Notes From The Editor

The Anticipation Approach to Trading

Here is an extremely powerful stock trading skill that virtually anyone can learn to use successfully. Simply look to the past to locate price zones where the market is likely to react in the days ahead. Doing this let's you anticipate what the market -- and your stock -- will probably do if and when price reaches these same levels in the future.

All you have to do is review your charts to find obvious price reversals that occurred in the past. First, check the charts that represent your preferred trading time frame. Once you've noted the important price levels in your usual time frame, shift to a longer period.

For example, if you normally trade daily charts, shift up to weekly charts to look for pivotal highs and lows that will soon come into play. Be aware that previous support and resistance levels dating back several weeks, months, or even years are very important.

Though most traders overlook them, these long forgotten price zones can dramatically influence current price action. It's at these previous reversal levels that the market tends to either reverse or rapidly accelerate.

Successful stock trading depends a great deal on being at the right place at the right time. Anticipating the market's reaction at key levels allows us to put good trade setups in place well in advance of reversals or rapid price acceleration.

Since individual stocks and the larger market are unpredictable, this "anticipation approach" is a perfect fit. There's no need to rush. Once you've reviewed the charts, wait for price to move into a hot zone, then place your trade setups. When the market shows its hand by committing to a particular direction, your trades are triggered in harmony with the market.

Enjoy the weekend!

- Thomas Sutton, Editor

Quick List

    
Stock     06/16     06/16      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

ZION      28.63     -0.35     29.52     27.08        2.44/1.22      3.04
SNV       31.26     -0.16     32.08     29.84        2.24/1.12      2.34
UPST      37.24     -0.46     39.35     35.71        3.64/1.82      6.92
DOCS      32.54      0.19     33.27      31.1        2.17/1.09      2.68
VECO      24.83      0.10     25.18                  1.58/0.79      1.72

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

On Friday the major US stock indexes initially rose but experienced a decline later in the session. However, they still ended the week on a positive note due to favorable inflation data and the Federal Reserve's decision not to raise its benchmark lending rate at the midweek meeting. It is worth noting that there is a possibility of future rate hikes in the summer.

The S&P 500 Index (SPX) had an impressive week, gaining 2.6%, its strongest performance since March. Similarly, the tech-heavy Nasdaq Composite (COMPX) index rose by 3.2%, while the blue-chip Dow Jones Industrial Average (DJIA) increased by 1.2%.

Throughout the week there were positive developments regarding the economy and inflation. The stock market's behavior remained consistent with the trend seen throughout the year, where major technology companies continued to drive most of the market's gains while smaller companies struggled to keep pace.

Retailers and regional banks underperformed, resulting in a decline of approximately 1% for the Russell 2000 index. Energy companies emerged as strong performers, benefiting from the continued rally of crude oil futures which surpassed $70 per barrel.

                      Friday                 On The Week      
                  --------------------   --------------------
Dow                 34,299.12  -108.94      +422.34     1.25%
Nasdaq              13,689.57   -93.25      +430.43     3.25%
S&P 500              4,409.59   -16.25      +110.73     2.58%

NYSE Volume                      6.94B                       
NYSE Advancers                   1,141                       
NYSE Decliners                   1,806                       

Nasdaq Volume                    8.16B                       
Nasdaq Advancers                 1,774                       
Nasdaq Decliners                 2,659                       

                                 New Highs/Lows

                   06/09  06/12  06/13  06/14  06/15  06/16
                 --------------------------------------------
NYSE New Highs        70     98    137    118    104    145
NYSE New Lows         17     12      8     18     22     15
Nasdaq New Highs     117    162    223    185    189    217
Nasdaq New Lows       73     83     71     89     84     79
   

TRADER'S TIP: "Hi-Tech Trading Platforms"

A direct access trading platform will help a good trader make more money, but it does nothing for those who are still trying to grasp the basics of the stock market. Success in this business is more dependent on accurate chart interpretation than buying the newest hi-tech software or hardware.

Huge profits are made each month by long-time professional traders who still use the phone to place their orders and manage open positions. As your execution and trade management abilities improve, it becomes obvious that what you know is far more important to your bottom line than any state-of-the-art trading platform.

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 - 4409.59 June 16, 2023

52-Week High: 4448.47
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4675.67
Resistance 2: 4531.57
Resistance 1: 4470.58
Pivot: 4387.47
Support 1: 4326.48
Support 2: 4243.37
Support 3: 4099.27

NASDAQ Composite - 13689.57 June 16, 2023

52-Week High: 13864.06
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 14741.69
Resistance 2: 14180.21
Resistance 1: 13934.89
Pivot: 13618.73
Support 1: 13373.41
Support 2: 13057.25
Support 3: 12495.77
        
Dow Industrials - 34299.12 June 16, 2023

52-Week High: 34712.28
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 35834.04
Resistance 2: 35028.91
Resistance 1: 34664.01
Pivot: 34223.78
Support 1: 33858.88
Support 2: 33418.65
Support 3: 32613.52
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, June 19, 2023:  
19-Jun          Juneteenth Day holiday, all markets closed
19-Jun  10:00 am   Home builder confidence index 

Tuesday, June 20, 2023:
20-Jun  8:30 am   Housing starts
20-Jun  11:45 am   New York Fed President John Williams speaks  

Wednesday, June 21, 2023:
21-Jun  10:00 am   Fed Chair Powell testifies to House panel
21-Jun  10:00 am   Senate nomination hearing for Fed Govs. Jefferson and Cook and nominee Kugler   

Thursday, June 22, 2023:
22-Jun  8:30 am   Initial jobless claims
22-Jun  8:30 am   U.S. current account
22-Jun  10:00 am   Existing home sales
22-Jun  10:00 am   Fed Chair Powell testifies to Senate panel
22-Jun  10:00 am   U.S. leading economic indicators  

Friday, June 23, 2023:
23-Jun  8:30 am   S&P flash U.S. services PMI
23-Jun  8:30 am   S&P flash U.S. manufacturing PMI


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

TRADER'S TIP: "Check the Charts, Not the Chatters"

When it comes to market reversals, traders usually listen to the wrong sources. They often follow the news media when they would be much better off viewing the technical picture. Avoid the mind numbing chatter of self-appointed experts. These guys and gals are normally there to make money for themselves - not for you.

Stocks Covered in This Issue

FINANCIAL SERVICES SECTOR

Zions Bancorporation, National Association (ZION: Financial Services/Banks-Regional) - 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 ZION's case we will enter a BUY should it reach the 29.52 level, or a SELL short trade if it drops to 27.08. As usual a trailing stop is essential, 2.44 which should be tightened to 1.22 on a 3.04 gain. ZION closed Friday at 28.63. Earnings Report Date: Jul 19, 2023. Beta: 1.10. Market-Cap: 4.24B. Optionable.

Synovus Financial Corp. (SNV: Financial Services/Banks-Regional) - SQUEEZE PLAY. Trader indecision has put SNV 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 32.08 and a SELL short entry at 29.84. Now it's up to SNV to show us which entry will be filled. Once the trade is underway place a 2.24 trailing stop, which can be tightened to 1.12 after you achieve a 2.34 profit. SNV closed on Friday at 31.26. Earnings Report Date: Jul 19, 2023. Beta: 1.36. Market-Cap: 4.568B. Optionable.

Upstart Holdings, Inc. (UPST: Financial Services/Credit Services) - SQUEEZE PLAY. In certain stocks a tightly constricted price range is a sign that neither bulls nor bears are confident of winning in the near term. This often means that the side that gives up first causes a quick move in the opposite direction. In these fear dominated skirmishes, opposing traders always benefit from the retreat. In the Squeeze Play setup you can actually play both sides of the inevitable surge. UPST traders reached this state of stand-off on Friday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 39.35 and a SELL short trigger at 35.71. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 3.64 which can be tightened to 1.82 on a 6.92 gain. UPST closed Friday at 37.24. Earnings Report Date: Aug 07, 2023. Beta: 1.46. Market-Cap: 3.079B. Optionable.

HEALTHCARE SECTOR

Doximity, Inc. (DOCS: Healthcare/Health Information Services) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in DOCS's narrowest trading range of the past seven sessions. With neither group able to take complete control on Friday, the stock's short term destiny is up for grabs. You can capitalize on this unusually tight condition by placing both a BUY order at 33.27 and a SELL order at 31.1. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.17 trailing stop. Tighten the stop to 1.09 once you have a 2.68 gain. DOCS closed Friday at 32.54. Earnings Report Date: Aug 15, 2023. Beta: N/A. Market-Cap: 6.334B. Optionable.

TECHNOLOGY SECTOR

Veeco Instruments Inc. (VECO: Technology/Semiconductor Equipment & Materials) - BULLISH BOUNCE. Positive price behavior near moving average support on Friday qualifies VECO for a Bullish Bounce setup. After several sessions of declining prices, VECO should soon begin trading in step with its established weekly uptrend. Tell your broker to BUY shares if VECO moves up to our entry trigger set at 25.18. You can also enter a 1.58 trailing stop, to be replaced with a 0.79 trailing stop when you obtain a 1.72 profit. VECO closed Friday at 24.83. Earnings Report Date: Aug 07, 2023. Beta: 1.25. Market-Cap: 1.284B. 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

"Flipping Stocks"

Flipping is a trading tactic that you can use to make sizable gains in a short amount of time. Keep in mind that there are some potential risks in flipping stocks, but if you follow a few simple guidelines the technique can work very well.

To "flip" a stock, you enter a position near the close and exit at the open of the next session - with the purpose of making a quick profit. This tactic works equally well from either the long or the short side, but in this article we'll focus primarily on the long (buy) side.

The risk is that if bad news hits the stock or the market overnight, you can incur a loss. However, if the market is working well with a large number of stocks finishing the day near their intra-day highs, the odds are in your favor that you will capture a nice profit by holding the stock until the open of the next session.

There are a couple of rules to bear in mind if you decide to use this tactic. However, before we look at the "two rules of flipping," here is a bit of background that shows why playing flip trades can be very profitable.

Studies by Moore Research Center show that when markets close in the upper 20% of their price range for the day, they tend to move higher the next session. For example, researchers looked at ten years of S&P 500 data and found that when the 20% level was met, prices rose above the previous day's high 80% of the time.

Traders and active investors can use this information as part of their planning routine when deciding whether to hold onto current positions, exit, or enter a new one for a quick flip trade. A top 20% market finish into the closing bell could merit holding a position longer than originally planned, whereas a close below that level might prompt a quick sale to lock in profits.

The studies by Moore Research also indicated that even though prices rose higher the next day 80% of the time, they only closed higher about 50% of the time - so it's a good idea to keep a tight stop on these "flippers!"

Okay, back to the rules.

The Two Rules of Flipping

1. Generally you want the market to be on the strong side. You will also want to select stocks that are finishing strong, within 20% of the session high. This is pretty easy to see, if you are watching the market near the close. Ideally you want your stocks to be in a sector that closes in the top 20% of its range with several strong stocks in the group finishing at their highs. There numerous indices for almost every sector, so be sure to monitor the index for stocks that you intend to enter.

2. Rule number two says, "If you bought a stock with the intention of flipping it, then flip it!" Lots of traders make the mistake of thinking that the stock will keep flying and they might miss the move if they sell. However, unless the stock you bought to flip has significant news overnight, most likely the stock will gap open and then sell off a bit as traders sell the gap. This play is termed as "fading the gap" - trading opposite of the move.

When flipping, you have to be disciplined in planning your trade and sticking with your plan. You can't get greedy if you want to "flip" successfully. One reason flipping a stock works so well is because the world tends to follow the US markets. When the US markets finish on the strong side, other foreign markets will normally have positive moves overnight. As a result, the next day we will often see the futures up before the open. This prompts many retail investors and amateur traders who don't want to miss the move to jump in with buy orders at the open, just as flippers are selling.

This is obviously a very short term trading tactic that is best suited for traders who have access to the markets at the close of the current session, and the open of the following session. Keep in mind that flipping has its own set of risks, but if you stick to the rules and use good trading discipline, it can be very profitable.

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

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