March 7, 2023 - The RightLine Report
Notes From The Editor
Successful traders consistently view the market as it is instead how they might prefer it to be. As a result they take appropriate actions, which in turn produce consistent profits. From this standpoint it's easy to see that trading results are directly linked to our ability to view the market correctly.
I'm using the term "market" to depict both the larger market made up of all trading taking place on the major exchanges, AND the individual trades that we have positions in at any time.
When we perceive the market accurately, we can use the information we get from our observations to define and use methods that give us a trading advantage. So how do we see the market "accurately"?
Our perception is actually our interpretation of our observations. Our interpretation is dramatically influenced by our individual beliefs, expectations and values. This means that when our beliefs and thoughts are relatively free from false assumptions and similar thinking errors, our interpretation of the market is more accurate. The more clearly we view the market, the easier it is to define and use profitable methods for trading the market consistently.
Here are a few key beliefs held by most successful traders:
- No matter what happens, the market is always correct and price is where it should be.
- Market price indicates the combined psychological states of all market participants at that time.
- The market will always go wherever it wants to, and usually proceeds in an unexpected manner.
- Traders are responsible for their own beliefs and actions, including the risks they take.
- Losses are an important part of trading. They provide feedback about a trader's ability to manage risk and engage emotions objectively.
Also ... many traders find it difficult to accept losses because of how it feels. Keep in mind that negative emotions are associated with personality programs that were formed during traumatic experiences.
Instead of rejecting these parts of ourselves, we can empower them by respectful acceptance. Respond to any negative feelings with positive thoughts and patience. Doing this reduces anxiety, increases self-respect, and promotes healthy thinking patterns in an effective and practical way.
Trade well!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 03/07 03/07 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
BILI 20.55 -1.08 21.34 19.71 1.63/0.82 2.16
DRQ 32.56 0.12 33.35 2.58/1.29 2.36
ELVN 21.19 -0.69 22.29 20.44 1.85/0.93 0.7
CORT 21.22 0.01 21.67 20.31 1.36/0.68 1.7
ZIM 21.63 0.06 22.15 1.67/0.84 2.38
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.
Stocks Covered Today Stock Splits
Market Summary
Stocks fell hard on Tuesday following Federal Reserve Bank Chairman Jerome Powell's testimony before the Senate Banking committee. Powell suggested that interest rates may need to go higher for longer in order to offset inflations. The remarks fueled fears of a large rate hike at the next FOMC/Federal Open Market Committee policy meeting. In equities, Dick's Sporting Goods (DKS $147) topped quarterly earnings projections, increased its dividend, and announced guidance for the full-year above forecasts, while Meta Platforms (META $185) is planning more employee layoffs that could affect thousands of workers. From the economic calendar, January consumer credit expanded at a slower pace than expected. The USD/dollar moved higher, oil and gold posted solid losses, and treasury yields were mixed.
Mar 6, 2023 Mar 7, 2023
-------------------- --------------------
Dow 33,431.44 40.47 32,856.46 -574.98
Nasdaq 11,675.74 -13.27 11,530.33 -145.40
S&P 500 4,048.42 2.78 3,986.37 -62.05
NYSE Volume 4.02B 3.95B
NYSE Advancers 1,077 630
NYSE Decliners 1,980 2,430
Nasdaq Volume 5.01B 5.45B
Nasdaq Advancers 1,545 1,397
Nasdaq Decliners 3,007 3,109
New Highs/Lows
02/28 03/01 03/02 03/03 03/06 03/07
--------------------------------------------
NYSE New Highs 80 86 83 124 87 58
NYSE New Lows 36 51 51 18 23 49
Nasdaq New Highs 104 100 95 99 93 62
Nasdaq New Lows 102 132 163 66 93 154
Stocks Covered Today Stock Splits
TRADER'S TIP: "Drawdown"
A drawdown is a reduction in account value due to a series of trading losses or from a decrease in the price of investments. It is usually stated either in percentage or dollar terms, and is measured from peak to valley. For example, if a trading account with an initial amount of $10,000 rose in value to $40,000, then dropped to $30,000, then increased again to $50,000, the account would have a maximum drawdown of $10,000 (which occurred when the account dropped from $40,000 to 30,000) even though the account was never in a negative position from the beginning.
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 - 3986.37 March 7, 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
NASDAQ Composite - 11530.33 March 7, 2023
52-Week High: 14646.90
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 12406.12
Resistance 2: 11980.10
Resistance 1: 11834.55
Pivot: 11554.08
Support 1: 11408.53
Support 2: 11128.06
Support 3: 10702.04
Dow Industrials - 32856.46 March 7, 2023
52-Week High: 35492.22
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 34909.38
Resistance 2: 34004.27
Resistance 1: 33697.62
Pivot: 33099.16
Support 1: 32792.51
Support 2: 32194.05
Support 3: 31288.94
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): 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 8:30 am Average hourly wages 8:30 am Average hourly wages 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
Stocks Covered Today Stock Splits
TRADER'S TIP: "Just When We Think It's Safe . . ."
Remember that just when we start getting "too comfortable" with a stock's trend - be it up or down - it might be a good time to review the "other" side of the trade. For example, once we've identified a clear up trending pattern, and played it for a bounce a few times, that's precisely when we ought to start looking for a failure of support and an opportunity to short. Trends don't last forever, and we don't want to get lulled into a single-sided trading mentality.
Stocks Covered in This Issue
COMMUNICATION SERVICES SECTOR
Bilibili Inc. (BILI: Communication Services/Electronic Gaming & Multimedia) - SQUEEZE PLAY. When a stock's daily price range contracts to an unusually low point, you can safely assume that in most cases a breakout from that range will result in a nice price move. To capture a portion of this potential movement we have set both a long and a short entry into BILI. A move to the upside will trigger our BUY entry at 21.34, while a drop to 19.71 will trigger our SELL short entry. Follow your position with a 1.63 trailing stop. Tighten the stop to 0.82 once you have a 2.16 gain. BILI closed Tuesday at 20.55. Earnings Report Date: Jun 07, 2023. Beta: 1.07. Market-Cap: 7.869B. Optionable.
ENERGY SECTOR
Dril-Quip, Inc. (DRQ: Energy/Oil & Gas Equipment & Services) - BULLISH BOUNCE. This trader-friendly setup turns repetitive stock behavior into real profits. Based on the tendency for up-trending stocks to drop briefly and then resume the up-trend, the Bullish Bounce places traders into excellent stocks when conditions are primed for more skyward movement. DRQ's current price action near moving average support signals a potential BUY entry at 33.35, followed by a 2.58 trailing stop which can be tightened to 1.29 upon earning 2.36. DRQ closed Tuesday at 32.56. Earnings Report Date: Apr 26, 2023. Beta: 1.14. Market-Cap: 1.113B. Optionable.
HEALTHCARE SECTOR
Enliven Therapeutics, Inc. (ELVN: 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 ELVN's case we will enter a BUY should it reach the 22.29 level, or a SELL short trade if it drops to 20.44. As usual a trailing stop is essential, 1.85 which should be tightened to 0.93 on a 0.7 gain. ELVN closed Tuesday at 21.19. Earnings Report Date: May 04, 2023. Beta: N/A. Market-Cap: 869.034M. Optionable.
Corcept Therapeutics Incorporated (CORT: Healthcare/Biotechnology) - SQUEEZE PLAY. Trader indecision has put CORT 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 21.67 and a SELL short entry at 20.31. Now it's up to CORT to show us which entry will be filled. Once the trade is underway place a 1.36 trailing stop, which can be tightened to 0.68 after you achieve a 1.7 profit. CORT closed on Tuesday at 21.22. Earnings Report Date: May 03, 2023. Beta: 0.55. Market-Cap: 2.29B. Optionable.
INDUSTRIALS SECTOR
ZIM Integrated Shipping Services Ltd. (ZIM: Industrials/Marine Shipping) - BULLISH BOUNCE. ZIM has charted an upward weekly trend until recently when sellers showed up to push prices lower. On Tuesday the selling ran into solid support. A potential bounce up from this level should attract buyers and likely return ZIM to the previously established uptrend. The Bullish Bounce set-up is the basis for our BUY entry, so be ready to go long on a rise to our trigger at 22.15. Set a trailing stop of 1.67, tightening to 0.84 on a 2.38 profit. ZIM closed at 21.63 on Tuesday. Earnings Report Date: Mar 13, 2023. Beta: 2.01. Market-Cap: 2.597B. 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.
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.
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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