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May 13, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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All successful trading strategies share the same foundation - Risk Control. You probably already know this. Now ask yourself a question. Do you always follow your Risk Control method? Do you always use a risk calculator to determine your position size before you enter a trade? And how about trade execution? Have you ever ordered the wrong number of shares? Or bought the wrong stock? Have you ever gone short when you meant to go long?
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"QUICK LIST"
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Stock 05/12 05/12 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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PARAP 23.01 -0.49 23.8 22.16 1.64/0.82 1.7
ZION 22.43 -0.25 23.3 21.29 2.01/1.01 3.2
CRNX 22.19 0.07 22.82 21.25 1.57/0.79 1.86
KDNY 23.39 0.55 23.71 22.1 1.61/0.81 2.36
INTT 20.56 0.73 21.36 19.51 1.85/0.93 2.54
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 were lower on Friday as traders continue to price in Federal Reserve Bank rate cuts by the September FOMC - Federal Open Market Committee - meeting. As earnings season winds down, analysts' expectations have been exceeded, with almost 92% of public companies having announced results already. Near 78% of these have topped earnings forecasts, well above the long-term rate of approximately 73%. Earnings growth for the quarter is down to about -2.5% compared to the same period last year, well above forecasts of a -7.0% growth rate at the start of 2023. Regardless, the quarter marks the second consecutive quarter of negative earnings growth for the S&P 500. Meanwhile, oil prices are near recent lows, with crude oil around $71 per barrel, perhaps indicating that markets expect a global slowdown in demand ahead. Friday On The Week
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Dow 33,300.62 -8.89 -373.76 -1.11%
Nasdaq 12,284.74 -43.76 +49.33 0.4%
S&P 500 4,124.08 -6.54 -12.17 -0.29%
NYSE Volume 3.54B
NYSE Advancers 1,312
NYSE Decliners 1,638
Nasdaq Volume 4.18B
Nasdaq Advancers 1,761
Nasdaq Decliners 2,608
New Highs/Lows
05/05 05/08 05/09 05/10 05/11 05/12
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NYSE New Highs 48 59 49 60 35 50
NYSE New Lows 49 44 76 69 86 118
Nasdaq New Highs 101 82 87 107 81 71
Nasdaq New Lows 135 113 189 171 219 250
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TRADER'S TIP:
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TRADER'S TIP: "Minute-by-Minute" Mature traders realize that there is no connection between the amount of time they watch their stock symbols during a session and the profits they make. Constantly over-monitoring a trade wastes time and is very distracting. Place your positions, set stops, and manage your trades on a regular schedule. Good trading habits allow you to be successful without being glued to your computer screen. **************************
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 - 4124.08 May 12, 2023 52-Week High: 4325.28 52-Week Low: 3491.58 Daily Trend: DOWN Weekly trend: UP Weekly Pivot Levels Resistance 3: 4236.47 Resistance 2: 4181.12 Resistance 1: 4152.60 Pivot: 4125.76 Support 1: 4097.24 Support 2: 4070.40 Support 3: 4015.04 https://www.prorightline.com/rlch/051223SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, May 15, 2023: 15-May MONDAY, MAY 15 15-May 8:30 am Empire State manufacturing survey 15-May TUESDAY, MAY 16 Tuesday, May 16, 2023: 16-May 8:30 am U.S. retail sales 16-May 8:30 am Retail sales minus autos 16-May 9:15 am Industrial production 16-May 9:15 am Capacity utilization 16-May 10:00 am Home builder confidence index 16-May WEDNESDAY, MAY 17 Wednesday, May 17, 2023: 17-May 8:30 am Housing starts 17-May THURSDAY, MAY 18 Thursday, May 18, 2023: 18-May 8:30 am Philadelphia Fed manufacturing survey 18-May 8:30 am Initial jobless claims 18-May 8:30 am Continuing jobless claims 18-May 10:00 am Existing home sales 18-May 10:00 am U.S. leading economic indicators 18-May FRIDAY, MAY 19 Friday, May 19, 2023: 19-May None scheduled 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: "Trading With Uncertainty" Successful traders learn how to be comfortable with uncertainty. It's impossible to be sure that your trade will be profitable before you enter a position. Waiting for all the right "facts" to arrive usually results in missing out on the opportunity. Accept that you can't know in advance whether or not a trade will work. Risk is a constant companion when trading. You can't eliminate it, so learn how to recognize and manage it. New traders want all the facts before they do a trade and by the time all the facts are out the trading opportunity is gone, then they enter the trade and wonder why it didn't work. If you're about to drive to town and you need every traffic light to turn green before you leave, you'll never get out of the driveway. ***********************************
STOCKS COVERED IN THIS ISSUE
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COMMUNICATION SERVICES SECTOR Paramount Global (PARAP: Communication Services/Entertainment) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in PARAP's narrowest trading range of the past seven sessions. With neither group able to take complete control on Friday, 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 23.8 and a SELL order at 22.16. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.64 trailing stop. Tighten the stop to 0.82 once you have a 1.7 gain. PARAP closed Friday at 23.01. Earnings Report Date: N/A. Beta: 1.66. Market-Cap: N/A. Not Optionable. FINANCIAL SERVICES SECTOR Zions Bancorporation, National Association (ZION: Financial Services/Banks-Regional) - SQUEEZE PLAY. Trader indecision has put ZION 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 23.3 and a SELL short entry at 21.29. Now it's up to ZION to show us which entry will be filled. Once the trade is underway place a 2.01 trailing stop, which can be tightened to 1.01 after you achieve a 3.2 profit. ZION closed on Friday at 22.43. Earnings Report Date: Jul 19, 2023. Beta: 1.10. Market-Cap: 3.479B. Optionable. HEALTHCARE SECTOR Crinetics Pharmaceuticals, Inc. (CRNX: 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 CRNX's case we will enter a BUY should it reach the 22.82 level, or a SELL short trade if it drops to 21.25. As usual a trailing stop is essential, 1.57 which should be tightened to 0.79 on a 1.86 gain. CRNX closed Friday at 22.19. Earnings Report Date: Aug 10, 2023. Beta: 0.94. Market-Cap: 1.265B. Optionable. Chinook Therapeutics, Inc. (KDNY: Healthcare/Biotechnology) - 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. KDNY traders reached this state of stand-off on Friday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 23.71 and a SELL short trigger at 22.1. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.61 which can be tightened to 0.81 on a 2.36 gain. KDNY closed Friday at 23.39. Earnings Report Date: Aug 07, 2023. Beta: N/A. Market-Cap: 1.584B. Optionable. TECHNOLOGY SECTOR inTEST Corporation (INTT: Technology/Semiconductor Equipment & Materials) - 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 INTT. A move to the upside will trigger our BUY entry at 21.36, while a drop to 19.51 will trigger our SELL short entry. Follow your position with a 1.85 trailing stop. Tighten the stop to 0.93 once you have a 2.54 gain. INTT closed Friday at 20.56. Earnings Report Date: Aug 02, 2023. Beta: N/A. Market-Cap: 240.223M. 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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"Loose Lips Sink Ships" By Chuck LeBeau In browsing around the web I often encounter discussions of the merits of a particular trade and opinions about the direction of a market. I know that the traders who voice these opinions have good intentions and much of the discussions could be helpful to the person receiving the information. However the provider of the opinion must be very careful that he doesn't start believing too strongly in his position because he has made the mistake of going public with it. This is an important psychological issue that I seldom see discussed. Taking losses is always difficult and the reluctance to promptly acknowledge that we are on the wrong side of the market is probably the single most costly error a trader can make. Even under the best of conditions we hate to take losses. Publicly advocating a particular trade or the direction of a market just makes being wrong all the more painful and harder to accept. If we make it a policy to go around advocating the merits of our trades it will only make it harder to recognize when we are wrong. Many years ago when I was a young futures broker at E. F. Hutton and Company, the firm decided that it would be a good idea to send our commodity research analysts on the road whenever they came up with a well researched idea that appeared to have great potential. Let's assume for a minute that our sugar analyst has decided that sugar is going to make a big move to the upside over the next six months. After publishing his research he would be sent from city to city where he would speak at meetings for brokers and clients suggesting why everyone should be buying sugar. At first the analyst road shows seemed like a great idea. The clients received the benefit of hearing about a well-researched idea straight from the analyst himself and also had the opportunity to ask questions and engage the analyst in a discussion of the details of the sugar market. The clients enjoyed the meetings and a lot of new commodity business was generated as a result. However, it turns out that the objectivity of the analysts was completely lost after the story had been told and the bullish scenario presented a dozen times or more. The analyst felt obligated to the firm and to the clients. The firm had spent a lot of money to send the analyst on the road and to host these meeting all over the country. As a result of the meetings the clients now knew the analysts by name and his personal and professional reputation was clearly on the line. This analyst was now committed and he was going to be bullish on sugar regardless of what happened in the market or what new information came to light. From the point of the tours onward the analyst would only look for information to support his opinion. To ever admit that he was wrong would be such public humiliation that the analyst would tend to ignore any contrary information and would stick to his original position through thick and thin. We eventually learned that the talented Hutton research analysts did a much better job when they were free to change their minds as new facts were revealed without the pressure and responsibility generated by their repeated espousing of a particular position on a specific trade. Discretionary traders should learn from this example and avoid discussing their open positions or their opinion about the direction of a market. It will only distort their objectivity and make it harder to take a loss promptly when that is the best course of action. Losses that only we know about are tough enough but losses that everyone knows about become much harder to stomach and we tend to postpone our exits in hope that the market will eventually turn around and prove us right. Remember that the best discretionary traders are usually very neutral about their positions and tend to take their guidance from the price action and the flow of new information. Its OK to listen to others talk about their positions, but don't make it a habit of discussing your open trades. It will only cost you money - especially if you repeat your opinions often enough that you might actually start believing what you are saying. This article was taken from an earlier work written by author and trading veteran Chuck LeBeau. It was originally titled "Discretionary Traders - Don't Talk About Your Open Positions." Chuck is the co- author of "Computer Analysis of the Futures Market" (McGraw-Hill 1992). ======================================================================
Best of luck and have a Great Week!
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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. |