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March 11, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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Healthy Trading Behavior
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"QUICK LIST"
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Stock 03/10 03/10 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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ATAT 23.49 -0.52 24.68 22.3 2.38/1.19 3.84
IPAR 133.73 -0.07 136.07 10.01/5.01 5.68
ELVN 21.09 -0.56 21.94 20.14 1.8/0.9 0.9
FOUR 68.31 -0.14 69.57 6.97/3.49 5.76
DQ 49.90 -0.85 52.12 5.09/2.55 4.02
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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The major US stock averages were dramatically lower on Friday, ending the week in the red as traders continue to look for clues regarding the Fed Bank's next rate tightening move. With high inflation ravaging the purchasing power of the middle class, government spending continues to add fuel to the fire despite signs of possible recession in the months ahead. Meanwhile, storms continue blowing in the banking sector, as a desperate SVB Financial (SIVB/trading halted) is reportedly in talks to sell itself after failing to raise capital. On Friday Silicon Valley Bank became the biggest bank since the 2008 financial crisis to be taken over by the FDIC. In economic news, the February labor report showed better job gains than predicted, and a lower increase in wages than expected, but an increase in the unemployment rate. Treasury yields fell hard following the release of the labor report. The USD/dollar was also lower, while oil and gold prices finished higher. Friday On The Week
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Dow 31,909.64 -345.22 -1481.33 -4.44%
Nasdaq 11,138.89 -199.47 -550.12 -4.71%
S&P 500 3,861.59 -56.73 -184.05 -4.55%
NYSE Volume 5.52B
NYSE Advancers 442
NYSE Decliners 2,637
Nasdaq Volume 6.21B
Nasdaq Advancers 856
Nasdaq Decliners 3,676
New Highs/Lows
03/03 03/06 03/07 03/08 03/09 03/10
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NYSE New Highs 124 87 58 45 51 25
NYSE New Lows 18 23 49 56 96 209
Nasdaq New Highs 99 93 62 63 72 37
Nasdaq New Lows 66 93 154 193 312 547
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TRADER'S TIP:
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TRADER'S TIP: "The Float" A stock's float is the total number of shares available to the public for trading. "Available" equals all shares outstanding less the stock owned by insiders such as executives and management, 5% Owners (anyone who owns 5% or more) and Rule 144 Shares. Stocks with a small float are more volatile than stocks with large floats. This is because a large buy or sell order can influence a small float stock price dramatically. Since small-cap stocks usually have fewer shares outstanding than large-cap companies, their float is smaller. This tends to cause higher volatility. For a look at Rule 144, you can visit the SEC website at the following link. Warning - be prepared for a lot of legal jargon... http://www.sec.gov/about/forms/rule144.pdf. **************************
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 - 3861.59 March 10, 2023 52-Week High: 4637.30 52-Week Low: 3491.58 Daily Trend: DOWN Weekly trend: UP Weekly Pivot Levels Resistance 3: 4393.13 Resistance 2: 4160.96 Resistance 1: 4011.27 Pivot: 3928.80 Support 1: 3779.10 Support 2: 3696.63 Support 3: 3464.46 https://www.prorightline.com/rlch/031023SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, MARCH 13 None scheduled TUESDAY, MARCH 14 6:00 am NFIB Optimism index 8:30 am Consumer price index 8:30 am Core CPI 8:30 am CPI (year over year) 8:30 am Core CPI ((year over year) WEDNESDAY, MARCH 15 8:30 am Retail sales 8:30 am Retail sales ex autos 8:30 am Producer price index 8:30 am Core PPI 8:30 am PPI (year over year) 8:30 am Core PPI (year over year) 8:30 am Empire State manufacturing 10:00 am Business inventories 10:00 am Homebuilders survey THURSDAY, MARCH 16 8:30 am Initial jobless claims 8:30 am Import price index 8:30 am Housing starts 8:30 am Building permits 8:30 am Philadelphia Fed manufacturing FRIDAY, MARCH 17 9:15 am Industrial production 9:15 am Capacity utilization 10:00 am U.S. leading economic index 10:00 am Consumer sentiment 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: "Trading Discipline... What Exactly is it?" In trading, discipline simply means that we always perform a basic group of essential actions every time we put on a trade - no exceptions. The reason we do this? Because research and experience has taught us that certain tactics or "rules" give us a statistical edge over the market. When we consistently use these simple rules over an extended period of time, we are much more successful than when we don't use them, or only use them when we "remember" to. ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR Atour Lifestyle Holdings Limited (ATAT: Consumer Cyclical/Lodging) - SQUEEZE PLAY. Friday's trading session left ATAT 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 24.68 and your SELL short trigger at 22.3. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 2.38 trailing stop. Once you have a 3.84 profit, reduce the stop to 1.19. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 3.063B. Not Optionable. CONSUMER DEFENSIVE SECTOR Inter Parfums, Inc. (IPAR: Consumer Defensive/Household & Personal Products) - 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. IPAR's reaction to support on Friday created a Bullish Bounce setup with a BUY entry trigger at 136.07. Use a 10.01 trailing stop, which should work well with IPAR's typical daily range. Tighten it to 5.01 on a 5.68 profit. IPAR closed at 133.73 on Friday. Earnings Report Date: May 08, 2023. Beta: 1.03. Market-Cap: 4.294B. Optionable. HEALTHCARE SECTOR Enliven Therapeutics, Inc. (ELVN: Healthcare/Biotechnology) - SQUEEZE PLAY. The ticker for Friday's session shows ELVN is now stuck in a tight price band. With the cyclical contraction and expansion nature of volatility in force, we should see a new period of price expansion in the days ahead. To improve the odds of catching the next directional wave, place a BUY trigger at 21.94 and a SELL short trigger at 20.14. When ELVN starts moving out of its narrow range, your order will be triggered. Once you're in the trade, cancel the opposing trigger and set a 1.8 trailing stop. Upon reaching a 0.9 profit, resize the stop to 0.9. Earnings Report Date: May 04, 2023. Beta: N/A. Market-Cap: 864.933M. Optionable. TECHNOLOGY SECTOR Shift4 Payments, Inc. (FOUR: Technology/Software-Infrastructure) - NEW HIGH DIP. FOUR's latest 52-week high and subsequent pullback has resulted in one of our favorite trade opportunities. An encounter with support on Friday sets the stage for a low-risk entry. Now watch for FOUR to move up to our BUY trigger at 69.57. Once triggered, place your market order. When the order is filled, follow with a trailing stop of 6.97. Tighten the stop to 3.49 when you have a 5.76-point gain. FOUR last closed at 68.31. Earnings Report Date: May 03, 2023. Beta: 1.21. Market-Cap: 5.663B. Optionable. Daqo New Energy Corp. (DQ: Technology/Semiconductor Equipment & Materials) - 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 49.90, DQ is on our radar for a BUY entry at 52.12. If you purchase shares of DQ, be sure to also place a trailing stop of 5.09. Snug it up to 2.55 on a 4.02 gain. Earnings Report Date: Apr 19, 2023. Beta: 0.52. Market-Cap: 3.741B. 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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"Tactics For Short-Term Traders Trading The News" Everyone wants to trade the news, but it's often a fruitless exercise. In most cases, the big money has already acted upon the news by the time you read or hear it. So how can at-home traders take advantage of news-related opportunities without becoming the ultimate bag-holders? News events generally fall into three categories: economic, company and institutional releases. Economic releases are scheduled well in advance, with most of them hitting the airwaves at 6:30 a.m., 9:45 a.m. or 10 a.m. EST. Company releases can come at any time, but they surge in the weeks following the end of a quarter. Institutional releases spike on Monday mornings but continue throughout the week. Of the three categories, economic news reaches traders with the shortest delay from the source. Earnings reports come in second, because full-disclosure rules force companies to distribute news through a wide variety of sources at the same time. Institutional releases are the slowest of the three by a wide margin. Traders should assume that preferred clients hear about analyst upgrades and downgrades well in advance of the public. Realize that your real-time news feed doesn't get you most of the news in real time. Even with government releases, institutions and funds will be at the point of release and acting upon the news before you receive it. They will typically initiate program trades that act instantly to remove perceived inefficiencies triggered by the data. Traders face a bigger obstacle trying to decipher cause-and-effect relationships between news and price movement. Often they'll assume that good news is good, and buy a stock that's already risen for a few days. But smarter money has already bought the rumor and is now selling the news. The trader is left holding a loss that may persist for weeks or months. Trading earnings news requires considerable discipline and patience. Start by standing aside through most releases, or exiting positions minutes before the news hits the airwaves. Save your capital for releases that fall well outside current expectations for future revenue and per-share results. It's best to avoid all positions based on prior performance, because that performance is measured by managed numbers that are highly manipulated. It's still dangerous to play extreme releases, because after-hours trading can be very thin. Reduce your size and place a limit order only when you've done your homework and know the exact price you want to own or sell short. This is typically a few cents above major resistance or below major support. Selling short during extended hours can be quite rewarding, because the Nasdaq has no uptick rule during this time of day. The best entry often comes during the afternoon following the earnings release, or two to three days later. Here's the theory: Everyone who wants to buy or sell the news takes action within the first few hours after the release. Once they have come off the sidelines, there's no one left to take the side of the market that pushed the stock in its initial direction. A strong shakeout then begins, and it's your time to get to work. See chart - https://prorightline.com/rlr/TClpnt021404.gif Pull up a 60-minute chart and pick out the most obvious support and resistance levels. Assume a selloff will get a ride back to the 50- period exponential moving average before there's a substantial recovery. Be ready to hold positions at a loss until the underlying trend reasserts itself or your stops get hit. Place tiered limit orders and enter the trade one small piece at a time. This way you'll be positioned if the market turns ahead of schedule. When there's a sharp pullback following an early rally, conservative traders should stand aside and wait a few days. This price action suggests that the smart money is selling the news into the hands of an overeager public. This type of reversal often lasts two or three days before profit-taking runs its course and lets the stock move back to the highs. Be patient during this initial selloff and wait for a low- risk entry. See chart - https://prorightline.com/rlr/TCckfr021404.gif Selling pressure often will end with a breakout from a simple pullback pattern, such as a bull flag. Although you're making the trade a few days after the earnings release, the intraday chart still generates the feedback needed to find your entry. Once you get in, watch the highs of the earnings day very closely. If a double-top pattern starts to form, exit the position immediately. These techniques should give you enough courage to jump in the next time your favorite company blows away earnings expectations. But what about those government releases that move the markets every day? How can at-home traders turn a profit at the same time the big boys are firing their biggest guns? Let's start by looking at the market clock. Many government reports, including monthly unemployment numbers, get released one hour before the market opens at 9:30 a.m. ET. It's vital that you're awake and focused at this important time. Better yet, watch the index futures for at least an hour before the release. This premarket price action reflects an important bias that will get supported or faded, depending on the news. Don't trade the release directly. Instead, take note of price boundaries hit by the futures after the release, but before the open. The key observation is whether they trade into or through obvious support-resistance barriers. Trading into a "line in the sand" suggests the broad market will reverse shortly after the open. Trading through a barrier can trigger an equity breakout or breakdown within the first 45 minutes of the regular session. The strongest trend days appear when there's synergy between the prerelease bias and subsequent news. The broad market can gap up and hold above the opening price easily when these two forces work together. But watch out for a shakeout day when the unemployment numbers give neither side an advantage. These choppy sessions often present good opportunities to build swing positions for the following week. Pick your prices early and step in slowly as the shakeout pulls the market into your numbers. Then hold tight through the weekend and look for follow-through on Monday or Tuesday. Don't try to interpret the news on a fundamental basis -- just stick to the charts and play the numbers. When you second-guess yourself because a release looks bullish or bearish, you'll hesitate just as the best trade is being offered to you. The bottom line is, we're not smart enough to understand the news and what it suggests about the economy. But we can see how everyone else is interpreting it and then take appropriate action. Remember that you're a trader, not a gambler. Never buy or sell before economic numbers just to play the release. These are lottery tickets that have no place in a sound trading discipline. It's even worse if you make money by doing it because the profit reinforces a horse race mentality that leads to disaster. Many lesser economic reports are issued at 6:30 a.m., 9:45 a.m. and 10 a. m. ET. Some news is even released during the lunch hour. Keep in mind most of these reports are not market movers and will be traded as excuses rather than responses. In other words, focus your attention on the periods when the reports hit the airwaves, but don't get hung up on the data. This strategy becomes very important when releases take place 15 or 30 minutes into the new trading day. The big boys often paint the numbers into the news and then fade that direction. Beneath the surface, they're using the release to find better prices to sell short or shake the public out of long positions. You can often predict this reversal through a simple convergence- divergence analysis. Consider where the market closed the prior day and the sentiment at that time. A common scenario is a sell-off day that closes near the lows. You wake up the next morning expecting a red screen and a gap down. To your surprise, the index futures are up a few ticks and look ready to rally. Then you recall there's an economic release coming out at 10 a.m. A rally continues into the report, and then the market sells off on relatively good news. It turns out a bid was being kept under the index futures so big money could sell short at higher prices. This is typically done with reports the public thinks are market movers, but institutions recognize as old, flawed or inconsequential data. Gross domestic product reports, like the one released last week, fit perfectly into this category. Durable goods numbers, regional manufacturing data and even inflation indices such as the producer price index and consumer price index also fit into this category. Traders can still take advantage of real surprises on these secondary reports. Watch for economic numbers that fall well outside standard deviation. Earlier this year there was a massive rally following the relatively obscure Empire State Manufacturing Survey. The number was so far above expectations that everyone had to stop and take notice. All bets are off when the market spits out one of these unexpected events. The good news is you're standing on equal footing with the big boys when this happens, because they're just as surprised as everyone else. It's a perfect time to keep it simple and trade the trend. ********************************** This special guest article was written by Alan Farley, author of "The Master Swing Trader." ======================================================================
Best of luck and have a Great Week!
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DISCLAIMER
The RightLine Report is an information service for investors and traders. It is not a solicitation nor a recommendation or offer to buy or sell securities. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. The publishers of The RightLine Report are not brokers or financial advisors, and are not acting in any way to influence the purchase or sale of any security. Stock picks, entry points and exit points should be considered an information resource to assist the trader in developing a trading plan and it is the sole responsibility of the reader to conduct his or her own due diligence before executing a trade. Trading securities should be considered speculative with a high degree of volatility and risk. The publishers of The RightLine Report recommend that anyone trading securities should do so with caution, exercise prudent trading discipline and have a personal risk management strategy in place before doing so. It is possible at this or some subsequent date, the publishers and staff of The Pro Right Line Corp. may own, buy or sell securities presented. The Pro Right Line Corp. is not a financial advisory service. Its publishers, owners or investors, are not liable for any losses or damages, monetary or otherwise, that result from the content of The RightLine Report. Past RightLine Report performance may not be indicative of future performance. All subscriptions and/or use of the RightLine.net website are subject to RightLine's "Terms of Use" and "Subscriber Terms & Conditions" which are posted at www.rightline.net. Any REDISTRIBUTION of the above information, without The RightLine's written consent, is STRICTLY PROHIBITED. Copyright / The Pro Right Line Corporation - All Rights Reserved To Unsubscribe, send an email to cs@prorightline.com or call 1-312-248-4241. |