March 28, 2023 - The RightLine Report


Notes From The Editor

Greed, Fear and the VIX

Greed and fear are the two most basic and fundamental emotions that govern trading. But traders are complex creatures. We're human, after all. Could it really be that simple that only two emotions matter?

What about hope? This is the force that drives stocks higher ahead of earnings reports or stock splits. It's an anticipation of something down the road - a rational expectation that some dynamic will impact a stock to produce a predictable movement. This isn't to be confused with blind hope, which is a close cousin of greed, that most maligned of all emotions.

And when you step back and think about it, greed and fear are closely related as well. In fact, it wouldn't be a stretch to say that fear is really at the core of greed. A trader who refuses to sell a position that's already very profitable, in the hopes that it will go even higher, is ultimately afraid of missing out on more profits. Traders who fail to use risk management because they're afraid of decreasing their profit potential fall into the same boat. Fear is the sworn enemy of growing, healthy trading accounts.

Sometimes you'll hear analysts talk about high levels of greed in the market. This always struck me as odd. There's no proven way to quantify greed. It's true that markets can become technically overextended and "toppy," but they can remain that way for weeks or months.

The same could be said of markets that are gripped by fear and panic selling. But unlike greed, we actually have a way to gauge fear: the volatility index (VIX). The VIX reflects the market's expectation of volatility over the next month. Traders fear uncertainty. When the VIX spikes toward 40, it's usually a sign that the market is approaching a bottom. This was the case in August 2008, when the VIX exploded up to all time high of near 90, almost doubling the previous record high of 45 set in 1998.

The impact of emotions on the market are most obvious during the immediate reaction to new developments. Think of a sell-off on bad earnings or a spike on news from the Fed. These emotion-driven reactions can be unpredictable and prone to sudden changes. By waiting for that initial reaction to pass, traders can put themselves in a stronger position to take money out of the market. One of the best emotions of all is the satisfaction of a job well-done when you close out a successful position!

Here's to profits,

Kent Barton
Senior Analyst

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
Stocks Covered Today    Stock Splits     

Quick List

Stock     03/28     03/28      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

CMCL      15.54      0.57     15.83                  1.61/0.81      1.24
BBW       22.73      0.85     23.16                  1.97/0.99       2.3
BLBD      20.34      0.23      20.8      19.4          1.4/0.7      2.18
BOOM      21.16     -0.08     21.89     20.37        1.52/0.76      3.02
SHLS      21.36      0.56     21.66     20.17        1.49/0.75      2.84

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.

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
Stocks Covered Today    Stock Splits     

Market Summary

The top US stock averages closed lower on Tuesday as the session focus shifted away from the distressed banking sector onto the financial weakness of companies. Now that big banks appear to have avoided a systemic meltdown thanks to government assistance on a couple of levels, other rate-sensitive aspects of the market are facing uncertainty. Tech sector equitites under selling pressure included Google parent Alphabet (GOOGL), Facebook parent Meta (META), Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), and computer chip-designer NVIDIA (NVDA). Oil prices and the yield on a 10-year treasury note were up slightly, gold and the USD/dollar closed near even.

                        Mar 27, 2023           Mar 28, 2023   
                  --------------------   --------------------
Dow                 32,432.08   194.55     32,394.25   -37.83
Nasdaq              11,768.84   -55.12     11,716.08   -52.76
S&P 500              3,977.53     6.54      3,971.27    -6.26

NYSE Volume                      4.25B                  4.03B
NYSE Advancers                   2,235                  1,792
NYSE Decliners                     787                  1,200

Nasdaq Volume                    4.34B                  4.06B
Nasdaq Advancers                 2,644                  1,959
Nasdaq Decliners                 1,845                  2,505

                                 New Highs/Lows

                   03/21  03/22  03/23  03/24  03/27  03/28
NYSE New Highs        25     28     31     23     34     27
NYSE New Lows         44    102    212    260     34     50
Nasdaq New Highs      60     49     57     42     63     43
Nasdaq New Lows      127    190    314    333    147    147

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
Stocks Covered Today    Stock Splits     

TRADER'S TIP: "Consistent Profits Are No Accident"

Successful trading doesn't just happen by chance. It requires an open mind, willingness to learn, discipline, skillful execution, and the ability to forgive self inflicted damage. As with all things of quality, it is the "wise choice of many alternatives."

The Technical Analyst

SPX Daily Chart

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 - 3971.27 March 28, 2023

52-Week High: 4637.30
52-Week Low: 3491.58
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4233.87
Resistance 2: 4103.54
Resistance 1: 4037.26
Pivot: 3973.21
Support 1: 3906.93
Support 2: 3842.88
Support 3: 3712.55

NASDAQ Composite - 11716.08 March 28, 2023

52-Week High: 14646.90
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 12722.81
Resistance 2: 12259.51
Resistance 1: 12041.73
Pivot: 11796.21
Support 1: 11578.43
Support 2: 11332.91
Support 3: 10869.61
Dow Industrials - 32394.25 March 28, 2023

52-Week High: 35492.22
52-Week Low: 28660.94
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 34181.62
Resistance 2: 33224.91
Resistance 1: 32731.22
Pivot: 32268.20
Support 1: 31774.51
Support 2: 31311.49
Support 3: 30354.78

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
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Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

5:00 pm	Fed Gov. Jefferson speaks
8:30 am	Advanced U.S. trade balance in goods
8:30 am	Advanced retail inventories	Feb.	
8:30 am	Advanced wholesale inventories	
9:00 am	S&P Case-Shiller home price index (20 cities)
9:00 am	FHFA home price index	
10:00 am	U.S. consumer confidence	
10:00 am	Fed Gov. Barr testifies to Senate on banks
10:00 am	Pending U.S. home sales	
10:00 am	Fed Gov. Barr testifies to House on banks
8:30 am	GDP (2nd revision)		
8:30 am	Initial jobless claims	
8:30 am	Continuing jobless claims				
12:45 pm	Boston Fed President Collins speaks
8:30 am	Personal income (nominal)	
8:30 am	Personal spending (nominal)	
8:30 am	PCE index]	
8:30 am	Core PCE index	
8:30 am	PCE (year-over-year)	
8:30 am	Core PCE (year-over-year)	
9:45 am	Chicago Business Barometer	
10:00 am	Consumer sentiment (final)	
10:00 pm	Fed Gov. Waller speaks				
3:05 pm	New York Fed President Williams speaks				
5:45 pm	Fed Gov. Cook speaks
For a chart of typical Up or Down market reactions to specific major US economic reports 
go to:  Economic Indicator Effects

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Stocks Covered Today    Stock Splits     

TRADER'S TIP: "A Mythological Metaphor"

Just as Odysseus in ancient Greek mythology bound himself to the ship's mast to prevent the wail of Sirens from luring the seafarer on to dangerous rocks, traders can find safety and prosperity by securing themselves with a few important standards.

1) Don't let the crowd determine your perspective. Although many investors indulge in false group security by mimicking everyone else, successful traders listen to others but think for themselves. Instead of marching with lemmings, stay focused on locating opportunity - there's plenty of it.

2) Avoid overtrading. There are two ways to over trade - trading too often, or taking on positions that are too large. To prevent the latter, always calculate the appropriate number of shares for your personal account size. And for the former, remember there's no reason to trade in a frenzy. Instead of grabbing every setup that comes along, concentrate on each trade you make. Thoughtfully pace yourself by taking on smaller trades to stay in tune, and then load up the wagons when the time is right.

3) Cut your losses and let your winners run. This means setting stops and executing them as planned. Don't dwell on the losers, just learn and go on. Manage your winners intelligently - give them enough room to grow, but don't neglect them and let profits disappear.

4) Even though trading is supposed to be serious business, the best traders know how to laugh - especially at themselves! Relax, and give yourself regular fun breaks to clear your head. You deserve it.

5) Thinking like a winner makes you a winner. The sum of our thoughts has an interesting way of showing up in our lives. Think of yourself as successful, and you are likely to be a success.

Stocks Covered in This Issue


Caledonia Mining Corporation Plc (CMCL: Basic Materials/Gold) - BULLISH BOUNCE. Positive price behavior near moving average support on Tuesday qualifies CMCL for a Bullish Bounce setup. After several sessions of declining prices, CMCL should soon begin trading in step with its established weekly uptrend. Tell your broker to BUY shares if CMCL moves up to our entry trigger set at 15.83. You can also enter a 1.61 trailing stop, to be replaced with a 0.81 trailing stop when you obtain a 1.24 profit. CMCL closed Tuesday at 15.54. Earnings Report Date: N/A. Beta: 0.77. Market-Cap: 268.582M. Optionable.


Build-A-Bear Workshop, Inc. (BBW: Consumer Cyclical/Specialty Retail) - BULLISH BOUNCE. BBW'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 BBW back in step with the bullish weekly trend, so our BUY entry trigger is set at 23.16. Once you hold a position, trail a stop of 1.97. Tighten it to 0.99 on a 2.3 gain. BBW closed at 22.73 on Tuesday. Earnings Report Date: May 23, 2023. Beta: 1.91. Market-Cap: 335.277M. Optionable.

Blue Bird Corporation (BLBD: Consumer Cyclical/Auto Manufacturers) - SQUEEZE PLAY. Traders are feeling the pressure as BLBD's intra-day price range on Tuesday shrunk to the narrowest spread in over a week. The tension between buyers and sellers should provide enough pent-up engergy for a breakout move in the days ahead, so get ready to trade with the new trend. To achieve that, place a BUY entry at 20.8 and a SELL short entry at 19.4. BLBD's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.4 trailing stop. Tighten it to 0.7 after you get a 2.18 gain. BLBD closed Tuesday at 20.34. Earnings Report Date: May 10, 2023. Beta: 1.36. Market-Cap: 651.533M. Optionable.


DMC Global Inc. (BOOM: Energy/Oil & Gas Equipment & Services) - SQUEEZE PLAY. Tuesday's narrow price range has created a potentially profitable setup in BOOM, as sellers and buyers find themselves in a near tie for control of price direction. The next short-term trend could go either way, so prepare for a move out of the draw within the next day or so. Set a BUY entry at 21.89 and a SELL short entry at 20.37. Let BOOM's price action determine your long or short entry. Once the order is filled, place a 1.52 trailing stop, and tighten it to 0.76 upon getting a 3.02 gain. BOOM closed Tuesday at 21.16. Earnings Report Date: May 03, 2023. Beta: 1.61. Market-Cap: 417.235M. Optionable.


Shoals Technologies Group, Inc. (SHLS: Technology/Solar) - SQUEEZE PLAY. A look at SHLS's daily chart shows what a price squeeze is all about. The constricted high-low daily trading range has produced a setup similar to a tightly coiled spring. Expect price to move sharply soon, with the direction yet to be determined. Let the upcoming market action resolve whether you will buy shares or sell short. To capture a move either way, place a BUY trigger at 21.66 and a SELL short trigger at 20.17. Once SHLS shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.49 and tighten to 0.75 on a 2.84 gain. SHLS closed Tuesday at 21.36. Earnings Report Date: May 15, 2023. Beta: 2.16. Market-Cap: 3.625B. 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.

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
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.

RightLine Risk Control Calculator 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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