Notes From The Editor

Tech stocks are often a great choice for traders who crave volatility, rapidly evolving products, and a steady stream of new developments. But what if you're looking for just the opposite?

Some traders prefer a more conservative approach, opting for stocks that are slower movers with relatively predictable business models. If this is you, you're in luck; there are plenty of sectors that typically fit the bill.

One of the best conservative groups is utilities. With reliable sources of revenue and quarterly dividends -- always a plus! -- these stocks can provide excellent set-ups that may come to fruition over weeks and months, rather than days. They also tend to attract defensive buying during times of market weakness.

Another area for non-volatile traders is non-durable goods. We're talking about the products that people always use, regardless of economic conditions. Think toothpaste, toilet paper, shampoo, and other necessities. Companies that specialize in these non-cyclicals, such as Procter & Gamble (PG), often provide a relatively safe harbor during times of market volatility.

A good way to gauge a stock's volatility is its Beta. This number, which you'll find listed with every RightLine set-up, measures volatility versus the S&P 500. A Beta of 1.00 means that the equity is roughly as volatile as the broader market. A reading of 0.50 would equate to half as much movement, while a reading of 2.00 would indicate twice as much volatility. You get the idea.

Note that the two approaches, aggressive and conservative, aren't mutually exclusive. Even the most devoted tech traders may occasionally find great set-ups in utilities. Similarly, conservative types can uncover solid opportunities in chips or software. Underlying market conditions, as well as sector-specific dynamics, both play a role in creating these conditions. So keep your eyes and mind open, also remembering that we have both long and short set-ups in our arsenal!

Here's to profits,

Kent Barton
Senior Analyst

Quick List

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

BMA       25.05      0.85     25.48                  1.83/0.92      2.56
MRUS      26.07      0.39     26.47                  1.68/0.84       2.6
RVNC      24.17      0.12     24.73     23.18        1.55/0.78       2.4
PTGX      23.16     -0.50     23.94     22.06        1.88/0.94      2.34
KYMR      22.48      0.31     23.05     21.53        1.52/0.76      3.38

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.

Market Summary

US stocks finished lower on Friday after gaining solid footing in late morning trading and pushing to new highs midday. This upward momentum was fueled by signs of easing jobs growth, offsetting the sharp jump in private payrolls reported on Thursday. The market has been anticipating a 25-basis point rate hike at the upcoming July Federal Open Market Committee meeting, although uncertainty remains about what will happen beyond that. In June, the US added the fewest jobs in 2-1/2 years, breaking a streak of 14 consecutive months of higher job numbers.

However, strong wage growth suggests that labor market conditions remain tight. Chicago Fed Bank CEO Goolsbee reiterated the FOMC's commitment to curbing inflation and expressed the likelihood of further tightening measures. This sentiment aligns with other statements made by Fed speakers, prompting an afternoon rally in stocks, although the week ended with mixed results.

During midday trading, the Dow Transports rose around 2% or 300 points, nearing its 52-week high of 15,888 on February 23. However, these gains were partially retraced by the end of the day. As we enter the new week, we anticipate significant events such as the release of CPI and PPI inflation data on Wednesday and Thursday respectively, as well as the kickoff of earnings season with banks reporting later in the week. Despite slipping in the final hour of trading, the Russell 2000 maintained strong gains for the day, while the S&P and Nasdaq Composite dipped into negative territory in the final minutes, joining the Dow.

                      Friday                 On The Week      
                  --------------------   --------------------
Dow                 33,734.88  -187.38      -672.72    -1.96%
Nasdaq              13,660.72   -18.33       -127.2    -0.92%
S&P 500              4,398.95   -12.64       -51.43    -1.16%

NYSE Volume                      3.64B                       
NYSE Advancers                   2,108                       
NYSE Decliners                     821                       

Nasdaq Volume                    5.11B                       
Nasdaq Advancers                 2,866                       
Nasdaq Decliners                 1,464                       

                                 New Highs/Lows

                   06/30  07/03  07/04  07/05  07/06  07/07
                 --------------------------------------------
NYSE New Highs       225     93      0     53     29     54
NYSE New Lows         16      7      0     13     34     21
Nasdaq New Highs     169     85      0     67     36     57
Nasdaq New Lows       76     61      0     66    140     67
   

TRADER'S TIP: "Trading Twenty-four Seven?"

Smart traders pick their spots. You don't have to trade continuously, nor should you. Being prepared for an opportunity means knowing about it in advance, which means staying informed - even when you aren't holding a position.

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 - 4398.95 July 7, 2023

52-Week High: 4458.48
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3089.99
Resistance 2: 3018.58
Resistance 1: 1509.29
Pivot: 2947.17
Support 1: 1437.88
Support 2: 2875.76
Support 3: 2804.35

NASDAQ Composite - 13660.72 July 7, 2023

52-Week High: 13864.06
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 9691.88
Resistance 2: 9414.57
Resistance 1: 4707.28
Pivot: 9137.26
Support 1: 4429.97
Support 2: 8859.95
Support 3: 8582.65
        
Dow Industrials - 33734.88 July 7, 2023

52-Week High: 34712.28
52-Week Low: 28660.94
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 35470.25
Resistance 2: 34721.34
Resistance 1: 34228.11
Pivot: 33972.43
Support 1: 33479.19
Support 2: 33223.51
Support 3: 32474.60
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, July 10, 2023:  
10-Jul  10:00 am   Wholesale inventories
10-Jul  10:00 am   Fed Vice Chair Michael Barr
10-Jul  11:00 am   San Francisco Fed President Mary Daly speaks
10-Jul  11:00 am   Cleveland Fed President Mester speaks
10-Jul  3:00 pm   Consumer credit 

Tuesday, July 11, 2023:
11-Jul  6:00 am   NFIB optimism index   

Wednesday, July 12, 2023:
12-Jul  8:30 am   Consumer price index
12-Jul  8"30 am   Core CPI
12-Jul  8:30 am   CPI year over year
12-Jul  8:30 am   Core CPI year over year
12-Jul  8:30 am   Richmond Fed President Barkin speaks
12-Jul  1:00 pm   Atlanta Fed President Bostic speaks
12-Jul  2:00 pm   Fed Beige Book 

Thursday, July 13, 2023:
NONE

Friday, July 14, 2023:
14-Jul  10:00 am   Consumer sentiment
14-Jul  8:30 am   Import price index
14-Jul  8:30 am   Import price index minus fuel


For a chart of typical Up or Down market reactions to specific major US economic reports 
go to:  Economic Indicator Effects

TRADER'S TIP: "Turn Off The Tube"

It's wise to limit the amount of information that does not help your trading. You may want to avoid stock chat rooms entirely, and though it may be hard, consider keeping financial news TV to a minimum.

Stocks Covered in This Issue

FINANCIAL SERVICES SECTOR

Banco Macro S.A. (BMA: Financial Services/Banks-Regional) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Friday BMA seemed intent on initiating a rebound. With moving average support nearby, BMA 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 25.48. Manage risk with a 1.83 stop. Tighten your stop to 0.92 when you have a 2.56 profit. BMA ended the day at 25.05. Earnings Report Date: N/A. Beta: 1.94. Market-Cap: 4.716B. Optionable.

HEALTHCARE SECTOR

Merus N.V. (MRUS: Healthcare/Biotechnology) - BULLISH BOUNCE. Here is another example of a stock in an established uptrend that has recently experienced a counter-trend drop. The sliding price action has now found support near a moving average zone, bouncing upward during Friday's session to close at 26.07. Anticipate the rebound to continue, and be ready to buy MRUS at 26.47. Follow your entry with a trailing stop of 1.68 which can be tightened to 0.84 on a 2.6 profit. Earnings Report Date: Aug 07, 2023. Beta: 0.81. Market-Cap: 1.298B. Optionable.

Revance Therapeutics, Inc. (RVNC: Healthcare/Biotechnology) - SQUEEZE PLAY. RVNC is caught in a dilemma. The stock's compressed price range on Friday has resulted in a condition comparable to a wound up rubber band. We anticipate that this undecided equity will take off soon, but with the direction still in question we'll let upcoming market action tell us whether to buy shares or sell short. RVNC is now at 24.17. We can capture price action either way by placing a BUY trigger at 24.73 and a SELL short trigger at 23.18. Once RVNC reveals its direction, enter your triggered order and disregard the other one. As soon as your position is in place, follow up with a trailing stop of 1.55. When you acquire a 2.4 profit, tighten the stop to 0.78. Earnings Report Date: Aug 07, 2023. Beta: 0.84. Market-Cap: 2.031B. Optionable.

Protagonist Therapeutics, Inc. (PTGX: Healthcare/Biotechnology) - SQUEEZE PLAY. When a stock's daily price range contracts to an unusually low point, you can safely assume that in most cases a breakout from that range will result in a nice price move. To capture a portion of this potential movement we have set both a long and a short entry into PTGX. A move to the upside will trigger our BUY entry at 23.94, while a drop to 22.06 will trigger our SELL short entry. Follow your position with a 1.88 trailing stop. Tighten the stop to 0.94 once you have a 2.34 gain. PTGX closed Friday at 23.16. Earnings Report Date: Aug 02, 2023. Beta: 1.96. Market-Cap: 1.326B. Optionable.

Kymera Therapeutics, Inc. (KYMR: Healthcare/Biotechnology) - SQUEEZE PLAY. One interesting trait of price volatility is that it cycles back and forth through periods of expansion and contraction. Stocks that have recently seen their daily price range shift from an average or wide range to an extremely contracted state are ideal candidates for expansive price moves. In many cases the next move is relatively fast and covers a sizable amount of territory. To take advantage of these trades we use both a BUY and a SELL entry. This allows us to enter in whichever direction the breakout takes. In KYMR's case we will enter a BUY should it reach the 23.05 level, or a SELL short trade if it drops to 21.53. As usual a trailing stop is essential, 1.52 which should be tightened to 0.76 on a 3.38 gain. KYMR closed Friday at 22.48. Earnings Report Date: Aug 07, 2023. Beta: 1.51. Market-Cap: 1.243B. 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.

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.

Trader's Corner

"Money Management"

Here are some quotes from some great traders and investors:

"I haven't met a rich technician." - Jim Rogers

"I always laugh at people who say "I've never met a rich technician" I love that! It's such an arrogant, nonsensical response. I used fundamentals for 9 years and got rich as a technician." - Mary Schwartz

"Diversify your investments." - John Templeton

"Diversification is a hedge for ignorance." - William O'Neil

"Don't bottom fish." - Peter Lynch

"Don't try to buy at the bottom or sell at the top." - Bernard Baruch

"Maybe the trend is your friend for a few minutes in Chicago, but for the most part it is rarely a way to get rich." - Jim Rogers

"I believe the very best money is made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms." - Paul Tudor Jones

So here we have a group of guys who have collectively taken billions of dollars out of the market and they don't agree on a darn thing regarding how to make money. Not one. So what is a person to do? Is there anything they do agree on? Just one:

"My basic advice is don't lose money." - Jim Rogers

"I'm more concerned about controlling the downside. Learn to take the losses. The most important thing about making money is not to let your losses get out of hand." - Marty Schwartz

"I'm always thinking about losing money as opposed to making money. Don't focus on making money, focus on protecting what you have." - Paul Tudor Jones

"Rule number one of investing is never lose money. Rule number two is never forget rule number 1." - Warren Buffet

There really are a lot of ways to make money in the market. There are tons of seminars you can pay for that will tell you "How I made $1 katrillion dollars in the stock market" and its sister book "How I Double my Money Every Hour" is available in many different forms too for only $29.95. All of these will tell you some patterns that will work sometimes and won't others. Some might have you going long with Jimmy Rogers, while others will have you doing it with Bernard Baruch, but when it gets right down to it the most critical part of making money, is not losing much. You're always going to take stops and lose some. But you don't want to lose much, because you won't make a penny tomorrow if you go broke today.

One of the most common mistakes traders will make is that of "risking the whole wad." There is not a faster way to have bad things happen to you than to do this. Studies have been done that suggest the most you should risk on any one trade is 2%. And most pros will tell you that is way too much and they risk 1/4 % to 1% on each trade. The idea here is that no one trade is going to really affect you either way. You're not going to get rich, but you're also not going to have to sell the house, as has happened to people.

One other benefit of small positions is that it allows you some freedom from worry. If you are risking a fairly small amount, you're not going to get shaken out. You're also not going to find yourself in a position where you say "Sheesh, I can't lose this much money" and you turn a bad trade into a terrible investment. So, if you are serious about this, if you want to make it long term you will practice sound money control. Before you ever enter a trade, the first thing you should ask yourself is how much am I risking here because, remember that while we are here to make money, we won't make any if we go broke.

The key to not going broke is to respect risk, take small positions that won't allow you to blow out. You must always keep in mind that in trading you are only playing the odds. You may have a setup that is correct 75% of the time but each trade is a random event. It doesn't take into account the last trade. If you have a 75% system, you can still be wrong 10 times in a row, and if you trade for any amount of time it will happen.

I once thought I had a foolproof way to make money at roulette. I would bet on black and red. I would sit at the table, and after the ball had landed on black or red 5 times in a row I would start to bet on the opposite color (so if it were 5 reds in a row I would start to bet on black) Then, if I was wrong, I would go ahead and double down, meaning that if my starting bet is $1, the next time I will be $2, then $4, then $8, then $16, etc. Eventually I would win, and would come out $1 ahead. So I am 13 years old and really thinking I have the Holy Grail. If it's so easy for a 13 year old to figure out, why is it that all the casinos are not out of business and we are all millionaires? Simple. It does not work.

If we are flipping coins, heads has a 50% chance of turning up on each roll, and so does tails. But each flip is independent of the last. The last coin toss has nothing to do with the one before it. It's a random event. There is a certain chance heads will occur on this roll, or that tails will. But which of them it is that comes up is a random occurrence. Each time you flip a coin it is one flip of a coin amongst the billions of times coins have been flipped. That's why you can roll 100 heads in a row if you do it long enough. That's why the first time I played roulette black came up 19 times in a row and I went home defeated.

Trading is the same. We have a certain percentage of our trades that will work out, and a certain percentage that will not. But your next trade has nothing to do with your last one. So even if you have the world's most accurate method, over time you will go broke if you don't practice good money management and risk control.

So now that we all understand why money management and risk control are very important lets cover exactly how to apply these rules to your trading. As I stated before, you shouldn't ever risk more than 2% of your account on one trade. But, as I also said, that's a bit much for most people and I'm in that group of most people. I like to keep my risk to around 1%. So lets focus our attention on risking 1% of your account on a trade. For the sake of this example let's just assume you have a very average account size, $25,000:

Say you are scanning tonight and come across XYZ, which looks like it might be a great swing-trade buy if it trades at 15.25. The low of the prior day is 14.50. This means you will place your stop at 14.25, risking 1.00 point on this trade. Assuming a $25,000 trading account you can lose up to $250 per trade. You will use this number to determine how many shares you can buy.

Let me leave you with a few more quotes on risk control:

"If you have an approach that makes money, then money management can make the difference between success and failure... ... I try to be conservative in my risk management. I want to make sure I'll be around to play tomorrow. Risk control is essential." - Monroe Trout

"If you personalize losses, you can't trade." - Bruce Kovner

"The best traders have no ego. You have to swallow your pride and get out of the losses." - Tom Baldwin

"Never risk more than 1% of your total equity in any one trade. By risking 1%, I am indifferent to any individual trade. Keeping your risk small and constant is absolutely critical." - Larry Hite

While all of these guys have different methods for making money, each of them agrees that risk control is the single most important aspect of trading. These individuals are the best in the world and the only thing they agree on is risk control. Think about it...

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.

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.

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