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June 10, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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I've always enjoyed learning from the best traders I can find. One of the most influential and certainly on my personal "best" list is futures trader Linda Bradford.
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"QUICK LIST"
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Stock 06/09 06/09 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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PPBI 21.57 -0.10 21.95 20.52 1.43/0.72 1.88
PRAA 23.06 -0.40 23.82 22.21 1.61/0.81 4.22
ETNB 20.30 0.12 20.76 19.37 1.39/0.7 2.08
OTEX 42.08 0.47 42.78 2.68/1.34 1.56
TEAM 171.99 1.60 176.28 12.55/6.28 13.6
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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Stock markets closed the week with little change after a quiet period. The lack of significant data or headlines allowed investors to focus on upcoming inflation and Federal Reserve announcements. Looking ahead, the coming week is expected to have a significant impact on market sentiment in the months to come. The release of the consumer price index (CPI) on Tuesday will be closely watched, followed by the Fed's rate announcements on Wednesday. Core inflation is projected to continue its downward trend, nearing the 5% mark, which it has not been below since November 2021. While we anticipate a moderation in core CPI over the rest of the year, any deviations from this trend could briefly undermine the current market rally, which has been driven by expectations of an approaching end to rate hikes. All eyes will be on the Fed's announcement, as they are likely considering a pause in rate hikes. However, given the mix of recent data, the announcement may be a toss-up between a pause or an additional 0.25% hike. The market will closely scrutinize the Fed's messaging regarding its approach in the coming months, particularly its willingness to pause or raise rates further based on upcoming inflation data. The S&P 500 reached a new high for 2023 this week, continuing its rebound that has seen a 20% increase from the October low. Growth-oriented investments, especially in the technology sector, have been driving this market rally, with the Nasdaq gaining over 27% year-to-date. However, this week saw a shift in market dynamics, with small-cap stocks outperforming and value-style investments surpassing growth. While this may not indicate a new trend in underlying performance, it underscores the importance of diversification. Despite the market's positive momentum, it looks like the somewhat narrow leadership and the market's reliance on a shift in Fed policy - which requires declining inflation - could lead to periods of volatility as we progress through the summer. Friday On The Week
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Dow 33,876.78 43.17 +114.02 0.34%
Nasdaq 13,259.14 20.62 +18.37 0.14%
S&P 500 4,298.86 4.93 +16.49 0.39%
NYSE Volume 3.79B
NYSE Advancers 1,119
NYSE Decliners 1,819
Nasdaq Volume 4.42B
Nasdaq Advancers 1,545
Nasdaq Decliners 2,850
New Highs/Lows
06/02 06/05 06/06 06/07 06/08 06/09
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NYSE New Highs 88 43 110 155 83 70
NYSE New Lows 15 24 18 10 18 17
Nasdaq New Highs 129 125 132 153 87 117
Nasdaq New Lows 54 71 83 58 62 73
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TRADER'S TIP:
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TRADER'S TIP: "Market Mischief: Headfakes & Whipsaws" Headfakes and whipsaws are terms used to describe market action with sharp price movement and abrupt reversals. This type of "yo-yo" action can cause a trader's stop to be triggered soon after a position is entered. Headfakes and whipsaws often result when market makers and other "deep pockets" push prices in one direction in an attempt to convince traders that the move is legit, then abruptly reverse the move. Headfakes, whipsaws, and other false breakouts are a normal part of trading, so condition yourself not to let them frustrate you. Even the best-looking trade will blow up sometimes, yet it really doesn't matter because the loss is contained when you apply solid risk control. Just remember that we're playing a game of odds where the "edge" in our trading plan provides profits over time. **************************
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 - 4298.86 June 9, 2023 52-Week High: 4325.28 52-Week Low: 3491.58 Daily Trend: UP Weekly trend: UP Weekly Pivot Levels Resistance 3: 4417.28 Resistance 2: 4355.73 Resistance 1: 4327.29 Pivot: 4294.18 Support 1: 4265.74 Support 2: 4232.63 Support 3: 4171.08 https://www.prorightline.com/rlch/060923SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, June 12, 2023: 12-Jun None scheduled Tuesday, June 13, 2023: 13-Jun 6:00 am NFIB optimism index 13-Jun 8:30 am Consumer price index 13-Jun 8"30 am Core CPI 13-Jun 8:30 am CPI year over year 13-Jun 8:30 am Core CPI year over year Wednesday, June 14, 2023: 14-Jun 8:30 am Producer price index 14-Jun 8"30 am Core PPI 14-Jun 8:30 am PPI year over year 14-Jun 8:30 am Core PPI year over year 14-Jun 2:00 pm Fed decision on interest-rate policy 14-Jun 2:30 pm Fed Chairman Powell press conference Thursday, June 15, 2023: 15-Jun 8:30 am Initial jobless claims 15-Jun 8:30 am U.S. retail sales 15-Jun 8:30 am Retail sales minus autos 15-Jun 8:30 am Import price index 15-Jun 8:30 am Import price index minus fuel 15-Jun 8:30 am Empire State manufacturing survey 15-Jun 8:30 am Philadelphia Fed manufacturing survey 15-Jun 9:15 am Industrial production 15-Jun 9:15 am Capacity utilization 15-Jun 10:00 am Business inventories Friday, June 16, 2023: 16-Jun 10:00 am Consumer sentiment 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: "A School of Fish" Have you ever watched a school of fish in the water? It's amazing how quickly these co-dependent aquatic creatures can change direction. The action of a single fish impacts the entire group, and vice versa. Just like the "school" of fish influences each individual fish that makes up the school, the larger stock market influences the price movement of the individual stocks that make up the market. Not all stocks move in exactly the same direction and same speed as the larger market, yet the greater "school" of stocks - as represented by the indices - dramatically affects the price movement of most individual stocks. ***********************************
STOCKS COVERED IN THIS ISSUE
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FINANCIAL SERVICES SECTOR Pacific Premier Bancorp, Inc. (PPBI: Financial Services/Banks-Regional) - SQUEEZE PLAY. The ticker for Friday's session shows PPBI is now stuck in a tight price band. With the cyclical contraction and expansion nature of volatility in force, we should see a new period of price expansion in the days ahead. To improve the odds of catching the next directional wave, place a BUY trigger at 21.95 and a SELL short trigger at 20.52. When PPBI starts moving out of its narrow range, your order will be triggered. Once you're in the trade, cancel the opposing trigger and set a 1.43 trailing stop. Upon reaching a 1.88 profit, resize the stop to 0.72. Earnings Report Date: Jul 19, 2023. Beta: 1.18. Market-Cap: 2.066B. Optionable. PRA Group, Inc. (PRAA: Financial Services/Credit Services) - SQUEEZE PLAY. Friday's trading session left PRAA in a very narrow price range after buyers and sellers fought to a near stalemate. Both sides are looking for some traction, and a breakout either way could provide a nice gain in the short term. To get aboard, set your BUY trigger at 23.82 and your SELL short trigger at 22.21. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.61 trailing stop. Once you have a 4.22 profit, reduce the stop to 0.81. Earnings Report Date: Aug 07, 2023. Beta: 1.16. Market-Cap: 903.256M. Optionable. HEALTHCARE SECTOR 89bio, Inc. (ETNB: Healthcare/Biotechnology) - SQUEEZE PLAY. ETNB shareholders know what it feels like to be squeezed. Friday's slim price range reveals uncertainty on both sides of the table, a situation which often resolves itself by either Bears or Bulls quickly gaining a clear advantage. The question is "who will win?" Near-term market action tell us whether we should sell short or we should buy shares instead. ETNB closed Friday at 20.30. The plan is to enter in the right direction by placing a BUY trigger at 20.76 and a SELL short trigger at 19.37. Once ETNB establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.39. After you've collected a 2.08 profit, tighten the stop to 0.7. Earnings Report Date: Aug 09, 2023. Beta: 0.77. Market-Cap: 1.5B. Optionable. TECHNOLOGY SECTOR Open Text Corporation (OTEX: Technology/Software-Application) - BULLISH BOUNCE. If you are looking for another bouncer with profits in mind, OTEX fits the bill. Shares have been in retreat-mode lately, but now this stock is in the process of bouncing from support. Currently priced at 42.08, plan to buy shares at 42.78 and use a 2.68 trailing stop. Tighten the stop to 1.34 on a 1.56 gain. Earnings Report Date: Aug 02, 2023. Beta: 1.07. Market-Cap: 11.393B. Optionable. Atlassian Corporation (TEAM: Technology/Software-Application) - BULLISH BOUNCE. TEAM has charted an upward weekly trend until recently when sellers showed up to push prices lower. On Friday the selling ran into solid support. A potential bounce up from this level should attract buyers and likely return TEAM to the previously established uptrend. The Bullish Bounce set-up is the basis for our BUY entry, so be ready to go long on a rise to our trigger at 176.28. Set a trailing stop of 12.55, tightening to 6.28 on a 13.6 profit. TEAM closed at 171.99 on Friday. Earnings Report Date: N/A. Beta: 0.82. Market-Cap: 47.733B. 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/ ***********************************
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/ **********************************
TRADER'S CORNER
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"The History, Science & Art of Technical Analysis" The very first chartists in the United States appeared at the turn of the century. They included Charles Dow, the author of the famous stock market theory, and William Hamilton who succeeded Dow as the editor of the Wall Street Journal. After the famous stock market "crash" of 1929, Hamilton advocated the use of charting in an editorial entitled "The Turn of The Tide" and then proceeded to lay out the principles of Dow's stock market theory in a book titled The Stock Market Barometer. The decade of the 1930's was the Golden Age of charting. Many innovative researchers published their work during that period including Richard D. Wyckoff, a trader who started in 1888 as a 15- year-old stock runner, W.D. Gann who began his career as a stockbroker in 1906, and R.N.Elliott, widely known for the "Elliott Wave Theory." Their work went into two distinct directions. Researchers such as Wyckoff saw charts as a graphic record of market supply and demand, while others including Gann and Elliott searched for a perfect order in the markets. In 1948, Edwards and McGee published a book called Technical Analysis of Stock Trends. They popularized the use of chart formations such as triangles, rectangles, head and shoulders, as well as support, resistance and trend lines. Things have changed a great deal since then. In the 40s, daily volume of an active stock on the NYSE was only several hundred shares. Today it's not uncommon to see an active stock trade tens of millions of shares each day. Bears were firmly in control of the stock market in the "good old days", but as years passed, the balance of power shifted to favor bulls. However, with bears back in the cockpit the past couple of years, some of the market tendencies that were evident back then are reappearing on the charts. Early technical analysts noted that stock market tops were sharp and fast, while bottoms took a long time to develop. That was true in the de-flationary era of the 30s and 40s, but from the 50s until mid 2000 bottoms tended to form quickly while tops took longer. The beginnings of technical analysis go back much further than the early nineteen hundreds. Japanese rice traders began using candlestick charts some two centuries before the first chartists appeared in America. Before you envision lots of dripping wax and flaming wicks, the term candlestick was adopted because of the similar appearance between candles and the symbols used to represent price that were drawn on each chart. The Japanese focus is on the relationship between opening and closing prices and on patterns that include several candles. They consider highs and lows relatively unimportant. Unfortunately, most candlestick chartist's fail to use many tools of Western analysts. They ignore volume and have no trend lines. This now appears to be changing as modern analysts combine Western technical indictors with classical candlestick patterns. A classic case of east meets west. OK, that's enough history for now. Let's take a quick look at two subjects, which help determine the success or failure of technical analysis in action. Is it Science or Art? "It would be possible to describe everything scientifically, but it would make no sense; it would be without meaning, as if you described a Beethoven symphony as a variation of wave pressure." ~Albert Einstein It may come as a surprise to find that technical analysis combines the dual categories of science and art. Although the subjects appear to be at opposite ends of the spectrum, joining them together creates a dual perspective that provides remarkable market insight. The resulting combination can be compared to night-vision goggles that let you see what others can't - like trend lines. This advantage gives you an edge and helps shift the odds into your favor. Science 101 The scientific aspect of technical analysis presents itself in many forms. There are literally dozens of separate indicators and unlimited ways of applying them. A lot of research went into developing these components, and even more to determine effectiveness and reliability. Studies have shown that the wide array of technical indicators and methods exhibit different degrees of success depending on how, when and under what condition they are applied. Art - So what is it, a Picasso or Rembrandt? The artistic qualities of technical analysis become obvious the instant you look at a visual display on a computer screen. Colorful charts graphically reveal elements of technical analysis as different indicators are painted in patterns and lines. Talk about abstract art! One look and you feel like it should be hanging in a metropolitan art museum. Less obvious than the graphic display but just as important is the impact of artistic interpretation. OK, so how should we interpret this painting? Although the price bars are determined by actual stock prices, the placement of each line, the number of bars included in each moving average and whether any technical indicators are used depends on the preference of the individual. It may look good, but no matter how pretty the picture, it is far more important that the final choice of technical tools and patterns can be used by the trader to produce profits. - Summary It turns out that technical analysis is a hybrid of art and science that has evolved over the centuries. Due to the complex choices that have to be made, many newcomers will never recognize the tremendous value of TA, and will remain unaware of the powerful forces at work behind the scenes. For those who desire a long-term relationship with the markets, the time and energy spent to learn how to use this powerful technology will be well rewarded! ======================================================================
Best of luck and have a Great Week!
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