July 9, 2022 - The RightLine Report
Notes From The Editor
Stock trading is much more rewarding when you view it as a means of self-improvement rather than just a way to earn money. It makes sense when you think about it. Money is a result of learning to trade well, and the process of learning to trade well requires us to improve on a number of important levels.
This means we have to change the way we think and act.
Most traders would agree that making the changes necessary to be a successful stock trader is desirable. However, just because something is "desirable" doesn't mean we're willing to make the effort necessary to change the way we feel about it.
For instance, the majority of people are of the opinion that a Bull market is the only market where profits can be made. Bull equals good, and bear equals bad ... right?
Wrong. While the rest of the world may view the markets this way, you already know it isn't true for traders who have learned how to take advantage of both up and down trends. And though there are plenty of reasons why the majority of investors prefer bull markets, many of these "reasons" are simply one-dimensional beliefs that limit opportunity.
The process of moving beyond our trading limitations involves becoming aware of the false assumptions and bias we each have. Once we become conscious of the mental and emotional limits that exist inside of us, we can go about the business of upgrading our perspectives.
Learning how to view market action as neither good nor bad begins with paying attention to your feelings. Notice and accept how you feel when the market goes up, and when it goes down. Then remind yourself that you can choose to perceive market movement any way you want to.
The next time the market goes down, focus on the fact that a down market presents just as much opportunity as an up market. Be persistent. It can take months to replace limiting beliefs with new and more effective ones. Realize that although all of us have been taught that "down" is our enemy, "down" is actually is just as much our ally as "up."
The trend really is your friend ... even when the trend is down. It takes practice to accept all price movement as opportunity, yet this is a necessary step toward bringing about the changes in thinking that produce consistent success.
Enjoy the weekend!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits Trader's Corner
Quick List
Stock 07/08 07/08 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
GRBK 21.43 0.15 21.88 20.47 1.41/0.71 2.18
TRDA 11.77 0.87 12.05 1.96/0.98 2.6
TARS 14.71 -0.15 15.11 1.32/0.66 1.66
ACLX 20.19 0.22 20.66 18.94 1.72/0.86 6.5
IGMS 20.75 -0.08 21.61 19.79 1.82/0.91 2.98
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 Trader's Corner
Market Summary
The major US stock indices were mixed on Friday, as he S&P 500 and Dow closed slightly lower, while the Nasdaq finished in bullish territory. In economic news, the June nonfarm payroll reportshowed job growth to be much stronger than predicted and the unemployment rate remained low, yet labor force participation surprisingly dropped. In addition, the final May report on wholesale inventories was revised to a smaller pace of growth than initially released and consumer credit declined in May. In equity headlines, Levi Strauss & Co (LEVI $17) beat quarterly profit estimates and increased its dividend, while Costco Wholesale (COST $502) announced strong June sales numbers. The USD/dollar and treasuries were lower, gold and oil prices were higher.
Friday On The Week
-------------------- --------------------
Dow 31,338.15 -46.40 +240.89 0.77%
Nasdaq 11,635.31 13.96 +507.46 4.56%
S&P 500 3,899.38 -3.24 +74.05 1.94%
NYSE Volume 3.59B
NYSE Advancers 1,498
NYSE Decliners 1,708
Nasdaq Volume 4.57B
Nasdaq Advancers 2,467
Nasdaq Decliners 2,089
New Highs/Lows
07/01 07/04 07/05 07/06 07/07 07/08
--------------------------------------------
NYSE New Highs 12 0 4 12 11 7
NYSE New Lows 205 0 313 182 59 56
Nasdaq New Highs 15 0 20 25 24 27
Nasdaq New Lows 318 0 477 209 118 83
Stocks Covered Today Stock Splits Trader's Corner
TRADER'S TIP: "Get Rich Quick"
Only an extremely tiny percentage of individuals who enter the stock market to get rich quick ever accomplish that goal. Most of them bust our rather quickly. This is due to the tendency for "get rich quick" folks to accept way too much risk - usually by putting too much of their account into one 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 - 3899.38 July 8, 2022
52-Week High: 4818.62
52-Week Low: 3636.85
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4206.19
Resistance 2: 4029.75
Resistance 1: 3964.56
Pivot: 3853.31
Support 1: 3788.12
Support 2: 3676.87
Support 3: 3500.43
NASDAQ Composite - 11635.31 July 8, 2022
52-Week High: 16212.23
52-Week Low: 10565.14
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 12968.65
Resistance 2: 12190.40
Resistance 1: 11912.85
Pivot: 11412.15
Support 1: 11134.60
Support 2: 10633.90
Support 3: 9855.65
Dow Industrials - 31338.15 July 8, 2022
52-Week High: 36952.65
52-Week Low: 29653.27
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 33380.92
Resistance 2: 32224.58
Resistance 1: 31781.36
Pivot: 31068.24
Support 1: 30625.02
Support 2: 29911.90
Support 3: 28755.56
Stocks Covered Today Stock Splits Trader's Corner
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, July 11, 2022: 11-Jul 11 am 3-year inflation expectations Tuesday, July 12, 2022: 12-Jul 6 am NFIB small-business index Wednesday, July 13, 2022: 13-Jul 8:30 am Consumer price index (monthly) 13-Jul 8:30 am Core CPI (monthly) 13-Jul 8:30 am CPI (year-over-year) 13-Jul 8:30 am Core CPI (year-over-year) 13-Jul 2 pm Beige book 13-Jul 2 pm Federal budget (comparison vs. year-ago) Thursday, July 14, 2022: 14-Jul 8:30 am Producer price index final demand (monthly) 14-Jul 8:30 am Initial jobless claims 14-Jul 8:30 am Continuing jobless claims Friday, July 15, 2022: 15-Jul 8:30 am Retail sales 15-Jul 8:30 am Retail sales excluding vehicles 15-Jul 8:30 am Import price index 15-Jul 8:30 am Empire state manufacturing index 15-Jul 9:15 am Industrial production index 15-Jul 9:15 am Capacity utilization 15-Jul 10 am UMich consumer sentiment index (preliminary) 15-Jul 10 am UMich 5-year inflation expectations (preliminary) 15-Jul 10 am Business inventories 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 Corner
TRADER'S TIP: "The Two Basic Types of Technical Indicators"
Technical indicators use math calculations to measure the relationship of current price action to previous prices. Most indicators fall under one of two categories - Trend-Following or Oscillators. Moving Averages and MACD are two well-known trend-following indicators, while Stochastics and RSI are both popular Oscillators. Trend-Following indicators react slowly, and look far into the past to help uncover the future. On the other hand, Oscillators respond quickly to short-term price fluctuations, moving up and down between Overbought and Oversold conditions. There are advantages and disadvantages to each type of indicator, so it is best to use indicators from both groups. This allows the negative features to offset each other while leaving the positive aspects intact.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
Green Brick Partners, Inc. (GRBK: Consumer Cyclical/Residential Construction) - SQUEEZE PLAY. Trader indecision has put GRBK 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 21.88 and a SELL short entry at 20.47. Now it's up to GRBK to show us which entry will be filled. Once the trade is underway place a 1.41 trailing stop, which can be tightened to 0.71 after you achieve a 2.18 profit. GRBK closed on Friday at 21.43. Earnings Report Date: Aug 01, 2022. Beta: 1.47. Market-Cap: 1.038B. Optionable.
HEALTHCARE SECTOR
Entrada Therapeutics, Inc. (TRDA: Healthcare/Biotechnology) - BULLISH BOUNCE. Entering a position in the early stages of a bounce is great way to get on board an up-trending stock. The "Bullish Bounce" setup identifies probable candidates by evaluating the trading action that takes place near support levels. TRDA's behavior on Friday could very well be a sign that a new bounce is underway. Place a BUY trigger at 12.05. In the event your trigger is met, also place a 1.96 trailing stop which can be trimmed down to 0.98 when you have a 2.6 profit. TRDA closed Friday at 11.77. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 369.173M. Not Optionable.
Tarsus Pharmaceuticals, Inc. (TARS: Healthcare/Biotechnology) - BULLISH BOUNCE. Another bullish bouncer, TARS appears ready to resume trading in an uptrend after recent selling forced the stock lower for several days. Friday's positive price action near Moving Average support says it's time to BUY shares if TARS reaches our entry trigger set at 15.11. Also place a 1.32 trailing stop which can be narrowed to 0.66 when you reach a 1.66 profit. TARS closed Friday at 14.71. Earnings Report Date: Aug 02, 2022. Beta: N/A. Market-Cap: 387.275M. Optionable.
Arcellx, Inc. (ACLX: 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 ACLX. A move to the upside will trigger our BUY entry at 20.66, while a drop to 18.94 will trigger our SELL short entry. Follow your position with a 1.72 trailing stop. Tighten the stop to 0.86 once you have a 6.5 gain. ACLX closed Friday at 20.19. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 884.051M. Not Optionable.
IGM Biosciences, Inc. (IGMS: 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 IGMS's case we will enter a BUY should it reach the 21.61 level, or a SELL short trade if it drops to 19.79. As usual a trailing stop is essential, 1.82 which should be tightened to 0.91 on a 2.98 gain. IGMS closed Friday at 20.75. Earnings Report Date: Aug 08, 2022. Beta: -0.16. Market-Cap: 882.427M. 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 Trader's Corner
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
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.
Stocks Covered Today Stock Splits Trader's Corner
Trader's Corner
"Market Breadth"
Have you ever noticed that just a few stocks can have a huge affect on the overall market? Both the Dow and the NASDAQ are susceptible to making a big move based on just a few moving stocks. The Dow contains only 30 stocks, so a large drop in one of its components can really affect this index. Similarly, since the NASDAQ gives more weight to its largest companies, a big move by just a few heavy hitters can dramatically change the index's end of the day result.
So how can we quickly find out whether a move in the market was driven by just a few stocks or by a majority of stocks? In other words, how can we determine market "breadth?"
The most common measurement of market breadth compares the number of advancing stocks to the number of declining stocks. There are several indicators that present the results in various formats, but they all basically deliver the same data. Each of them is based on how many stocks were up on the day, and how many were down.
The undisputed king of advancing and declining indicators is the Advance/Decline Line, or "A/D Line". When compared to the movement of a market index like the Dow or S&P 500, the A/D Line has proven to be an effective gauge of the stock market's breadth and strength.
When more stocks are advancing than declining, the A/D Line moves up, and when decliners outnumber advancers, the A/D Line moves down. Many traders feel that the A/D Line is a better indication of market strength than more frequently used indices such as the Nasdaq, Dow, or S&P 500 Index. Charting the trend of the A/D Line allows you to determine if the strength of the overall market is rising or falling.
One common way to use the A/D Line is to look for a difference of opinion between an index like the Dow and the A/D Line. Often, an end to a bear market can be anticipated when the A/D Line begins to flatten out and turn upward at the same time the Dow is still making new lows.
In the past, when a divergence develops between the Dow and the A/D Line, the Dow has typically reversed and followed the direction of the A/D Line. Sometimes a military example is used to explain the relationship between the A/D Line and the Dow. The idea is that when the soldiers (the A/D Line) refuse to follow their leaders (new highs in the Dow), then the leaders will follow the direction of the soldiers. Sort of a broad based mutiny!
Although there are AD lines for the Nasdaq and the Amex, the New York Stock Exchange (NYSE) is the most commonly used measure of market breadth. Keep in mind that the specific level of the AD line isn't important, it's the trend of the line that matters. Always check to see if it is trending in the same direction and a similar rate as the underlying market index. If the two lines aren't in sync, consider it a sign that a trend reversal may be in the near future.
The A/D Line also helps to confirm whether the market has already bottomed. If the line stays flat while the market moves higher, the rally may just be a relief rally. In the best scenario, the line will rise too. Like all other indicators the A/D Line isn't fool proof. A market bottom may move in step with the A-D line, or it may not occur for months. The A/D Line certainly has value as a timing tool, but shouldn't be used as a stand-alone decision maker.
It is always wise to consider a broad body of evidence when anticipating future price direction!
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.
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
Click Here To Unsubscribe