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May 20, 2023 - The RightLine Report
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NOTES FROM THE EDITOR
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In the ever-changing market, it's important to adjust your trading strategy from time to time. These adjustments are usually subtle, like including more shorts than longs or exploring different sectors. But how can you determine if an idea is worth pursuing?
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"QUICK LIST"
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Stock 05/19 05/19 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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INBX 25.16 0.87 25.56 1.76/0.88 3.6
HROW 21.32 0.36 21.94 20.27 1.67/0.84 2.6
HROW 21.32 0.36 21.94 20.27 1.67/0.84 2.6
RXST 25.56 1.03 26.03 23.97 2.06/1.03 1.26
SSTI 25.88 0.35 26.48 24.83 1.65/0.83 1.94
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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The major US stock inidces were slightly lower on Friday yet still logged the biggest weekly gain since March.Despite earlier optimism that a debt-ceiling deal could be reached by Sunday, the talks came to a halt midday Friday after Republican negotiators blamed the White House for resisting spending cuts. Though it is very likely that the debt-ceiling impasse will be resolved, it may come down to the wire, as it has in recent years. In equities, corporate earnings have held up better than expected. Shares of Deere jumped higher, as the farm equipment manufacturer topped profit estimates and boosted its guidance for the full year. On the flip side, shares of Foot Locker tumbled hard, as the company cut its sales and profit forecast. More broadly, the first-quarter earnings season is almost complete, as 95% of the S&P 500 companies have reported. Every S&P 500 sector has beat sales and earnings growth estimates except for utilities. Along with the rise in stocks, the uptick in bond yields was another notable development this week. Hawkish commentary from Fed officials temporarily pushed the probability of one more quarter-point hike in June above 40%, from 15% a week ago. But the chance of another Fed hike fell again to 22% later in the day after Fed Chair Powell said rates may not have to rise as much as expected to curb inflation. Absent a big surprise in the next inflation and jobs data coming out before the June meeting, the Fed appears ready to step to the sidelines. Friday On The Week
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Dow 33,426.63 -109.28 +126.01 0.38%
Nasdaq 12,657.90 -30.94 +373.16 3.04%
S&P 500 4,191.98 -6.07 +67.9 1.65%
NYSE Volume 4.05B
NYSE Advancers 1,169
NYSE Decliners 1,776
Nasdaq Volume 3.94B
Nasdaq Advancers 1,966
Nasdaq Decliners 2,372
New Highs/Lows
05/12 05/15 05/16 05/17 05/18 05/19
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NYSE New Highs 50 43 36 56 82 75
NYSE New Lows 118 58 107 80 45 45
Nasdaq New Highs 71 77 69 85 115 108
Nasdaq New Lows 250 160 199 144 104 98
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TRADER'S TIP:
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TRADER'S TIP: "Do Gaps Always Fill?" Contrary to popular opinion, gaps don't always fill. In fact, price gaps form some of the best levels of support and resistance. The bigger the gap, the more significant the support or resistance zone. **************************
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 - 4191.98 May 19, 2023 52-Week High: 4325.28 52-Week Low: 3491.58 Daily Trend: UP Weekly trend: UP Weekly Pivot Levels Resistance 3: 4377.68 Resistance 2: 4274.63 Resistance 1: 4233.30 Pivot: 4171.58 Support 1: 4130.25 Support 2: 4068.53 Support 3: 3965.48 https://www.prorightline.com/rlch/051923SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, May 22, 2023: 22-May MONDAY, MAY 22 22-May None scheduled 22-May TUESDAY, MAY 23 Tuesday, May 23, 2023: 23-May 8:30 am 23-May 8:30 am 23-May 10:00 am New home sales 23-May WEDNESDAY, MAY 24 Wednesday, May 24, 2023: 24-May 2:00 pm Minutes of Fed's May FOMC meeting 24-May THURSDAY, MAY 25 Thursday, May 25, 2023: 25-May 8:30 am GDP (first revision) 25-May 8:30 am Corporate profits 25-May 8:30 am Initial jobless claims 25-May 8:30 am Continuing jobless claims 25-May 10:00 am Pending home sales 25-May FRIDAY, MAY 26 Friday, May 26, 2023: 26-May 8:30 am Durable-goods orders 26-May 8:30 am Durable-goods minus transportation 26-May 8:30 am Personal income (nominal) 26-May 8:30 am Personal spending (nominal) 26-May 8:30 am PCE index 26-May 8:30 am Core PCE index 26-May 8:30 am PCE (year-over-year) 26-May 8:30 am Core PCE (year-over-year) 26-May 8:30 am Advanced U.S. trade balance in goods 26-May 8:30 am Advanced retail inventories 26-May 8:30 am Advanced wholesale inventories 26-May 10:00 am Consumer sentiment (final) 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: "Whipping the Sea" You have to analyze your behavior in the market instead of acting out your feelings. We get angry at the market, we become afraid of it, we develop silly superstitions. All the while, the market keeps cycling through its rallies and declines like an ocean going through its storms and calm periods. Mark Douglas writes in The Disciplined Trader that in the market, There is no beginning, middle, or end - only what you create in your own mind. Rarely do any of us grow up learning to operate in an arena that allows for complete freedom of creative expression, with no external structure to restrict it in any way." We try to cajole or manipulate the market, acting like the ancient emperor Xerxes, who ordered his soldiers to horsewhip the sea for sinking his fleet. Most of us are not aware how manipulative we are, how we bargain, how we act out our feelings in the market. Most of us consider ourselves the center of the universe and expect every person or group to be either good or bad to us. This does not work in the market which is completely impersonal." ~ Dr. Alex Elder, trader and author of "Trading For A Living" ***********************************
STOCKS COVERED IN THIS ISSUE
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HEALTHCARE SECTOR Inhibrx, Inc. (INBX: Healthcare/Biotechnology) - BULLISH BOUNCE. INBX's positive weekly uptrend is still intact despite recent selling that has driven share prices lower. Price action on Friday shows that traders are aware of the moving average support zone now in play, and they are ready to consider buying again. A shift up from this point will attract even more buyers. The new buying should move INBX back in step with the bullish weekly trend, so our BUY entry trigger is set at 25.56. Once you hold a position, trail a stop of 1.76. Tighten it to 0.88 on a 3.6 gain. INBX closed at 25.16 on Friday. Earnings Report Date: Aug 07, 2023. Beta: 2.86. Market-Cap: 1.097B. Optionable. Harrow Health, Inc. (HROW: Healthcare/Drug Manufacturers-Specialty & Generic) - SQUEEZE PLAY. Traders are feeling the pressure as HROW's intra-day price range on Friday 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 21.94 and a SELL short entry at 20.27. HROW's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.67 trailing stop. Tighten it to 0.84 after you get a 2.6 gain. HROW closed Friday at 21.32. Earnings Report Date: Aug 07, 2023. Beta: N/A. Market-Cap: 642.201M. Optionable. Harrow Health, Inc. (HROW: Healthcare/Drug Manufacturers-Specialty & Generic) - SQUEEZE PLAY. Friday's narrow price range has created a potentially profitable setup in HROW, 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 21.94 and a SELL short entry at 20.27. Let HROW's price action determine your long or short entry. Once the order is filled, place a 1.67 trailing stop, and tighten it to 0.84 upon getting a 2.6 gain. HROW closed Friday at 21.32. Earnings Report Date: Aug 07, 2023. Beta: N/A. Market-Cap: 642.201M. Optionable. RxSight, Inc. (RXST: Healthcare/Medical Devices) - SQUEEZE PLAY. A look at RXST'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 26.03 and a SELL short trigger at 23.97. Once RXST shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 2.06 and tighten to 1.03 on a 1.26 gain. RXST closed Friday at 25.56. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 868.577M. Optionable. TECHNOLOGY SECTOR SoundThinking, Inc. (SSTI: Technology/Software-Application) - SQUEEZE PLAY. Friday's trading action forced SSTI'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 SSTI 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 26.48 if SSTI moves higher, and place your order to SELL short at 24.83 if price declines to that level. As usual follow your entry with a trailing stop, 1.65 should be sufficient. Reduce your stop to 0.83 on a 1.94 gain. SSTI closed Friday at 25.88. Earnings Report Date: Aug 07, 2023. Beta: N/A. Market-Cap: 316.908M. 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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Hammer Time! Technicians throughout the world have adopted the Japanese practice of candlestick charting. In fact, many have abandoned Western bars in favor of this visual tool that generates detailed information from short-term price movement. Of all candlestick patterns, single bar hammers and dojis provide the most versatile immediate feedback. Western technical analysis rarely offers such dependable single bar signals. These formations print when a significant battle between bulls and bears ends in a draw. Two characteristics generate their predictive power: 1. High to low range greater than average. 2. Closing tick equal to or near opening tick. Dojis represent perfect opening-closing balance as price finishes exactly where it started. Hammers need only close so that the central body of the candlestick is less than one-third the length of the bar's total range. But the body must sit near one end of the bar's action. Dojis and hammers predict immediate reversals within the time frames they are created. Their significance directly relates to their position within the overall chart pattern. When appearing on high volume near significant highs or lows, they may represent price extremes signifying an important change in trend. If printed within an ongoing congestion pattern, they often reflect market makers or specialists "cleaning out" stops in one direction so they can move the market in the opposite direction. Retracement science assists traders in predicting events subsequent to one of these important candles. Shifting down one time frame from the bar reveals the length of the short-term trend being reversed by the long finger. Very often, dojis and hammers represent first rise/first failure setups within the smaller time frame. This further predicts where the reversal momentum will fade for a test of the candle. Following a doji or hammer reversal, a test of the candle high or low often takes place within 3 to 5 bars. When the test fails, expect price to thrust sharply forward, especially when overbought/oversold indicators show no divergence. When the test succeeds, shift down one time frame again and trade the setup according to double bottom/double top strategy. Specifically look for price to surge on the breakout past the high/low of the initial reversal generated by the candle. See Chart - https://prorightline.com/rlr/TCdell101103.gif Hundreds of stocks printed long-legged dojis and hammers during the dramatic October 1998 reversal day. DELL never returned to test its low following a death-defying leap into the abyss. Pay close attention to gap support or resistance created by the bar following the candle event. See Chart - https://prorightline.com/rlr/TCaltr101103.gif Price returns to test ALTR's new high doji and reverses. Reviewing this chart on a 5-min intraday interval reveals a classic double top scenario. Aggressive traders often enter short sales at doji tops, recognizing their hidden power. *********************************************************** This guest article was written by Alan Farley, trader and author of "The Master Swing Trader." ======================================================================
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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. |