May 11, 2023 - The RightLine Report
Notes From The Editor
Here's an interesting "fact." Apparently, communications experts analyzing face-to-face interactions have determined that only a small chunk of information - maybe 10% - is transmitted through what's actually said during a conversation. Another 10% is the underlying subtext and hidden meanings behind what's spoken. Making up the majority of communication is body language.
It's hard to say whether this statistic has much bearing in reality, because it's hard to quantify something like human interaction. But nonetheless, it highlights an interesting point: body language can reveal a person's thoughts or intentions, even when they aren't consciously trying to convey that information. Skilled readers of body language have an advantage in nearly any social situation - everything from dating to poker to business.
The stock market has its own "body language." Sure, you can turn on the TV and see exactly how the major indexes are doing. However, this only reveals a small amount of information. Dig deeper, and you'll find lots of important details lurking below the surface. For instance, let's say the S&P 500 is up 15 points. That's a nice move, but does the rally have any "conviction"? In other words, is the momentum likely to continue?
Daily volume readings help to answer that question. In general, a large rally that's accompanied by large volume has a high amount of "conviction." More investors/traders have committed to long positions, indicating that they expect the market to rise in the near-term.
On the other hand, a rally accompanied by light volume is less likely to be sustained. Oftentimes the market will move nicely without much participation. The Holiday season is a perfect example.
Of course, terms like "weak volume" and "heavy volume" are relative; what's "normal" is dependent on the market's current climate. Frequent market observers are able to get a good sense for what "average" volume is for an index.
This provides a basic benchmark for comparing daily volume readings. Those volume statistics can be found in every issue of the Rightline Report, just under the "market summary" section.
Here's to profits,
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 05/11 05/11 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
CMCSA 40.37 0.50 41.05 2.48/1.24 1.58
ONON 33.12 0.45 34 2.55/1.28 3.12
SRDX 20.26 -0.11 20.61 19.15 1.46/0.73 2.06
AVTE 20.77 -0.37 21.29 19.74 1.55/0.78 2.94
VVI 21.47 -0.04 21.93 20.4 1.53/0.77 1.4
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
The major stock indexes were mixed on Thursday, with the Dow and S&P 500 slightly lower as the Nasdaq moved modestly higher. In equities, regional banks were under pressure again after Pac West (PACW $5) announced that more than 9% of deposits were withdrawn. The producer price index (PPI) showed just a 0.2% monthly gain, better than expected and a sign that inflation is cooling at a gradual pace. On the global front, the Bank of England raised interest rates by 0.25% as European nations try to contain high inflation that has gone into double digits. Treasury yields slipped lower on the positive US inflation news, as the consumer price index (CPI) was also favorable. Oil held steady at near $71 a barrel. Debt-ceiling negotiations, rising costs and Fed monetary policy are still market drivers, but with inflation easing up it is unlikely the Fed will choose to raise rates significantly going forward.
May 10, 2023 May 11, 2023
-------------------- --------------------
Dow 33,531.33 -30.48 33,309.51 -221.82
Nasdaq 12,306.44 126.89 12,328.51 22.06
S&P 500 4,137.64 18.47 4,130.62 -7.02
NYSE Volume 4.07B 3.76B
NYSE Advancers 1,707 927
NYSE Decliners 1,264 2,046
Nasdaq Volume 4.96B 4.5B
Nasdaq Advancers 2,560 1,662
Nasdaq Decliners 1,830 2,768
New Highs/Lows
05/04 05/05 05/08 05/09 05/10 05/11
--------------------------------------------
NYSE New Highs 38 48 59 49 60 35
NYSE New Lows 258 49 44 76 69 86
Nasdaq New Highs 60 101 82 87 107 81
Nasdaq New Lows 476 135 113 189 171 219
Stocks Covered Today Stock Splits
TRADER'S TIP: "Moving Averages and the Law of Attraction"
All significant Daily Moving Averages - like the 50, 100 and 200 - act as magnets. Watch out when price begins to gain momentum toward a well known DMA. Once the action moves within a Moving Average's "gravitational field," just leave it up to the laws of physics - contact is almost inevitable.
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 - 4130.62 May 11, 2023
52-Week High: 4325.28
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4401.09
Resistance 2: 4262.45
Resistance 1: 4199.35
Pivot: 4123.81
Support 1: 4060.71
Support 2: 3985.17
Support 3: 3846.53
NASDAQ Composite - 12328.51 May 11, 2023
52-Week High: 13181.09
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 12820.79
Resistance 2: 12481.33
Resistance 1: 12358.37
Pivot: 12141.87
Support 1: 12018.91
Support 2: 11802.41
Support 3: 11462.95
Dow Industrials - 33309.51 May 11, 2023
52-Week High: 34712.28
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 36263.89
Resistance 2: 34943.56
Resistance 1: 34308.97
Pivot: 33623.23
Support 1: 32988.64
Support 2: 32302.90
Support 3: 30982.57
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Friday, May 12, 2023: 12-May 8:30 am Import price index 12-May 8:30 am Import price index minus fuel 12-May 10:00 am Consumer sentiment (preliminary) 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: "The Market Weather"
The market is much like the weather - we all know that it's pointless to try and change it. On the other hand, we can always adjust our sails to take advantage of the prevailing winds.
Stocks Covered in This Issue
COMMUNICATION SERVICES SECTOR
Comcast Corporation (CMCSA: Communication Services/Telecom Services) - BULLISH BOUNCE. CMCSA has charted an upward weekly trend until recently when sellers showed up to push prices lower. On Thursday the selling ran into solid support. A potential bounce up from this level should attract buyers and likely return CMCSA 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 41.05. Set a trailing stop of 2.48, tightening to 1.24 on a 1.58 profit. CMCSA closed at 40.37 on Thursday. Earnings Report Date: Jul 26, 2023. Beta: 0.99. Market-Cap: 167.914B. Optionable.
CONSUMER CYCLICAL SECTOR
On Holding AG (ONON: Consumer Cyclical/Footwear & Accessories) - BULLISH BOUNCE. If you are looking for another bouncer with profits in mind, ONON fits the bill. Shares have been in retreat-mode lately, but now this stock is in the process of bouncing from support. Currently priced at 33.12, plan to buy shares at 34 and use a 2.55 trailing stop. Tighten the stop to 1.28 on a 3.12 gain. Earnings Report Date: May 16, 2023. Beta: N/A. Market-Cap: 10.791B. Optionable.
HEALTHCARE SECTOR
Surmodics, Inc. (SRDX: Healthcare/Medical Devices) - SQUEEZE PLAY. A look at SRDX'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 20.61 and a SELL short trigger at 19.15. Once SRDX shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.46 and tighten to 0.73 on a 2.06 gain. SRDX closed Thursday at 20.26. Earnings Report Date: Jul 25, 2023. Beta: 1.02. Market-Cap: 287.129M. Optionable.
Aerovate Therapeutics, Inc. (AVTE: Healthcare/Biotechnology) - SQUEEZE PLAY. Thursday's trading action forced AVTE'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 AVTE 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 21.29 if AVTE moves higher, and place your order to SELL short at 19.74 if price declines to that level. As usual follow your entry with a trailing stop, 1.55 should be sufficient. Reduce your stop to 0.78 on a 2.94 gain. AVTE closed Thursday at 20.77. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 516.151M. Not Optionable.
INDUSTRIALS SECTOR
Viad Corp (VVI: Industrials/Specialty Business Services) - SQUEEZE PLAY. VVI is caught in a dilemma. The stock's compressed price range on Thursday has resulted in a condition comparable to a wound up rubber band. We anticipate that this undecided equity will take off soon, but with the direction still in question we'll let upcoming market action tell us whether to buy shares or sell short. VVI is now at 21.47. We can capture price action either way by placing a BUY trigger at 21.93 and a SELL short trigger at 20.4. Once VVI reveals its direction, enter your triggered order and disregard the other one. As soon as your position is in place, follow up with a trailing stop of 1.53. When you acquire a 1.4 profit, tighten the stop to 0.77. Earnings Report Date: Aug 02, 2023. Beta: 1.75. Market-Cap: 452.907M. 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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