May 2, 2023 - The RightLine Report
Notes From The Editor
As with any other endeavor in life, trading has its own vibrant community of people who are interested in learning, sharing, and improving their craft. Going it alone, sitting at your computer, it's easy to overlook this fact.
By reading this Report, you're already tapping into outside advice that can improve your trading. But what about face-to-face conversations or online forums? These can also be great sources of information.
Do you have any friends who trade? Even a casual conversation can reveal interesting details about their trading strategy. They might be able to provide you with feedback and advice on your own approach. Also consider joining a local trading group. Many areas of the country have groups that gather on a regular basis - every month, for example - to learn, share, and discuss.
The online community is jam-packed with trading forums. In this case, you need to be a bit more selective. Oftentimes these forums will be filled with hype, emotion, and hot air - the exact opposite of what traders need in order to be profitable. But a more objective, learning-based approach can be found; all it takes is some basic searching. Some forums even have live chatrooms where you can talk about trading on a real-time basis.
There's also no shortage of news sites devoted to the markets. These can be worth checking out, but remember not to get caught up in the endless deluge of new developments. While specific news stories can drive price action, there are stronger underlying forces - both technical and economic - that influence stocks.
It's also important to remember that news stories are often priced in ahead of time; by the time they become "fact," the lion's share of the price move has already occurred.
The same applies to CNBC and other market-focused media. Don't get caught up in the siren's call of a smooth-talking analyst, a hotly-hyped earnings announcement, or the steady crawl of the stock ticker. Focus on the price action, and what's actually happening in the market; the tale of the chart tells the real story!
Here's to profits,
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 05/02 05/02 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
JAKK 22.97 0.25 23.38 21.82 1.56/0.78 2.02
IMKTA 92.54 0.06 93.96 5.28/2.64 3.46
RVMD 23.35 -0.50 24.29 22.44 1.85/0.93 2.18
TCX 22.11 0.50 22.63 2.45/1.23 2.5
MAXN 26.10 -0.82 27.33 24.98 2.35/1.18 3.46
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 US stock market was lower on Tuesday ahead of a key Fed Bank interest rate decision on Wednesday, as renewed weakness in regional banks triggered bearish sentiment. Shares of Western Alliance were down 15% and PacWest dropped 27% with the rescue of First Republic Bank over the weekend failing to ease financial stability worries. The financial and energy sectors led the losses, while the growth areas of the market were lifted by the drop in bond yields. Along with the ongoing bank troubles, concern over congressional debt-ceiling discussions also helped bonds rally and reinforced the idea that rates will soon peak.
May 1, 2023 May 2, 2023
-------------------- --------------------
Dow 34,051.70 -46.46 33,684.53 -367.17
Nasdaq 12,212.60 -13.99 12,080.51 -132.09
S&P 500 4,167.87 -1.61 4,119.58 -48.29
NYSE Volume 3.33B 4.49B
NYSE Advancers 1,212 603
NYSE Decliners 1,777 2,399
Nasdaq Volume 5.18B 5.51B
Nasdaq Advancers 2,044 1,281
Nasdaq Decliners 2,392 3,129
New Highs/Lows
04/25 04/26 04/27 04/28 05/01 05/02
--------------------------------------------
NYSE New Highs 43 31 37 72 83 41
NYSE New Lows 103 101 55 37 35 152
Nasdaq New Highs 39 51 53 71 103 62
Nasdaq New Lows 385 408 219 153 198 443
Stocks Covered Today Stock Splits
TRADER'S TIP: "Free Advice From TV Talking Heads"
When it comes to financial advice, always remember that the brokerage firms who pay the advisors make most of their money from commissions on stock sales. It may only be a few bucks for each transaction, but it adds up to hundreds of billions of dollars. Though many analysts are well intended, a major purpose of their stock picks is to attract customers and generate order flow. Whether the recommendations are profitable or not really isn't that important - the companies make money whenever someone buys or sells shares.
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 - 4119.58 May 2, 2023
52-Week High: 4325.28
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4371.05
Resistance 2: 4250.34
Resistance 1: 4209.91
Pivot: 4129.63
Support 1: 4089.20
Support 2: 4008.92
Support 3: 3888.21
NASDAQ Composite - 12080.51 May 2, 2023
52-Week High: 13181.09
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 12942.25
Resistance 2: 12513.30
Resistance 1: 12369.94
Pivot: 12084.35
Support 1: 11940.99
Support 2: 11655.40
Support 3: 11226.45
Dow Industrials - 33684.53 May 2, 2023
52-Week High: 34712.28
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 35550.27
Resistance 2: 34681.56
Resistance 1: 34389.86
Pivot: 33812.85
Support 1: 33521.15
Support 2: 32944.14
Support 3: 32075.43
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, May 01, 2023: 01-May MONDAY, MAY 1 01-May 10:00 am ISM manufacturing 01-May 10:00 am Construction spending 01-May TUESDAY, MAY 2 Tuesday, May 02, 2023: 02-May 10:00 am U.S. job openings 02-May 10:00 am Factory orders 02-May WEDNESDAY, MAY 3 Wednesday, May 03, 2023: 03-May 8:15 am ADP employment 03-May 10:00 am ISM services 03-May 2:00 pm Federal Reserve interest-rate statement 03-May 2:30 pm Fed Chair Powell press conference 03-May THURSDAY, MAY 4 Thursday, May 04, 2023: 04-May 8:30 am U.S. productivity 04-May 8:30 am U.S. trade deficit 04-May 8:30 am Initial jobless claims 04-May 8:30 am Continuing jobless claims 04-May FRIDAY, MAY 5 Friday, May 05, 2023: 05-May 8:30 am U.S. employment report 05-May 8:30 am U.S. unemployment rate 05-May 8:30 am U.S. hourly wages 05-May 8:30 am Hourly wages year over year 05-May 3:00 pm Consumer credit 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: "Profits Improve With Technical Timing"
Regardless of the reasons you decide to buy a stock, Technical Analysis is always helpful when it comes to timing entries. Support and resistance on the charts may be unfamiliar to most investors, but they have a huge impact on stock price movement.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
JAKKS Pacific, Inc. (JAKK: Consumer Cyclical/Leisure) - SQUEEZE PLAY. Traders are feeling the pressure as JAKK's intra-day price range on Tuesday shrunk to the narrowest spread in over a week. The tension between buyers and sellers should provide enough pent-up engergy for a breakout move in the days ahead, so get ready to trade with the new trend. To achieve that, place a BUY entry at 23.38 and a SELL short entry at 21.82. JAKK's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.56 trailing stop. Tighten it to 0.78 after you get a 2.02 gain. JAKK closed Tuesday at 22.97. Earnings Report Date: Jul 25, 2023. Beta: 2.17. Market-Cap: 226.735M. Optionable.
CONSUMER DEFENSIVE SECTOR
Ingles Markets, Incorporated (IMKTA: Consumer Defensive/Grocery Stores) - BULLISH BOUNCE. Entering a position in the early stages of a bounce is great way to get on board an up-trending stock. The "Bullish Bounce" setup identifies probable candidates by evaluating the trading action that takes place near support levels. IMKTA's behavior on Tuesday could very well be a sign that a new bounce is underway. Place a BUY trigger at 93.96. In the event your trigger is met, also place a 5.28 trailing stop which can be trimmed down to 2.64 when you have a 3.46 profit. IMKTA closed Tuesday at 92.54. Earnings Report Date: May 03, 2023. Beta: 0.65. Market-Cap: 1.758B. Optionable.
HEALTHCARE SECTOR
Revolution Medicines, Inc. (RVMD: Healthcare/Biotechnology) - SQUEEZE PLAY. Tuesday's narrow price range has created a potentially profitable setup in RVMD, as sellers and buyers find themselves in a near tie for control of price direction. The next short-term trend could go either way, so prepare for a move out of the draw within the next day or so. Set a BUY entry at 24.29 and a SELL short entry at 22.44. Let RVMD's price action determine your long or short entry. Once the order is filled, place a 1.85 trailing stop, and tighten it to 0.93 upon getting a 2.18 gain. RVMD closed Tuesday at 23.35. Earnings Report Date: May 08, 2023. Beta: 1.45. Market-Cap: 2.482B. Optionable.
TECHNOLOGY SECTOR
Tucows Inc. (TCX: Technology/Software-Infrastructure) - BULLISH BOUNCE. Some people hear of a stock that's performing nicely and then buy it without any regard for timing the entry. This approach usually leaves money on the table, money that could just as well be added to profits. The Bullish Bounce setup provides a well timed entry and reduces exposure to risk by placing both the entry trigger and exit stop near the bottom of the bounce. We have an opportunity to use this approach with TCX which met our setup criteria on Tuesday. The BUY trigger for this trade is at 22.63, and the trailing stop is sized at 2.45. Resize the stop to 1.23 upon collecting a 2.5 point gain. TCX closed Tuesday at 22.11. Earnings Report Date: May 08, 2023. Beta: 0.82. Market-Cap: 239.445M. Optionable.
Maxeon Solar Technologies, Ltd. (MAXN: Technology/Solar) - SQUEEZE PLAY. A look at MAXN'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 27.33 and a SELL short trigger at 24.98. Once MAXN shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 2.35 and tighten to 1.18 on a 3.46 gain. MAXN closed Tuesday at 26.10. Earnings Report Date: May 16, 2023. Beta: 1.52. Market-Cap: 1.176B. 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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