report Date: Aug 03, 2022. Beta: 0.91. Market-Cap: 1.061B. Optionable.
INDUSTRIALS SECTOR
Airbus SE (EADSY: Industrials/Aerospace & Defense) - BULLISH BOUNCE. The charts for EADSY show that despite the downward pressure from sellers recently, the weekly uptrend is still going strong. Buyers showed up again on Thursday, 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 26.76, and follow your entry with a trailing stop of 1.83. Tighten it to 0.92 when a 1.08 profit is reached. EADSY ended the latest session at 26.34. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 82.956B. Not 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
---------------- ------- -------- ------- ------ -------
Gamestop GME 7/7/2022 7/22/2022 4-for-1 Yes
Alphabet GOOG 2/1/2022 7/18/2022 20-for-1 Yes
Nasdaq Inc NDAQ 7/20/2022 8/29/2022 3-for-1 Yes
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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