June 29, 2023 - The RightLine Report
Notes From The Editor
So you've made some money in the market...now what?
When it comes to running a business, it's often said that unmanaged growth can be just as dangerous as lean economic times. The same can be said of trading stocks. Without the right approach, a temporary profits can quickly evaporate - or even turn into a loss.
Fortunately, this fate can be easily avoided by following some simple guidelines. It all starts with risk management. Using position sizing and trailing stops will ensure that very few active trades, once profitable, will wind up generating a loss.
But what about winning trades that you've already closed out? We've all experienced - or at least heard about - the phenomenon of being profitable "on paper," only to wind up losing those gains and never enjoying the fruits of your labor. To make those profits more tangible, don't hesitate to take some money out of your account and spend it on something that enriches your life.
How much should you take out? Well, that depends on your personal goals, and on how much you want to grow your trading account. But by occasionally spending a relatively small chunk - say, 5 to 10% - of your profits, you'll feel a real sense of reward and accomplishment. Pay bills, treat you or your spouse to something nice, add to your vacation fund; the possibilities are endless. Some brokerages even offer debit cards, so you can use that money as soon as the trade settles.
This also helps to avoid the "paper money" syndrome - the tendency to start viewing your trading account as something akin to monopoly money, rather than real cash you can use. When you lose sight of the value of your account, there's a psychological tendency to be more careless with your money. Risky trades and unmanageable losses may soon follow.
One caveat, however: don't get too caught up in the short-term reward of profitable trades. While rewarding yourself for a successful trade can be fulfilling, don't fall into the instant- trading goals. By balancing the long and short term, you'll stay motivated, focused, and excited as your account grows over time.
Here's to profits,
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 06/29 06/29 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
DFH 24.12 0.22 24.45 1.78/0.89 1.86
VTS 22.19 0.20 22.56 21.27 1.29/0.65 2.3
CLB 24.35 0.43 25.01 23.27 1.74/0.87 2.8
BCYC 24.91 0.11 25.81 2.19/1.1 2.52
SMTC 25.00 0.42 25.34 23.7 1.64/0.82 2.62
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
Thursday the markets closed on a positive note, with broad upward movement. The Federal Reserve's stress test results revealed that some of the country's largest banks are well-prepared to withstand a severe recession, which boosted bank stocks. Also, the final revision to the first-quarter GDP showed stronger growth of 2%, surpassing the initial estimate of 1.3% and exceeding expectations. This growth was primarily driven by robust consumer spending and exports. As a result, treasury yields have risen, while prices have declined as investors anticipate the Federal Reserve's efforts to address inflationary pressures by potentially implementing higher interest rates. Fed Chair Jerome Powell has indicated the possibility of additional rate hikes to curb demand.
There was positive news on the labor market front, as weekly jobless claims dropped to the lowest level since May. This combination of better-than-expected GDP growth and a resilient labor market demonstrates that the US economy remains on solid ground despite the Fed's rate hikes.
Looking ahead, Fed Chairman Jerome Powell's recent statements suggest that the Central Bank is likely to adopt a more assertive stance in the coming months, given the strong labor market and persistent inflationary pressures. Inflation is a key concern for investors and policymakers. While there are signs of moderation, the pace remains slow, with inflation still well above the 2% target. Several central banks worldwide, including Australia, Canada, and England, have surprised economists with their aggressive rate hikes. This global trend has sparked concerns among US investors, as they consider the possibility of the US Fed following suit, and Powell's comments seem to support this perspective. Higher interest rates help control inflation by increasing borrowing costs, such as mortgage rates, and reducing liquidity. With the 10-year treasury yield nearing 3.9%, it is likely that consumer financing rates and corporate borrowing costs will rise, potentially leading to decreased capital investment.
Jun 28, 2023 Jun 29, 2023
-------------------- --------------------
Dow 33,852.66 -74.08 34,122.42 269.76
Nasdaq 13,591.75 36.08 13,591.33 -0.42
S&P 500 4,376.86 -1.55 4,396.44 19.58
NYSE Volume 3.76B 3.7B
NYSE Advancers 1,620 2,022
NYSE Decliners 1,320 941
Nasdaq Volume 4.54B 4.39B
Nasdaq Advancers 2,298 2,611
Nasdaq Decliners 2,070 1,770
New Highs/Lows
06/22 06/23 06/26 06/27 06/28 06/29
--------------------------------------------
NYSE New Highs 50 52 58 107 115 149
NYSE New Lows 37 47 31 32 34 19
Nasdaq New Highs 67 49 58 87 86 111
Nasdaq New Lows 125 153 171 168 126 120
Stocks Covered Today Stock Splits
TRADER'S TIP: "Intuition"
Intuition - we've all learned to rely on it in different areas of our lives. When it comes to trading the markets, trusting our intuition exclusively is a process that often leads to financial harm. As a rule of thumb, it's best to use your intuition to develop your methodology - not to decide when to enter or exit a trade.
For example, you may find that you intuitively prefer to trade one type of trade instead of another. Following your intuition in this manner will often lead you to better setups, resulting in bigger profits. Intuition that causes you to fine tune and test your trading methods is much more effective than using it as an entry or exit strategy.
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 - 4396.44 June 29, 2023
52-Week High: 4448.47
52-Week Low: 3491.58
Daily Trend: UP
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
NASDAQ Composite - 13591.33 June 29, 2023
52-Week High: 13864.06
52-Week Low: 10088.83
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 14444.24
Resistance 2: 14021.80
Resistance 1: 13757.16
Pivot: 13599.36
Support 1: 13334.72
Support 2: 13176.92
Support 3: 12754.48
Dow Industrials - 34122.42 June 29, 2023
52-Week High: 34712.28
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 35871.72
Resistance 2: 34929.61
Resistance 1: 34328.52
Pivot: 33987.50
Support 1: 33386.41
Support 2: 33045.39
Support 3: 32103.28
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): 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) Monday, July 03, 2023: None scheduled Tuesday, July 04, 2023: US stock markets closed for Independence Day 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 27-Jun 10:00 am New home sales 27-Jun 10:00 am Consumer confidence Wednesday, July 05, 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, July 06, 2023: 29-Jun 8:30 am Initial jobless claims 29-Jun 10:00 am Pending home sales 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: "Victory!"
Regardless of what some "experts" have to say, trading isn't war. If you consider trading the same thing as combat, you may wind up being stressed, or even worse, hostile. Those who view trading as a matter of life and death usually take things very personally and tend to hold onto losses way too long. If you choose to use a military model for your trading approach, keep in mind that throughout history successful military leaders knew when to take a small loss on the battlefield. When outnumbered, they often retreated so they could return to fight another day.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
Dream Finders Homes, Inc. (DFH: Consumer Cyclical/Residential Construction) - 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. DFH's behavior on Thursday could very well be a sign that a new bounce is underway. Place a BUY trigger at 24.45. In the event your trigger is met, also place a 1.78 trailing stop which can be trimmed down to 0.89 when you have a 1.86 profit. DFH closed Thursday at 24.12. Earnings Report Date: Aug 02, 2023. Beta: 1.47. Market-Cap: 2.246B. Optionable.
ENERGY SECTOR
Vitesse Energy, Inc. (VTS: Energy/Oil & Gas E&P) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in VTS's narrowest trading range of the past seven sessions. With neither group able to take complete control on Thursday, 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 22.56 and a SELL order at 21.27. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.29 trailing stop. Tighten the stop to 0.65 once you have a 2.3 gain. VTS closed Thursday at 22.19. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 638.817M. Optionable.
Core Laboratories Inc. (CLB: Energy/Oil & Gas Equipment & 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. CLB traders reached this state of stand-off on Thursday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 25.01 and a SELL short trigger at 23.27. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.74 which can be tightened to 0.87 on a 2.8 gain. CLB closed Thursday at 24.35. Earnings Report Date: Jul 25, 2023. Beta: 2.67. Market-Cap: 1.136B. Optionable.
HEALTHCARE SECTOR
Bicycle Therapeutics plc (BCYC: Healthcare/Biotechnology) - BULLISH BOUNCE. Another bullish bouncer, BCYC appears ready to resume trading in an uptrend after recent selling forced the stock lower for several days. Thursday's positive price action near Moving Average support says it's time to BUY shares if BCYC reaches our entry trigger set at 25.81. Also place a 2.19 trailing stop which can be narrowed to 1.1 when you reach a 2.52 profit. BCYC closed Thursday at 24.91. Earnings Report Date: Aug 02, 2023. Beta: 0.73. Market-Cap: 748.384M. Optionable.
TECHNOLOGY SECTOR
Semtech Corporation (SMTC: Technology/Semiconductors) - SQUEEZE PLAY. SMTC traders on both sides of the fence are now locked in a head-to-head shootout. Thursday's price range was the narrowest in over a week, as neither Bears or Bulls have been able to clearly gain the upper hand. This gives us an opportunity to catch the next directional move with little risk of loss. To do this we'll place both a long and a short trigger with a BUY at 25.34 and a SELL short trigger at 23.7. When one of the orders is filled, cancel the remaining order and enter a 1.64 trailing stop. When you've reached a 2.62 paper profit, tighten the stop to 0.82. SMTC closed at 25.00 on Thursday. Earnings Report Date: Aug 29, 2023. Beta: 1.67. Market-Cap: 1.599B. 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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