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June 27, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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Years ago a family-owned hibachi style restaurant opened near my neighborhood. The food was great, prices were reasonable, and the restaurant was an immediate success. Word quickly spread, and during the weeks following the grand opening people lined up to get in.
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"QUICK LIST"
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Stock 06/27 06/27 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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CVNA 24.30 3.39 24.83 4.32/2.16 5.52
LKNCY 21.29 0.26 22.25 20.37 1.88/0.94 1.18
BHVN 23.22 0.61 23.73 2.39/1.2 2.78
REPL 23.29 -0.09 23.91 2.47/1.24 2.86
RCKT 20.10 0.27 20.47 19.04 1.43/0.72 2.18
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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US stocks rallied on strong economic data Tuesday with the S&P 500, Nasdaq, and Russell 2000 all posting gains of over 1%. The bullish move was ignited by several economic releases that exceeded consensus expectations including May headline durable goods orders, consumer confidence, and new home sales. Information Technology and Consumer Discretionary sectors continued their strong year-to-date performance by posting gains of over 1.5%. Additionally, cyclical sectors such as industrials and materials closed up over 1%, reflecting broader participation. After beginning interest rate hikes in March of 2022, the Fed Bank opted to pause interest rate hikes at their June meeting. Although inflation has come down from its June 2022 peak, it still remains well above the Fed's long-term target of 2%. The Central Bank has made very clear that they remain committed to restoring price stability and that additional hikes are probable moving forward. Tuesday's better than expected economic releases could put further upward pressure on prices, particularly in housing, potentially pushing the Fed toward additional interest rate hikes. Markets are currently pricing in approximately a 75% probability of a 25 basis point hike at the July 26th meeting and are no longer pricing in expected rate cuts in 2023. We are already seeing the impact of tighter monetary conditions across the economy in areas such as manufacturing and recent trends in labor market conditions. Volatility in capital markets is likely as the Fed approaches the end of their tightening cycle, but would not expect equity markets necessarily to re-test their 2022 lows. Year-to-date the S&P 500 has returned over 13% while the Russell 2000 has posted a gain of over 5%. This outperformance is due to the narrow leadership from large-cap technology companies with exposure to the AI theme. As the US economy transitions through the second half of the Fed's tightening cycle and emerges on the other side, we expect equity market leadership to broaden and to see more balanced performance across cyclically oriented asset classes, such as US small-cap stocks. Jun 26, 2023 Jun 27, 2023
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Dow 33,714.71 -12.72 33,926.74 212.03
Nasdaq 13,335.78 -156.74 13,555.67 219.89
S&P 500 4,328.82 -19.51 4,378.41 49.59
NYSE Volume 3.42B 3.59B
NYSE Advancers 1,952 2,136
NYSE Decliners 1,000 807
Nasdaq Volume 4.44B 5.07B
Nasdaq Advancers 2,052 2,660
Nasdaq Decliners 2,371 1,742
New Highs/Lows
06/20 06/21 06/22 06/23 06/26 06/27
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NYSE New Highs 69 92 50 52 58 107
NYSE New Lows 19 29 37 47 31 32
Nasdaq New Highs 91 92 67 49 58 87
Nasdaq New Lows 100 132 125 153 171 168
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TRADER'S TIP:
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TRADER'S TIP: "Hot Zones" While up and down price behavior reflects the impact of news and sentiment, heavy hitters like market makers and institutional traders use technical analysis to locate potential breakout and reversal zones. Some of these areas are easy to see, for they line up with previous high and low pivot points. Others are less obvious. Trend lines, Bollinger Bands, Fibonacci overlays, and other technical tools are used to locate the hot spots. Where two or more of these converge, support or resistance is stronger. Bullish moves beyond these limits occur when sellers give in and join the buyers. Bearish moves occur in the same fashion, only in reverse. As traders we can anticipate these points, and manage positions by preparing for possible breakouts or reversals at these junctions. It doesn't pay to be stubborn! If a trade tells us it wants to break through support or resistance, we can play it that way. If it decides to reverse, we can follow along. One measure of a trader's strength is the ability to quickly adapt and go with the current price flow. To a large degree, this is what is meant by the saying, "let the market tell you what to do." **************************
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 - 4378.41 June 27, 2023 52-Week High: 4448.47 52-Week Low: 3491.58 Daily Trend: DOWN Weekly trend: UP Weekly Pivot Levels Resistance 3: 4593.47 Resistance 2: 4486.41 Resistance 1: 4417.37 Pivot: 4379.35 Support 1: 4310.31 Support 2: 4272.29 Support 3: 4165.23 https://www.prorightline.com/rlch/062723SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, June 26, 2023: 26-Jun None scheduled Tuesday, June 27, 2023: 27-Jun 8:30 am Durable-goods orders 27-Jun 8:30 am Durable-goods minus transportation 27-Jun 9:00 am S&P Case-Shiller home price index (20 cities) 27-Jun 10:00 am New home sales 27-Jun 10:00 am Consumer confidence Wednesday, June 28, 2023: 28-Jun 8:30 am Advanced U.S. trade balance in goods 28-Jun 8:30 am Advanced retail inventories 28-Jun 8:30 am Advanced wholesale inventories Thursday, June 29, 2023: 29-Jun 8:30 am Initial jobless claims 29-Jun 10:00 am Pending home sales Friday, June 30, 2023: 30-Jun 8:30 am Personal income (nominal) 30-Jun 8:30 am Personal spending (nominal) 30-Jun 8:30 am PCE index] 30-Jun 8:30 am Core PCE index 30-Jun 8:30 am PCE (year-over-year) 30-Jun 8:30 am Core PCE (year-over-year) 30-Jun 9:45 am Chicago Business Barometer 30-Jun 10:00 am Consumer sentiment (final) 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: "Using The Market Map" While Charting and Technical Analysis gives us a map of the market by revealing the price levels where trading decisions need to be made, it doesn't make those decisions for us. It's our job as traders to pilot the journey by entering positions and taking the right exits along the way! ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR Carvana Co. (CVNA: Consumer Cyclical/Auto & Truck Dealerships) - BULLISH BOUNCE. This trader-friendly setup turns repetitive stock behavior into real profits. Based on the tendency for up-trending stocks to drop briefly and then resume the up-trend, the Bullish Bounce places traders into excellent stocks when conditions are primed for more skyward movement. CVNA's current price action near moving average support signals a potential BUY entry at 24.83, followed by a 4.32 trailing stop which can be tightened to 2.16 upon earning 5.52. CVNA closed Tuesday at 24.30. Earnings Report Date: Aug 02, 2023. Beta: 2.79. Market-Cap: 4.316B. Optionable. Luckin Coffee Inc. (LKNCY: Consumer Cyclical/Restaurants) - SQUEEZE PLAY. Trader indecision has put LKNCY 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 22.25 and a SELL short entry at 20.37. Now it's up to LKNCY to show us which entry will be filled. Once the trade is underway place a 1.88 trailing stop, which can be tightened to 0.94 after you achieve a 1.18 profit. LKNCY closed on Tuesday at 21.29. Earnings Report Date: Aug 07, 2023. Beta: -0.70. Market-Cap: 5.874B. Not Optionable. HEALTHCARE SECTOR Biohaven Ltd. (BHVN: Healthcare/Biotechnology) - BULLISH BOUNCE. Among other strengths, the Bullish Bounce protects traders from buying a stock "at the top" of its current cycle. The entry into this setup always takes place in upward-moving stocks that have retreated a bit under normal conditions. Now sitting at 23.22, BHVN is on our radar for a BUY entry at 23.73. If you purchase shares of BHVN, be sure to also place a trailing stop of 2.39. Snug it up to 1.2 on a 2.78 gain. Earnings Report Date: Aug 03, 2023. Beta: N/A. Market-Cap: 1.584B. Optionable. Replimune Group, Inc. (REPL: Healthcare/Biotechnology) - BULLISH BOUNCE. Everyone familiar with price charts knows that a stock tends to bounce its way higher rather than move in a straight line. The lower levels of these short-term rebounds offer a safe and often early entry into stocks that are in the process of establishing longer-term uptrends. REPL's reaction to support on Tuesday created a Bullish Bounce setup with a BUY entry trigger at 23.91. Use a 2.47 trailing stop, which should work well with REPL's typical daily range. Tighten it to 1.24 on a 2.86 profit. REPL closed at 23.29 on Tuesday. Earnings Report Date: Aug 02, 2023. Beta: 1.64. Market-Cap: 1.346B. Optionable. Rocket Pharmaceuticals, Inc. (RCKT: 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 RCKT's case we will enter a BUY should it reach the 20.47 level, or a SELL short trade if it drops to 19.04. As usual a trailing stop is essential, 1.43 which should be tightened to 0.72 on a 2.18 gain. RCKT closed Tuesday at 20.10. Earnings Report Date: Aug 07, 2023. Beta: 1.21. Market-Cap: 1.617B. 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/ ======================================================================
Best of luck and have a Great Week!
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