Notes From The Editor

Ramping Up

There comes a point in every successful trader's career when it's time to grow and expand. If you've developed a winning strategy and steadily squeezed profits out of the market, you may reach the logical conclusion that, "hey, if I put more money into my positions, I could make more money."

Very true. But as with all aspects of trading, ramping up needs to be done with caution and care. No haphazard, Vegas-esque rolling of the dice!

First, ask yourself if you're truly comfortable taking larger positions. During the past six months, did your approach consistently net more points than it lost? Is it in-line with the market's current direction and underlying trends? Are you psychologically prepared to handle larger positions?

Assuming that you're ready to move into larger trades, remember the cardinal rule of trading: ALWAYS use risk management and stop-losses. This will mean that while your losses may be larger (a logical result of having larger positions), they'll still be manageable.

As you scale up, also remember that you're not locked into larger trades. If a set-up looks promising, but you feel it's still a bit on the risky side, don't hesitate to take a smaller position. This gives you exposure to the stock, but keeps your potential risk at a minimum.

There may also be more extended periods of time when you need to revert to your "old" position sizing. The market will inevitably shift (for example, from a strong long-term uptrend to a shallow downtrend) and your trading strategy might drop out of sync with the market's dynamics. When this happens, it's time to regroup and test a new approach with smaller trades. Once you're back on track, you can scale back up.

As long as you follow these guidelines - especially solid risk management techniques - don't be afraid to grow and push the envelope. If you truly feel like you've reached your comfort zone and are ready to ramp up, give it a shot!

Here's to profits,

Kent Barton
Senior Analyst

Quick List

    
Stock     06/08     06/08      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

BHVN      23.13      0.55     23.77     21.74        2.03/1.02      1.82
NTNX      29.37      0.38     29.98                  2.34/1.17      1.34
TCX       30.72      0.29     31.35                   2.5/1.25      6.62
LITE      51.08      0.28     51.89                  3.75/1.88      3.26
ASAN      22.53     -0.18      23.2     21.22        1.98/0.99      1.64

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

Stocks made notable gains on Thursday, with the S&P 500 achieving a new closing record for 2023. The focus on global inflation remains as central banks in Australia and Canada raised rates this week in response to persistent inflationary pressures. European and Asian shares, on the other hand, showed little change. The 10-year bond yield experienced a decrease of approximately 7 basis points (0.07%), trading around 3.7%. The dollar also declined from its three-month high. In terms of news, there isn't much expected until next week, when we will receive updates on the PMI and comments from the Fed. Despite elevated rates, the US economy has managed to avoid a recession thus far, thanks to the resilience of the labor market.

Taking a closer look at recent performance, it appears that the tech sector has relinquished some of its gains driven by artificial intelligence. Conversely, small-cap and cyclical stocks have shown relatively strong performance, buoyed by better-than-expected US growth and a tight labor market. This shift in investor sentiment could signify a move towards riskier and more cyclical assets, especially with a debt-ceiling deal in place and robust GDP growth.

                        Jun 7, 2023            Jun 8, 2023    
                  --------------------   --------------------
Dow                 33,665.02    91.74     33,833.61   168.59
Nasdaq              13,104.89  -171.52     13,238.52   133.63
S&P 500              4,267.52   -16.33      4,293.93    26.41

NYSE Volume                      4.54B                  3.83B
NYSE Advancers                   1,927                  1,427
NYSE Decliners                   1,039                  1,515

Nasdaq Volume                    5.28B                  4.32B
Nasdaq Advancers                 2,471                  2,237
Nasdaq Decliners                 1,963                  2,171

                                 New Highs/Lows

                   06/01  06/02  06/05  06/06  06/07  06/08
                 --------------------------------------------
NYSE New Highs        27     88     43    110    155     83
NYSE New Lows         76     15     24     18     10     18
Nasdaq New Highs      84    129    125    132    153     87
Nasdaq New Lows      123     54     71     83     58     62
   

TRADER'S TIP: "Penny Stocks"

There seem to be two primary ways that penny stocks move up rapidly. First is the famous "Pump & Dump" tactic that made several well-known chat room "traders" extremely wealthy during the late nineties. The way this works is someone loads up on the cheap stock, then tells everyone in the "free" chat rooms that the stock is about to make a huge move. Of course shares do take off once word gets out, because demand increases while the Pump & Dumpers control the float. After a day or so of ramping the price higher, the chat room guru sells into the rally. This leaves the less experienced buyers holding worthless paper.

The second method involves massive Public Relations campaigns. Direct postal mail and email SPAM is sent to millions of people in order to create a false demand for the stock. By the time the average buyer gets in, it's to late - the scammers have sold to the unsuspecting public and are gone. Let the buyer beware!

Penny stocks and other OTCs - Over The Counter - stocks are easily manipulated. Though these schemes are often illegal, they still occur. This is the main reason that RightLine only covers stocks that trade on the major exchanges.

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 - 4293.93 June 8, 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

NASDAQ Composite - 13238.52 June 8, 2023

52-Week High: 13361.90
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 14128.57
Resistance 2: 13602.06
Resistance 1: 13421.41
Pivot: 13075.56
Support 1: 12894.91
Support 2: 12549.05
Support 3: 12022.54
        
Dow Industrials - 33833.61 June 8, 2023

52-Week High: 34712.28
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 35625.07
Resistance 2: 34524.58
Resistance 1: 34143.67
Pivot: 33424.08
Support 1: 33043.17
Support 2: 32323.59
Support 3: 31223.10
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    


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

TRADER'S TIP: "Triangles and Time Frames"

Always check the next larger time frame when trying to determine if a triangle pattern is likely to lead to an upward breakout. For example, if you are trading a daily chart, refer to the weekly chart to see which way the trend is headed. If the larger trend is up, a triangle on the next lower time frame is more likely to break out higher.

Stocks Covered in This Issue

HEALTHCARE SECTOR

Biohaven Ltd. (BHVN: Healthcare/Biotechnology) - SQUEEZE PLAY. Sometimes when Bulls and Bears face off in the market arena for a typical day-long battle, there is no clear winner. This is evident when the daily price range contracts to an unusually narrow state. BHVN found itself in this condition on Thursday when neither buyers or sellers were able to push ahead. This setup provides traders a chance to hop on board the next breakout - whether it's to the upside or down - with little risk of loss. To do this place a BUY order at 23.77 and a SELL short trigger at 21.74. When BHVN moves outside of Thursday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 2.03 trailing stop. After you've got a 1.82 profit, tighten the stop to 1.02. BHVN closed at 23.13 on Thursday. Earnings Report Date: Aug 03, 2023. Beta: N/A. Market-Cap: 1.582B. Optionable.

TECHNOLOGY SECTOR

Nutanix, Inc. (NTNX: Technology/Software-Infrastructure) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Thursday NTNX seemed intent on initiating a rebound. With moving average support nearby, NTNX 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 29.98. Manage risk with a 2.34 stop. Tighten your stop to 1.17 when you have a 1.34 profit. NTNX ended the day at 29.37. Earnings Report Date: Aug 29, 2023. Beta: 1.36. Market-Cap: 6.924B. Optionable.

Tucows Inc. (TCX: Technology/Software-Infrastructure) - 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 30.72. Anticipate the rebound to continue, and be ready to buy TCX at 31.35. Follow your entry with a trailing stop of 2.5 which can be tightened to 1.25 on a 6.62 profit. Earnings Report Date: Aug 07, 2023. Beta: 0.83. Market-Cap: 332.741M. Optionable.

Lumentum Holdings Inc. (LITE: Technology/Communication Equipment) - BULLISH BOUNCE. Up-trending stocks like LITE have a tendency to bounce their way skyward rather than travel higher in a straight line. After touching down to a moving average support level on Thursday, LITE is poised to lift off again. To take advantage of this setup, prepare to BUY shares at 51.89 if positive price action occurs. As always, follow your entry with a trailing stop. A 3.75 trailer should work well with LITE. Tighten it to 1.88 on a 3.26 gainer. Earnings Report Date: Aug 14, 2023. Beta: 1.10. Market-Cap: 3.509B. Optionable.

Asana, Inc. (ASAN: Technology/Software-Application) - SQUEEZE PLAY. ASAN 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 23.2 and a SELL short trigger at 21.22. When one of the orders is filled, cancel the remaining order and enter a 1.98 trailing stop. When you've reached a 1.64 paper profit, tighten the stop to 0.99. ASAN closed at 22.53 on Thursday. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 4.965B. 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.

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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