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March 4, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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One of my favorite aspects of trading - something that took me several years to fully realize - is how much it can teach you about life. I'm not talking about some pseudo-philosophical mumbo jumbo here, but real life lessons and skills that come in handy every day.
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"QUICK LIST"
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Stock 03/03 03/03 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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OSW 11.47 0.25 11.71 0.86/0.43 0.72
REPL 22.04 -0.37 22.86 21.19 1.67/0.84 2.82
SBLK 23.73 0.59 24.12 1.78/0.89 1.14
IBEX 27.94 0.75 28.42 2.24/1.12 2.54
APPF 129.58 -0.07 132.68 13.28/6.64 10.54
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 rallied higher on Thursday despite economic news showing a dip in unemployment claims and a lowered revision in fourth quarter GPD/Gross Domestic Product. In equities, shares of Macy's (M $23) and Salesforce (CRM $187) surged higher after the firms announced better quarterly profits than expected. Treasury yields contine to march higher, as did the USD/dollar and oil prices. Gold finished the session lower. Friday On The Week
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Dow 33,390.97 387.40 +574.05 1.75%
Nasdaq 11,689.01 226.02 +294.07 2.58%
S&P 500 4,045.64 64.29 +75.6 1.9%
NYSE Volume 4.11B
NYSE Advancers 2,484
NYSE Decliners 588
Nasdaq Volume 5.14B
Nasdaq Advancers 3,182
Nasdaq Decliners 1,351
New Highs/Lows
02/24 02/27 02/28 03/01 03/02 03/03
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NYSE New Highs 44 72 80 86 83 124
NYSE New Lows 47 25 36 51 51 18
Nasdaq New Highs 60 100 104 100 95 99
Nasdaq New Lows 169 102 102 132 163 66
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TRADER'S TIP:
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TRADER'S TIP: "Successful Traders Pay Their Share of Taxes" 54% of all personal income taxes paid to the IRS come from a relatively small group of people - only 5% of all Americans. Research shows that these high income earners use considerably less government services per person than the other 95% who together pay only 46% of the total US tax bill. **************************
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 - 4045.64 March 3, 2023 52-Week High: 4637.30 52-Week Low: 3491.58 Daily Trend: UP Weekly trend: UP Weekly Pivot Levels Resistance 3: 4247.62 Resistance 2: 4127.49 Resistance 1: 4086.56 Pivot: 4007.36 Support 1: 3966.43 Support 2: 3887.23 Support 3: 3767.10 https://www.prorightline.com/rlch/030323SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, MARCH 6 10.00 am Factory orders TUESDAY, MARCH 7 10:00 am Fed Chairman Powell testifies to Senate 10:00 am Wholesale inventories 3:00 pm Consumer credit WEDNESDAY, MARCH 8 8:15 am ADP employment 8:30 am U.S. trade balance 10:00 am Fed Chairman Powell testifies to House 10:00 am Job openings (JOLTS) 2:00 pm Beige Book THURSDAY, MARCH 9 8:30 am Jobless claims 10:00 am Fed Gov Waller speaks FRIDAY, MARCH 10 8:30 am Employment report 8:30 am U.S. unemployment rate 2:00 pm Federal budget 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: "In The Game" We can take advantage of price movement with careful planning and proper trading execution, but there's no reason to ever force a trade. Taking reasonable risk always includes solid money management so be sure to include Risk Control in your trading plan. Also, we always have the option to stand aside when nothing seems to work - just remember that while the sidelines offer a safe place to watch as we wait for an opening, we have to be on the field to score! ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR OneSpaWorld Holdings Limited (OSW: Consumer Cyclical/Leisure) - BULLISH BOUNCE. The charts for OSW show that despite the downward pressure from sellers recently, the weekly uptrend is still going strong. Buyers showed up again on Friday, resulting in the early stages of a rebound that started near moving average support. The resulting Bullish Bounce set-up offers a potential entry point for a long play. Set your trigger to BUY shares at 11.71, and follow your entry with a trailing stop of 0.86. Tighten it to 0.43 when a 0.72 profit is reached. OSW ended the latest session at 11.47. Earnings Report Date: May 02, 2023. Beta: 2.22. Market-Cap: 1.061B. Optionable. HEALTHCARE SECTOR Replimune Group, Inc. (REPL: Healthcare/Biotechnology) - SQUEEZE PLAY. Friday's trading action forced REPL's daily price range into an abnormally narrow state. This translates into opportunity; for the cyclical nature of price volatility is to shrink extensively, then swell rapidly as shares move in one direction or another. Instead of trying to predict the direction REPL will take when price volatility begins to increase, we'll set both a BUY (long) and a SELL (short) trigger to get us into the right trade. Be ready to BUY shares at 22.86 if REPL moves higher, and place your order to SELL short at 21.19 if price declines to that level. As usual follow your entry with a trailing stop, 1.67 should be sufficient. Reduce your stop to 0.84 on a 2.82 gain. REPL closed Friday at 22.04. Earnings Report Date: May 17, 2023. Beta: 1.66. Market-Cap: 1.249B. Optionable. INDUSTRIALS SECTOR Star Bulk Carriers Corp. (SBLK: Industrials/Marine Shipping) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Friday SBLK seemed intent on initiating a rebound. With moving average support nearby, SBLK 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 24.12. Manage risk with a 1.78 stop. Tighten your stop to 0.89 when you have a 1.14 profit. SBLK ended the day at 23.73. Earnings Report Date: May 22, 2023. Beta: 1.07. Market-Cap: 2.437B. Optionable. TECHNOLOGY SECTOR IBEX Limited (IBEX: Technology/Information Technology Services) - 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 Friday's session to close at 27.94. Anticipate the rebound to continue, and be ready to buy IBEX at 28.42. Follow your entry with a trailing stop of 2.24 which can be tightened to 1.12 on a 2.54 profit. Earnings Report Date: May 16, 2023. Beta: 0.68. Market-Cap: 509.849M. Not Optionable. AppFolio, Inc. (APPF: Technology/Software-Application) - BULLISH BOUNCE. Up-trending stocks like APPF 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 Friday, APPF is poised to lift off again. To take advantage of this setup, prepare to BUY shares at 132.68 if positive price action occurs. As always, follow your entry with a trailing stop. A 13.28 trailer should work well with APPF. Tighten it to 6.64 on a 10.54 gainer. Earnings Report Date: May 08, 2023. Beta: 1.02. Market-Cap: 4.587B. 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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"How To Trade Channeling or Range Bound Stocks" (Editor's Note: Though the markets may change over time, some aspects of trading will always stay the same. Such is the nature of human behavior, especially when money is involved. Senior Analyst T.C. Salmon wrote the following Trader's Corner quite a few years ago, and it's still just as relevant to trading stocks today as it was then. Enjoy!) Often a stock will enter a period when it seems to go nowhere. One day's gains are offset by a dip the following session or two, and so on and on. This Bull and Bear tussle can be very profitable if one takes the time to identify the trend - or in these cases, the lack of trend - and trade the boundaries of support and resistance. There are several names for this behavior. Call it what you may: "channeling", "range bound" or "consolidation"; its all the same thing. Buyers seem to come out of the woodwork as shares approach the bottom of their range and sellers are waiting at the top. No pattern lasts forever, so it is important to recognize when the stock you are watching breaks out of its pattern in one direction or the other. This is where risk management through the use of trailing stops comes into play. There are several key factors which need to be addressed if you decide to trade a channeling stock. First find a company which has easily identifiable support and resistance levels. Many times a stock will "bounce" back and forth between key DMAs such as the 22 and 50 DMAs. It is important to note the distance between the DMAs, not so much by dollars and cents, but rather by percentage. Give preference to the stocks with a 5-10% difference between the two extremes. Since most people prefer the bullish side, also give preference to plays where the levels of support or resistance are either running "flat" (vertical) or on a slight incline. This can be easily seen when using DMAs - Daily Moving Averages - or by drawing trend-lines through recent highs and lows on the daily chart. In addition, pay attention to the stocks' Beta. Stocks with a Beta above 1 will be more active than the S&P 500, those under 1 less volatile. A Beta of 1.20 means that a company's stock price will be 20% more volatile than the S&P and a Beta of 0.80, 20% less volatile. Those not able to monitor their investments closely should stay with lower Beta companies. Compare a stock's recent volume with its norm. Average volume can be easily found if you use RightLine Charts, or you can pull up a company's chart on Yahoo Finance. If a stock moves out of its recent range on markedly higher volume, chances are that it will continue the trend at least into the next session. Keep an eye on the overall trend of the markets. Also monitor the news, and be aware of significant upcoming events on each trade that you are in. Earnings report dates are very important. Now let's take a look at one of the companies that I recently traded: TRST began to become range bound on December 23rd. This happened to be a stock that I was long in and was becoming frustrated with. As I began the process of evaluating whether or not I wanted to be in the stock or move on to something else, I recognized what was occurring on the charts. To see the chart go to: https://prorightline.com/rlr/TCtrst012304.gif If you draw a straight line through the December 29th high and another line through the January 6th low, the channel is clear. Buying near the low of the channel and selling near the top would have yielded one or two successful trades per week, on a consistently profitable basis. TRST broke out of its channel to the upside on January 20th, then pulled back into it the following session. Notice how its floor or support level seems to be moving up. From late December to January 13th, support was coming from near 13.20-13.23, it then moved up to the 50 DMA (13.40) and now it appears to be moving into the 22 DMA's (13.53) neighborhood. At the same time intra-day highs have been declining. This has given TRST smaller intra-day spreads in price and thus less room for profits in channel trading. That said, the "coiling" or "squeezing" of the stock's price, on lower volume and firming and rising support looks bullish to me. This should make TRST a good candidate for a long position, but that's another column. If you are interested in channel trading, pick a stable of companies to monitor on a daily basis. Make sure they meet your personal risk tolerance preference and price comfort level. Watch your stocks for "pauses" to develop with clear lines of support and resistance. Make sure on your purchases that you immediately set trailing stops just below support. The amount of the stop should be based on the price of the stock and its intra-day volatility range. Plan an exit strategy before you get into a trade. Remember - it is extremely rare to ever buy at the exact low and sell at the high on these stocks. Good luck to you, and remember to always "plan your trade and trade your plan!" TC Salmon Senior Analyst ======================================================================
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. |