June 22, 2023 - The RightLine Report
Notes From The Editor
Famed investor Peter Lynch is the man behind that time-honored piece of wisdom, "Invest in what you know." While stock traders don't need to develop a deep understanding of the equities they take positions in, this advice can also be applied to trading. Here are some simple questions to ask as you get to know a specific stock:
What does the company do? A basic understanding of the company's products and/or services can help you filter through daily news and focus on developments that might impact its stock. For instance, same-store retail numbers for Gap (GPS) might have a large impact on Urban Outfitters (URBN), which is in the same retail niche. However, those Gap numbers probably wouldn't have an impact on a larger retailer, such as Walmart (WMT).
What sector is it in? It's often said that the direction of the broader market has the most influence on a stock's intraday movement. But don't forget about the influence of its sector. For example, even the most bullish semiconductor stock would have a tough time posting a gain on a day when the overall chip group was tanking.
How volatile is it? This is a very important factor to get a grip on. How choppy is the stock on an intraday basis? How much does it tend to move over the course of a week or a month? Is it prone to wild swings, or is it a reliably stable and slow mover? A stock's Beta (listed in every RightLine set-up) provides a basic reading of average volatility. A reading of 1.00 is roughly equal to the S&P 500's volatility. 2.00 would be twice as volatile, while 0.50 would be half as volatile. But it's also a good idea to supplement this indicator with a simple eyeballing of the daily chart.
What are its technical tendencies? Because large groups of traders tend to watch individual stocks, technical patterns often emerge. Are there any moving averages that tend to impact the stock's movement? Does it like to follow long-term trendlines?
If you feel like you know a ticker - and it also fits your trading strategy - consider adding it to your "stable" of stocks. This is a list of equities that you can watch on a daily basis. A scan through the list will often reveal trading opportunities, and also help you take the market's pulse as it shifts from day to day, and from hour to hour.
Here's to profits,
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 06/22 06/22 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
CRT 21.81 -0.53 22.46 20.99 1.47/0.74 2.3
RAPT 21.05 -0.13 21.53 20.21 1.32/0.66 2.2
RXO 22.00 0.02 22.51 1.5/0.75 1.2
EVBG 26.62 0.09 27.14 1.92/0.96 2
ASAN 22.74 -0.07 23.59 21.68 1.91/0.96 2.84
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 mixed on Thursday, with the S&P 500 and Nasdaq higher, while the Dow Jones closed lower. Federal Reserve Chair Jerome Powell underscored the Fed's focus on taming inflation in his semi-annual report to Congress. Powell noted in his testimony that two more rate hikes in 2023 is a "pretty good guess," implying the rate-hiking cycle likely remains ongoing. In our view, the Fed is likely nearing the end of its rate-hiking campaign, with one or two hikes remaining, and will remain highly dependent on incoming inflation and economic data.
Treasury yields also climbed higher, with the 2-year Treasury yield now around 4.79%. The yield curve, the difference between the 10-year and 2-year Treasury yield, remains highly inverted, which historically has been a reliable indicator of an economic downturn or recessionary environment on the horizon.
Labor markets continue to show some signs of easing. Weekly jobless claims figures continued to inch higher and are now at the highest levels of the year. While jobless claims remain relatively healthy versus history, the move higher could be a leading indicator of a labor market that is softening. Total job openings in the US also have moved lower from recent highs. We believe that the labor market will likely cool in the months ahead, although we expect unemployment to rise more modestly than in past downturns, likely remaining below 5%.
Jun 21, 2023 Jun 22, 2023
-------------------- --------------------
Dow 33,951.52 -102.35 33,946.71 -4.81
Nasdaq 13,502.20 -165.09 13,630.61 128.41
S&P 500 4,365.69 -23.02 4,381.89 16.20
NYSE Volume 3.71B 3.53B
NYSE Advancers 1,508 982
NYSE Decliners 1,418 1,947
Nasdaq Volume 5.2B 4.52B
Nasdaq Advancers 1,800 1,674
Nasdaq Decliners 2,583 2,693
New Highs/Lows
06/15 06/16 06/19 06/20 06/21 06/22
--------------------------------------------
NYSE New Highs 104 145 0 69 92 50
NYSE New Lows 22 15 0 19 29 37
Nasdaq New Highs 189 217 0 91 92 67
Nasdaq New Lows 84 79 0 100 132 125
Stocks Covered Today Stock Splits
TRADER'S TIP: "Bases Loaded?"
Success rarely comes from over-leveraging your account and putting everything on one or two rolls of the dice. Yes, high-octane homeruns are nice, but steady base hits are less risky and add up over time. Be patient - you'll get your share of points as a result of trading smart.
Take a different route than the crowd by locating low-risk trade setups and applying Risk Control to every position. Disciplined consistency may not be as dramatic as shooting wildly from the hip, but you're much more likely to hit your profit target.
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 - 4381.89 June 22, 2023
52-Week High: 4448.47
52-Week Low: 3491.58
Daily Trend: DOWN
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 - 13630.61 June 22, 2023
52-Week High: 13864.06
52-Week Low: 10088.83
Daily Trend: DOWN
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 - 33946.71 June 22, 2023
52-Week High: 34712.28
52-Week Low: 28660.94
Daily Trend: DOWN
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
Stocks Covered Today Stock Splits
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
Stocks Covered Today Stock Splits
TRADER'S TIP: "Reverse Stock Splits"
Although rare, every now and then you will see or hear of a reverse stock splits. Investors generally view this negatively, as it is often a ploy to prop up the share price. Only on occasion is it done for a positive reason. In other words....avoid!
Stocks Covered in This Issue
ENERGY SECTOR
Cross Timbers Royalty Trust (CRT: Energy/Oil & Gas E&P) - SQUEEZE PLAY. CRT is stuck in a Bull/Bear deadlock. Fortunately for traders this impasse should be resolved soon, with one side or the other taking control. We want to be positioned for a potential quick move up or down, so get ready to catch this train with a BUY entry at 22.46 and a SELL short entry at 20.99. Once your trade is filled, enter a 1.47 trailing stop. Tighten it to 0.74 after a 2.3 gain. CRT closed on Thursday at 21.81. Earnings Report Date: Aug 21, 2023. Beta: 0.77. Market-Cap: 130.86M. Not Optionable.
HEALTHCARE SECTOR
RAPT Therapeutics, Inc. (RAPT: Healthcare/Biotechnology) - SQUEEZE PLAY. Thursday's trading session left RAPT 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 21.53 and your SELL short trigger at 20.21. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.32 trailing stop. Once you have a 2.2 profit, reduce the stop to 0.66. Earnings Report Date: Aug 09, 2023. Beta: 0.36. Market-Cap: 722.962M. Optionable.
INDUSTRIALS SECTOR
RXO, Inc. (RXO: Industrials/Trucking) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Thursday RXO seemed intent on initiating a rebound. With moving average support nearby, RXO 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 22.51. Manage risk with a 1.5 stop. Tighten your stop to 0.75 when you have a 1.2 profit. RXO ended the day at 22.00. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 2.572B. Optionable.
TECHNOLOGY SECTOR
Everbridge, Inc. (EVBG: Technology/Software-Application) - 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 Thursday's session to close at 26.62. Anticipate the rebound to continue, and be ready to buy EVBG at 27.14. Follow your entry with a trailing stop of 1.92 which can be tightened to 0.96 on a 2 profit. Earnings Report Date: Aug 07, 2023. Beta: 0.80. Market-Cap: 1.079B. Optionable.
Asana, Inc. (ASAN: Technology/Software-Application) - SQUEEZE PLAY. Traders are feeling the pressure as ASAN'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 23.59 and a SELL short entry at 21.68. ASAN's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.91 trailing stop. Tighten it to 0.96 after you get a 2.84 gain. ASAN closed Thursday at 22.74. Earnings Report Date: Sep 18, 2023. Beta: 1.30. Market-Cap: 4.931B. 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
---------------- ------- -------- ------- ------ -------
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.
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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