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June 7, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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It wasn't too many years ago that short-term traders were portrayed by the news media as reckless gamblers. Traders were often made to look foolish for not approaching the markets in the traditional buy-and-hold manner. Thinking back, I can't remember one interview where short-termers were asked if they also invested in longer-term holdings, yet most traders I know do both.
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"QUICK LIST"
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Stock 06/06 06/06 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
SDA 12.80 1.11 13.98 3.05/1.53 2.76
IDYA 24.45 0.06 24.89 23.27 1.62/0.81 2.14
INBX 24.49 0.44 25.04 23.13 1.91/0.96 3.8
FORM 31.15 1.00 31.88 3.03/1.52 1.84
SSTI 24.61 0.28 25.07 23.5 1.57/0.79 2.98
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 finished higher on Tuesday despite the absence of significant economic releases and the completion of most corporate earnings announcements. Market attention is expected to turn towards two key events next week: the release of the May Consumer Price Index (CPI) report and the Federal Open Market Committee (FOMC) meeting. These upcoming events are anticipated to provide valuable insights and shape market sentiment moving forward. The S&P 500's impressive performance in the beginning of the year can be attributed to the strong contributions from three key sectors: information technology, communication services, and consumer discretionary. These sectors have all experienced significant gains of over 20% year-to-date. In comparison, the industrials sector, which is the next best-performing sector, has seen more modest growth with a 2.52% gain for the year. In addition, these three sectors have consistently demonstrated positive performance in recent weeks, with communication services and consumer discretionary sectors recording positive returns for four consecutive weeks, and the information technology sector for three consecutive weeks. On the other hand, certain cyclical asset classes like small-cap equities have not performed as well as the S&P 500 year-to-date. The labor market has proven to be a strong and resilient component of the economy, as evidenced by the surpassing of payroll addition expectations last week. However, it's worth noting that wage growth has been moderate, and there has been a slight increase in the unemployment rate. Given these factors, we anticipate a pause in interest rate hikes during the upcoming June meeting. Nevertheless, we cannot disregard the potential for another rate increase in July, as the Federal Reserve aims to steer inflation towards its long-term target of 2%. Tuesday On The Week
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Dow 33,573.28 10.42 +530.5 1.61%
Nasdaq 13,276.42 46.99 +258.99 1.99%
S&P 500 4,283.85 10.06 +78.33 1.86%
NYSE Volume 4B
NYSE Advancers 2,348
NYSE Decliners 632
Nasdaq Volume 4.84B
Nasdaq Advancers 3,183
Nasdaq Decliners 1,243
New Highs/Lows
05/30 05/31 06/01 06/02 06/05 06/06
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NYSE New Highs 51 20 27 88 43 110
NYSE New Lows 78 117 76 15 24 18
Nasdaq New Highs 128 51 84 129 125 132
Nasdaq New Lows 146 202 123 54 71 83
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TRADER'S TIP:
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TRADER'S TIP: "The Market Shows Its Hand" Breakouts through key resistance levels, and breakdowns through key support levels both signal price moves that are likely to persist for some time. The power of trend is one of the strongest allies a trader can have, so make it your friend regardless of whether it is up or down. This means learning to play the market from both sides - buying when the trend is up, and selling short when the trend is down. Leave your Bull or Bear bias at the door and let the market tell you what IT wants 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 - 4283.85 June 6, 2023 52-Week High: 4325.28 52-Week Low: 3491.58 Daily Trend: UP Weekly trend: UP Weekly Pivot Levels Resistance 3: 4512.10 Resistance 2: 4377.58 Resistance 1: 4329.97 Pivot: 4243.06 Support 1: 4195.45 Support 2: 4108.54 Support 3: 3974.02 https://www.prorightline.com/rlch/060623SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Wednesday, June 07, 2023: 07-Jun 8:30 am U.S. trade deficit 07-Jun 3:00 pm Consumer credit 07-Jun THURSDAY, JUNE 8 Thursday, June 08, 2023: 08-Jun 8:30 am Initial jobless claims 08-Jun 10:00 am Wholesale inventories 08-Jun FRIDAY, JUNE 9 Friday, June 09, 2023: 09-Jun None scheduled 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: "Accredited Investor" This is the SEC term for a person or entity meeting any of the criteria listed below: "The federal securities laws define the term accredited investor in Rule 501 of Regulation D as: 1) a bank, insurance company, registered investment company, business development company, or small business investment company; 2) an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million; 3) a charitable organization, corporation, or partnership with assets exceeding $5 million; 4) a director, executive officer, or general partner of the company selling the securities; 5) a business in which all the equity owners are accredited investors; 6) a natural person who has individual net worth, or joint net worth with the person's spouse, that exceeds $1 million at the time of the purchase; 7) a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or 8) a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes." ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR SunCar Technology Group Inc. (SDA: Consumer Cyclical/Auto & Truck Dealerships) - NEW HIGH DIP. Basking in the light of a recent new 52-week high, SDA shares have pulled back a bit as traders enjoy some nice profits. Now it looks like the Bull may be ready to resume the uptrend again. Tuesday's bounce from a Moving Average support zone provides us with solid setup, so be ready to enter when price reaches our BUY trigger at 13.98. Follow your long entry with a 3.05 stop, then tighten it to 1.53 after gaining 2.76. SDA ended the Tuesday session at 12.80. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.069B. Not Optionable. HEALTHCARE SECTOR IDEAYA Biosciences, Inc. (IDYA: 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 IDYA's case we will enter a BUY should it reach the 24.89 level, or a SELL short trade if it drops to 23.27. As usual a trailing stop is essential, 1.62 which should be tightened to 0.81 on a 2.14 gain. IDYA closed Tuesday at 24.45. Earnings Report Date: Aug 14, 2023. Beta: 0.85. Market-Cap: 1.401B. Optionable. Inhibrx, Inc. (INBX: Healthcare/Biotechnology) - SQUEEZE PLAY. Trader indecision has put INBX 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 25.04 and a SELL short entry at 23.13. Now it's up to INBX to show us which entry will be filled. Once the trade is underway place a 1.91 trailing stop, which can be tightened to 0.96 after you achieve a 3.8 profit. INBX closed on Tuesday at 24.49. Earnings Report Date: Aug 07, 2023. Beta: 2.86. Market-Cap: 1.068B. Optionable. TECHNOLOGY SECTOR FormFactor, Inc. (FORM: Technology/Semiconductors) - BULLISH BOUNCE. FORM's positive weekly uptrend is still intact despite recent selling that has driven share prices lower. Price action on Tuesday shows that traders are aware of the moving average support zone now in play, and they are ready to consider buying again. A shift up from this point will attract even more buyers. The new buying should move FORM back in step with the bullish weekly trend, so our BUY entry trigger is set at 31.88. Once you hold a position, trail a stop of 3.03. Tighten it to 1.52 on a 1.84 gain. FORM closed at 31.15 on Tuesday. Earnings Report Date: Jul 25, 2023. Beta: 1.23. Market-Cap: 2.403B. Optionable. SoundThinking, Inc. (SSTI: Technology/Software-Application) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in SSTI's narrowest trading range of the past seven sessions. With neither group able to take complete control on Tuesday, 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 25.07 and a SELL order at 23.5. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.57 trailing stop. Tighten the stop to 0.79 once you have a 2.98 gain. SSTI closed Tuesday at 24.61. Earnings Report Date: Aug 07, 2023. Beta: 1.47. Market-Cap: 301.357M. 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 a 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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