March 9, 2023 - The RightLine Report
Notes From The Editor
"Market Weirdness"
We're all familiar with the market's highly volatile nature. In truth, most investors have no idea how to react when the market is in a bizzare mood; especially if the volatility lasts for very long. Sooner or later all calm markets erupt into a frenzied state. Fortunately it isn't all that hard to do the right things when stocks are acting strange.
Here are four of the most important keys to keep in mind when faced with a jumpy market:
- Plan Ahead
Ask the average investor to show you his or her investment plan and you'll probably get sidestepped. In fact, most investors don't have a real plan. Too bad, because the process of planning is sort of like a time machine that lets you anticipate future possibilities. Of course no one can see the future, but adaptive planning on a regular basis is the closest thing to it.
- Use Technical Analysis
Regardless of any other reason to buy a stock, the charts should always be used for timing entries. Support and resistance may be unfamiliar to most investors, but it has a huge impact on stock price movement. The Technical Analyst section of the RightLine Report is a powerful trading tool that anyone can use. A few years ago this sort of analysis was thought to be only for geeky trading professionals. Now it's starting to be accepted by mainstream traders and investors alike.
- Control Risk
Investors rarely use proper position sizing techniques before buying. This means they are usually over-exposed to risk immediately after the purchase and often take damaging losses before they even realize it. Choosing the optimum number of shares to buy in relation to your personal account size provides a layer of protection everyone needs. When thinking of buying a stock, think "Risk Control" before putting any money on the table.
- Manage Your Positions Carefully
This is where the rubber meets the road. Just looking at a monthly statement once a quarter rarely works in the real world. Every trader and investor should review their portfolio at regular intervals, and use trailing stops as part of their exit strategy. It's important to know when to get in, but when it comes to making money in the stock market, knowing where to get out is even MORE important.
Bottom Line: This four-pronged approach to the markets dramatically outperforms the type of investing most folks use. Intelligent traders apply these principles all the time, and investors can too. Your friends who invest with the traditional method of buy-and-hope may be surprised to discover that the RightLine trading style is very relevant to their investment objectives - even if they don't "trade".
Trade well!
Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 03/09 03/09 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
EVA 33.97 -0.45 35.21 32.58 2.63/1.32 3.36
XPOF 28.70 0.06 29.52 27.51 2.01/1.01 2.22
AMPH 35.36 -0.07 36.29 34.2 2.09/1.05 1.32
MATW 36.75 -0.54 37.89 35.63 2.26/1.13 1.78
TCX 23.17 -0.36 24.01 22.03 1.98/0.99 4.38
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 again on Thursday as traders responded to more hawkish testimony from Federal Bank Chairman Jerome Powell to Congress. Despite the selloff, an increase in weekly initial unemployment claims seemed to offer some slight relief from concerns about how aggressive the Fed may be in in raising interest rates during the weeks ahead. In equities, shares of SVB Financial (SIVB $106) took a dive after the firm announced they were selling securities for a loss to raise cash, and Silvergate Capital's (SI $3) stock price fell off a cliff after announcing it would shut down its bank operations and liquidate assets. As a result, stock prices in numerous banks declined. The USD/dollar, oil prices and treasury yields were mostly lower, and gold traded to the upside.
Mar 8, 2023 Mar 9, 2023
-------------------- --------------------
Dow 32,798.40 -58.06 32,254.86 -543.54
Nasdaq 11,576.00 45.67 11,338.35 -237.65
S&P 500 3,992.01 5.64 3,918.32 -73.69
NYSE Volume 3.54B 4.46B
NYSE Advancers 1,574 431
NYSE Decliners 1,459 2,680
Nasdaq Volume 5.11B 5.09B
Nasdaq Advancers 2,127 942
Nasdaq Decliners 2,351 3,620
New Highs/Lows
03/02 03/03 03/06 03/07 03/08 03/09
--------------------------------------------
NYSE New Highs 83 124 87 58 45 51
NYSE New Lows 51 18 23 49 56 96
Nasdaq New Highs 95 99 93 62 63 72
Nasdaq New Lows 163 66 93 154 193 312
Stocks Covered Today Stock Splits
TRADER'S TIP: "Whipping the Sea"
"You have to analyze your behavior in the market instead of acting out your feelings. We get angry at the market, we become afraid of it, we develop silly superstitions. All the while, the market keeps cycling through its rallies and declines like an ocean going through its storms and calm periods. Mark Douglas writes in The Disciplined Trader that in the market, "There is no beginning, middle, or end - only what you create in your own mind. Rarely do any of us grow up learning to operate in an arena that allows for complete freedom of creative expression, with no external structure to restrict it in any way."
We try to cajole or manipulate the market, acting like the ancient emperor Xerxes, who ordered his soldiers to horsewhip the sea for sinking his fleet. Most of us are not aware how manipulative we are, how we bargain, how we act out our feelings in the market. Most of us consider ourselves the center of the universe and expect every person or group to be either good or bad to us. This does not work in the market which is completely impersonal."
~ Dr. Alex Elder, trader and author of "Trading For A Living"
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 - 3918.32 March 9, 2023
52-Week High: 4637.30
52-Week Low: 3491.58
Daily Trend: DOWN
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 - 11338.35 March 9, 2023
52-Week High: 14646.90
52-Week Low: 10088.83
Daily Trend: DOWN
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 - 32254.86 March 9, 2023
52-Week High: 35492.22
52-Week Low: 28660.94
Daily Trend: DOWN
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: "Breakaway Gaps"
Breakaway gaps occur when a stock price leaps out of a consolidation or basing pattern. If the gap is to the upside, consider buying immediately, but be sure to put a stop loss just beneath the bottom of the gap. A true breakaway gap won't look back. To apply the same approach to stocks that gap lower, just reverse the procedure and enter a short position. Always use a protective stop order to protect against losses.
Stocks Covered in This Issue
BASIC MATERIALS SECTOR
Enviva Inc. (EVA: Basic Materials/Lumber & Wood Production) - SQUEEZE PLAY. EVA 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 35.21 and a SELL short trigger at 32.58. When one of the orders is filled, cancel the remaining order and enter a 2.63 trailing stop. When you've reached a 3.36 paper profit, tighten the stop to 1.32. EVA closed at 33.97 on Thursday. Earnings Report Date: May 02, 2023. Beta: 1.04. Market-Cap: 2.371B. Optionable.
CONSUMER CYCLICAL SECTOR
Xponential Fitness, Inc. (XPOF: Consumer Cyclical/Leisure) - SQUEEZE PLAY. In certain stocks a tightly constricted price range is a sign that neither bulls nor bears are confident of winning in the near term. This often means that the side that gives up first causes a quick move in the opposite direction. In these fear dominated skirmishes, opposing traders always benefit from the retreat. In the Squeeze Play setup you can actually play both sides of the inevitable surge. XPOF traders reached this state of stand-off on Thursday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 29.52 and a SELL short trigger at 27.51. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 2.01 which can be tightened to 1.01 on a 2.22 gain. XPOF closed Thursday at 28.70. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.428B. Optionable.
HEALTHCARE SECTOR
Amphastar Pharmaceuticals, Inc. (AMPH: Healthcare/Drug Manufacturers-Specialty & Generic) - 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. AMPH 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 36.29 and a SELL short trigger at 34.2. When AMPH 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 2.09 trailing stop. After you've got a 1.32 profit, tighten the stop to 1.05. AMPH closed at 35.36 on Thursday. Earnings Report Date: May 08, 2023. Beta: 0.73. Market-Cap: 1.694B. Optionable.
INDUSTRIALS SECTOR
Matthews International Corporation (MATW: Industrials/Conglomerates) - SQUEEZE PLAY. MATW shareholders know what it feels like to be squeezed. Thursday's slim price range reveals uncertainty on both sides of the table, a situation which often resolves itself by either Bears or Bulls quickly gaining a clear advantage. The question is "who will win?" Near-term market action tell us whether we should sell short or we should buy shares instead. MATW closed Thursday at 36.75. The plan is to enter in the right direction by placing a BUY trigger at 37.89 and a SELL short trigger at 35.63. Once MATW establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 2.26. After you've collected a 1.78 profit, tighten the stop to 1.13. Earnings Report Date: Apr 26, 2023. Beta: 1.13. Market-Cap: 1.118B. Optionable.
TECHNOLOGY SECTOR
Tucows Inc. (TCX: Technology/Software-Infrastructure) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in TCX's narrowest trading range of the past seven sessions. With neither group able to take complete control on Thursday, the stock's short term destiny is up for grabs. You can capitalize on this unusually tight condition by placing both a BUY order at 24.01 and a SELL order at 22.03. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.98 trailing stop. Tighten the stop to 0.99 once you have a 4.38 gain. TCX closed Thursday at 23.17. Earnings Report Date: May 03, 2023. Beta: 0.84. Market-Cap: 250.815M. 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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