Notes From The Editor

Are You Addicted To Trading?

My name is Kent, and I'm a recovering tradeaholic.

"Addiction" in our society carries a negative meaning. Anything you do, taken to the extreme, can have unwanted side effects. The increasing frequency of internet addiction cases is a perfect example. A perfectly normal, productive, and well-intentioned behavior can quickly morph into a beast that thoroughly dominates your life.

Then again, there's nothing wrong with having a healthy obsession. Becoming intensely focused on an endeavor is a great way to improve your performance - whether it's playing a sport, making music, being an entrepreneur, or just about any pursuit you choose.

There's a fine line between these two categories. But for many online traders, becoming obsessed is almost a natural progression. That was certainly my experience; profitable results from my initial trading rewarded my early interest. But before long, I was overtrading and overstressed.

Overtrading goes hand-in-hand with trading addiction. A churning account, eaten away by commissions, will decrease over time. This marks a good time to step back and rethink your strategy. However, those addicted will actually trade more, thinking that the right "winning" positions are just around the corner.

Symptoms of a trading addiction include sweaty palms, insomnia, upset stomach, and general edginess. They're not conducive to a happy life or to a rising trading account.

The easiest way to turn a healthy obsession into a full-blown addiction is to carry too much risk in open positions. For people with "normal" professions, the end of the workday is the logical time to unwind and relax. The same should be true of trading; when the closing bell sounds, it's time to put stocks aside.

This is impossible for traders who constantly dread the following morning, fearing that a gap at the opening bell will wipe out their accounts. While there is certainly nothing wrong with holding overnight positions - we recommended it wholeheartedly - proper risk management and stop placement must be used to keep risk in check.

The internet provides us with countless ways to satisfy the endless search for more knowledge. Bulletin boards, chat rooms, and other forums give traders an opportunity to interact with each other and learn more. This is all well and good, but it can also be used to justify addictive behavior.

I remember scouring what was basically a stock "gossip" board, looking for other traders who shared my bullish view on an equity that was tanking. All the gossip in the world couldn't help that poor tech stock, which I held until I'd taken a major account hit. An expensive lesson - but one that was well-learned.

In the end, what counts is that you learn from your mistakes. Perhaps that's ultimately what separates healthy obsession from addiction. The former is characterized by a constant hunger to improve, while addicts rely on blind hope.

Here's to profits,

Kent Barton
Senior Analyst

Quick List

    
Stock     05/16     05/16      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

UFCS      23.58      0.28     23.93                  1.67/0.84      0.92
NAMS      20.05      0.24     20.72     19.19        1.53/0.77      2.48
OSCR      22.15     -0.50     23.11     21.47        1.64/0.82      2.04
ATRC      22.63      0.51     22.97     21.33        1.64/0.82      2.46
UHT       37.64      0.69     38.13                  2.54/1.27      1.82

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.

Market Summary

Stock markets closed slightly lower on Thursday, stepping back from earlier gains and pulling back from record highs. Although the Dow Jones Industrial Average briefly surpassed 40,000 for the first time, it couldn't maintain the momentum and ended the day in negative territory. Small and mid-cap stocks also experienced declines, lagging behind their large-cap counterparts. Sector wise, most segments saw losses, with consumer staples being the only exception, buoyed by Walmart's strong earnings report.

In global markets, Asian markets closed higher, while European markets trended lower due to weaker-than-expected corporate earnings. The USD/dollar strengthened against major currencies, supported by higher import prices. WTI oil prices saw an increase, nearing $80 per barrel, driven by reduced crude inventories and robust demand. Conversely, gold prices dipped slightly, retracing some recent gains.

Treasury yields saw a modest uptick, with the 10-year yield at 4.38%, down around 0.3% from its April highs. The favorable inflation report released yesterday has reinforced expectations that the Federal Reserve may be able to implement rate cuts later this year. We maintain the view that ongoing signs of inflation easing should keep the Fed on course to lower rates in the latter part of the year, a move that would likely benefit both the economy and the broader markets.

                        May 15, 2024           May 16, 2024   
                  --------------------   --------------------
Dow                 39,908.00   349.89     39,869.38   -38.62
Nasdaq              16,742.39   231.21     16,698.32   -44.07
S&P 500              5,308.15    61.47      5,297.10   -11.05

NYSE Volume                      4.37B                  3.82B
NYSE Advancers                   1,977                  1,267
NYSE Decliners                     845                  1,510

Nasdaq Volume                    8.58B                 11.97B
Nasdaq Advancers                 2,625                  1,956
Nasdaq Decliners                 1,571                  2,254

                                 New Highs/Lows

                   05/09  05/10  05/13  05/14  05/15  05/16
                 --------------------------------------------
NYSE New Highs       192    216    153    157    284    199
NYSE New Lows         18     24     18     14     12     16
Nasdaq New Highs     158    169    142    162    269    186
Nasdaq New Lows       93    100     89     77     76     59
   

TRADER'S TIP: "Invest In Learning"

Someone once said that "Good judgment comes from experience, and experience comes from bad judgment." Humorous, yes, and often true. Just be aware that there is more than one way to benefit from "experience." All of us have learned some things the hard way. This is the most common method of learning - make a mistake, and pay for it. Thankfully, there is a better way - gaining good judgment from the experiences of OTHERS! Learning from the mistakes and successes of other traders is far superior to unintentionally investing in over-priced lessons of our own.

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".

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

MONDAY, MAY 13					
9:00 am	Fed Vice Chair Philip Jefferson and Cleveland Fed President Loretta Mester				

TUESDAY, MAY 14					
8:30 am	Producer price index
8:30 am	PPI year over year			
8:30 am	Core PPI	
8:30 am	Core PPI year over year
9:10 am	Fed Gov Lisa Cook speaks				
10:00 am	Fed Chair Jerome Powell speaks
				
WEDNESDAY, MAY 15					
8:30 am	Consumer price index
8:30 am	CPI year over year			
8:30 am	Core CPI	
8:30 am	Core CPI year over year	
8:30 am	U.S. retail sales	
8:30 am	Retail sales minus autos	
8:30 am	Empire State manufacturing survey	
10:00 am	Home builder confidence index	
10:00 am	Business inventories	March		
12:00 pm	Minneapolis Fed President Neel Kashkari speaks				
3:20 pm	Fed Gov. Michelle Bowman speaks
				
THURSDAY, MAY 16					
8:30 am	Initial jobless claims			
8:30 am	Philadelphia Fed manufacturing survey
8:30 am	Housing starts	
8:30 am	Building permits	
8:30 am	Import price index	
8:30 am	Import price index minus fuel	
9:15 am	Industrial production	
9:15 am	Capacity utilization	
1:00 pm	New York Fed President Williams speaks				
10:00 am	Fed Vice Chair for Supervision Michael Barr testifies				
12:00 pm	Cleveland Fed President Loretta Mester speaks				
3:50 pm	Atlanta Fed President Raphael Bostic speaks
				
FRIDAY, MAY 17					
10:00 am	U.S. leading economic indicators
10:15 am	Fed Governor Christopher Waller speaks

For a chart of typical Up or Down market reactions to specific major US economic reports 
go to:  Economic Indicator Effects

TRADER'S TIP: "Bounce & Swing Plays"

Bounce plays are among the best short-term trades available. Since these setups usually occur near predictable support and resistance areas, the plays are low-risk when followed with safety Stops. They are commonly referred to as "swing" trades. This is because they often present traders with a chance to go long on a bounce from support, and then after the stock moves higher for a profit, reverse the same play for a short-sell near resistance. The "swing" occurs between support and resistance, giving both long and short traders specific entry and exit points. For more on this type of trade go to: http://www.rightline.net/education/bounce.html.

Stocks Covered in This Issue

FINANCIAL SERVICES SECTOR

United Fire Group, Inc. (UFCS: Financial Services/Insurance - Property & Casualty) - BULLISH BOUNCE. Another bullish bouncer, UFCS appears ready to resume trading in an uptrend after recent selling forced the stock lower for several days. Thursday's positive price action near Moving Average support says it's time to BUY shares if UFCS reaches our entry trigger set at 23.93. Also place a 1.67 trailing stop which can be narrowed to 0.84 when you reach a 0.92 profit. UFCS closed Thursday at 23.58. Earnings Report Date: Jul 29, 2024. Beta: 0.36. Market-Cap: 596.477M. Optionable.

HEALTHCARE SECTOR

NewAmsterdam Pharma Company N.V. (NAMS: Healthcare/Biotechnology) - 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 NAMS. A move to the upside will trigger our BUY entry at 20.72, while a drop to 19.19 will trigger our SELL short entry. Follow your position with a 1.53 trailing stop. Tighten the stop to 0.77 once you have a 2.48 gain. NAMS closed Thursday at 20.05. Earnings Report Date: N/A. Beta: --. Market-Cap: 1.804B. Optionable.

Oscar Health, Inc. (OSCR: Healthcare/Healthcare Plans) - 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 OSCR's case we will enter a BUY should it reach the 23.11 level, or a SELL short trade if it drops to 21.47. As usual a trailing stop is essential, 1.64 which should be tightened to 0.82 on a 2.04 gain. OSCR closed Thursday at 22.15. Earnings Report Date: Aug 6, 2024. Beta: 1.65. Market-Cap: 5.255B. Optionable.

AtriCure, Inc. (ATRC: Healthcare/Medical Instruments & Supplies) - SQUEEZE PLAY. Trader indecision has put ATRC 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 22.97 and a SELL short entry at 21.33. Now it's up to ATRC to show us which entry will be filled. Once the trade is underway place a 1.64 trailing stop, which can be tightened to 0.82 after you achieve a 2.46 profit. ATRC closed on Thursday at 22.63. Earnings Report Date: Jul 23, 2024. Beta: 1.41. Market-Cap: 1.095B. Optionable.

REAL ESTATE SECTOR

Universal Health Realty Income Trust (UHT: Real Estate/REIT - Healthcare Facilities) - BULLISH BOUNCE. Positive price behavior near moving average support on Thursday qualifies UHT for a Bullish Bounce setup. After several sessions of declining prices, UHT should soon begin trading in step with its established weekly uptrend. Tell your broker to BUY shares if UHT moves up to our entry trigger set at 38.13. You can also enter a 2.54 trailing stop, to be replaced with a 1.27 trailing stop when you obtain a 1.82 profit. UHT closed Thursday at 37.64. Earnings Report Date: Jul 23, 2024. Beta: 0.78. Market-Cap: 520.377M. 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.

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.

Disclaimer

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