May 18, 2023 - The RightLine Report
Notes From The Editor
Here are four simple guidelines you can benefit from regardless of the time frame you choose to trade and invest in.
1) Be sure of your time horizon.
Most people buy stocks without first considering how long they will own them. Are your plans short-term or long-term? It makes a big difference. Although history shows that the market generally goes up in the long run, it doesn't reveal what's just ahead.
2) Don't rely solely on the clock or calendar.
While this may sound odd at first, choosing our time horizon has as much to do with price movement as it does clock or calendar time. A trader who specializes in trading 15-minute bars has an idea of how much the price should move within that "time" frame. The actual amount of time in a "normal" trade of this type can be anywhere from 15-minutes to several hours, or on some occasions even a few days.
However, an experienced trader would never expect this type of trade to go on for weeks or months. He or she is always aware of the normal price movement that can be expected during the average trade time period, and doesn't plan on being in the trade indefinitely.
The same reasoning holds true for any chosen time frame, whether we are trading one-minute bars or monthly charts. Profit is the only part of the trading clock with cash value, so when making trade management decisions always consider your earnings too.
3) Get Control of the Risk Factor.
No matter how well we trade, sometimes we're going to be wrong. Despite all of the hype to the contrary, most successful traders win only about half of their trades. Using intelligent risk management tactics insures that losses won't hurt us.
4) Use Your Emotional Intelligence.
We've got to play the hand we're dealt, even when we don't like it. The stock market is much bigger than any one of us. We have no control over what it does, but we do have complete control over how we respond to it. Getting angry when the market goes down doesn't make it go back up, but the emotional stress of anger has the potential to cloud our judgment.
Trade well!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 05/18 05/18 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
CERE 31.96 0.27 32.5 2.54/1.27 3.8
EGRX 20.50 0.35 20.93 19.51 1.42/0.71 1.74
IDYA 21.19 0.03 21.68 20.21 1.47/0.74 1.7
KDNY 21.38 -0.13 21.72 20.22 1.5/0.75 2.26
GFL 37.28 -0.09 37.86 3.11/1.56 1.68
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
US stocks rallied on Thursday as traders digested the latest earnings announcements while keeping an eye on the unfolding debt-ceiling negotiations. Hopes of progress on the debt limit offset comments from the Dallas Fed president suggesting that it could be premature for the Fed to end its interest rate hikes. There were a couple of bright spots on the economic front, with initial jobless claims better than expectations and meaningful improvement in the May reading for the Philadelphia Fed manufacturing index. In equities, Walmart topped quarterly earnings expectations for the quarter, syncing with upbeat quarterly reports from Home Depot and Target earlier this week. Apparently consumers are still in good financial shape, which should help soften the slowdown in the overall economy as we head towards summer.
May 17, 2023 May 18, 2023
-------------------- --------------------
Dow 33,420.77 408.63 33,535.91 115.14
Nasdaq 12,500.57 157.51 12,688.84 188.27
S&P 500 4,158.77 48.87 4,198.05 39.28
NYSE Volume 4.05B 3.99B
NYSE Advancers 2,311 1,738
NYSE Decliners 675 1,203
Nasdaq Volume 4.51B 4.54B
Nasdaq Advancers 3,163 2,359
Nasdaq Decliners 1,282 2,043
New Highs/Lows
05/11 05/12 05/15 05/16 05/17 05/18
--------------------------------------------
NYSE New Highs 35 50 43 36 56 82
NYSE New Lows 86 118 58 107 80 45
Nasdaq New Highs 81 71 77 69 85 115
Nasdaq New Lows 219 250 160 199 144 104
Stocks Covered Today Stock Splits
TRADER'S TIP: "Remember This . . ."
One brief but very important rule - never let a short-term loser turn into a long-term investment. It's usually a losing game.
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 - 4198.05 May 18, 2023
52-Week High: 4325.28
52-Week Low: 3491.58
Daily Trend: UP
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
NASDAQ Composite - 12688.84 May 18, 2023
52-Week High: 13181.09
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 12655.66
Resistance 2: 12465.07
Resistance 1: 12374.90
Pivot: 12274.48
Support 1: 12184.31
Support 2: 12083.89
Support 3: 11893.30
Dow Industrials - 33535.91 May 18, 2023
52-Week High: 34712.28
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 34717.39
Resistance 2: 34055.92
Resistance 1: 33678.27
Pivot: 33394.44
Support 1: 33016.79
Support 2: 32732.96
Support 3: 32071.48
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): 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 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
Stocks Covered Today Stock Splits
TRADER'S TIP: "What is Money Management?"
In essence, Money Management is the part of your trading method that you use to decide how many shares to hold in a position. Money Management and Position Sizing are essentially the same thing.
Stocks Covered in This Issue
HEALTHCARE SECTOR
Cerevel Therapeutics Holdings, Inc. (CERE: Healthcare/Biotechnology) - BULLISH BOUNCE. Positive price behavior near moving average support on Thursday qualifies CERE for a Bullish Bounce setup. After several sessions of declining prices, CERE should soon begin trading in step with its established weekly uptrend. Tell your broker to BUY shares if CERE moves up to our entry trigger set at 32.5. You can also enter a 2.54 trailing stop, to be replaced with a 1.27 trailing stop when you obtain a 3.8 profit. CERE closed Thursday at 31.96. Earnings Report Date: Jul 31, 2023. Beta: 1.48. Market-Cap: 5.012B. Optionable.
Eagle Pharmaceuticals, Inc. (EGRX: Healthcare/Drug Manufacturers-Specialty & Generic) - SQUEEZE PLAY. EGRX 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. EGRX closed Thursday at 20.50. The plan is to enter in the right direction by placing a BUY trigger at 20.93 and a SELL short trigger at 19.51. Once EGRX establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.42. After you've collected a 1.74 profit, tighten the stop to 0.71. Earnings Report Date: Aug 07, 2023. Beta: 0.91. Market-Cap: 268.372M. Optionable.
IDEAYA Biosciences, Inc. (IDYA: Healthcare/Biotechnology) - SQUEEZE PLAY. The ticker for Thursday's session shows IDYA is now stuck in a tight price band. With the cyclical contraction and expansion nature of volatility in force, we should see a new period of price expansion in the days ahead. To improve the odds of catching the next directional wave, place a BUY trigger at 21.68 and a SELL short trigger at 20.21. When IDYA starts moving out of its narrow range, your order will be triggered. Once you're in the trade, cancel the opposing trigger and set a 1.47 trailing stop. Upon reaching a 1.7 profit, resize the stop to 0.74. Earnings Report Date: Aug 14, 2023. Beta: 0.85. Market-Cap: 1.214B. Optionable.
Chinook Therapeutics, Inc. (KDNY: Healthcare/Biotechnology) - SQUEEZE PLAY. Thursday's trading session left KDNY in a very narrow price range after buyers and sellers fought to a near stalemate. Both sides are looking for some traction, and a breakout either way could provide a nice gain in the short term. To get aboard, set your BUY trigger at 21.72 and your SELL short trigger at 20.22. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.5 trailing stop. Once you have a 2.26 profit, reduce the stop to 0.75. Earnings Report Date: Aug 07, 2023. Beta: N/A. Market-Cap: 1.43B. Optionable.
INDUSTRIALS SECTOR
GFL Environmental Inc. (GFL: Industrials/Waste Management) - BULLISH BOUNCE. Another bullish bouncer, GFL 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 GFL reaches our entry trigger set at 37.86. Also place a 3.11 trailing stop which can be narrowed to 1.56 when you reach a 1.68 profit. GFL closed Thursday at 37.28. Earnings Report Date: Jul 25, 2023. Beta: 1.34. Market-Cap: 13.762B. 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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