Notes From The Editor

Ask the question "What is a stock trader's main goal?" and you'll probably hear something like "To make a lot of money!" It surprises many people to find that the major goal of a truly successful trader isn't to make money, but to make the best trades possible.

Most folks don't understand stock trading, and many believe that traders spend all day just thinking about money. It helps for them to look at other professions for comparison. Teachers, contractors, attorneys, doctors, and mechanics are all paid for what they do, but most don't count their money while they're working. Those that constantly think of money instead of the job at hand pay a severe price for not focusing on what's truly important. How would you feel if your doctor always wanted to talk about was how much money he or she was making?

Repeatedly calculating the amount of money in a trade sends a warning signal that a trader's emotions are running too high. In a highly emotional state of mind it's easy to let feelings substitute for intelligent trade management. Uneasiness over how much money is on the table quickly moves a trader from relaxation to apprehension. Fortunately it's not that hard to switch back to a much more productive trading mindset.

Here's how to do it. Immediately after entering a trade and putting initial stops in place, write down your feelings in your trading journal. If you are uneasy or feel overly concerned about the trade, take a short break away from your desk. Depending on which you prefer, either go for brief walk, or lie down with your eyes closed for at least ten to fifteen minutes.

As you are walking or resting, think about the fact that you have done everything needed to protect against any serious financial damage that might result from the trade. Calmly consider that you use the risk calculator to determine the number of shares in your position, and you set stops to prevent any possible harm.

As you begin to relax, feel the satisfaction that comes from knowing you are trading intelligently. Realize that it really doesn't matter whether price moves in the desired direction for this specific trade or not. Remind yourself that trading successfully doesn't depend on any one trade.

Contemplate the concept that trading with risk control prevents even a series of losses from spoiling your trading success. Take comfort in the reality that trading is a repetitive process that allows you to learn and improve your skills as you progress.

When you resume trading, you may still feel the temptation to concentrate on the cash in play. Just remember that money doesn't have to be the center of your focus. Money is simply the byproduct of the thoughts and subsequent actions you take while calmly trading stocks.

It helps tremendously to put your attention on the different aspects of your personal trading routine. By highlighting the importance of stock selection, trade planning, risk control, and execution, the money will soon become just a pleasant afterthought. And yes, it's certainly okay to enjoy counting the profits once the trade is closed!

Trade well,

- Thomas Sutton, Editor

Quick List

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

FVRR      26.76      0.37     27.68     25.73        1.95/0.98      2.56
BAX       46.05      0.75     46.78                  2.85/1.43       1.8
VKTX      22.86      1.19     23.38     21.25        2.13/1.07      2.48
MATW      38.08      1.26     38.69                  2.54/1.27      1.56
CVEO      20.19      0.68     20.48     19.22        1.26/0.63      1.78

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

US stocks finished a challenging week on a high note with the major indices closing sharply higher on Friday. Key moments for the week included the latest Fed Bank rate hike and continued worries over regional banks. Traders responded positively to Friday's release of the April jobs report, which showed the labor market remains in good shape. The 10-year Treasury yield topped 3.4%, as bond traders interpreted the strong job gains as a potential piece of evidence that the FMOC (Federal Open Market Committee) will decide to keep loan rates to banks higher for longer. In equties, financial services stocks were boosted by gains among the regional banks, while the technology sector got a nice lift from Apple's latest quarterly results. Overall, sector leadership for the session reflected a more bullish tone for the economic environment.

                      Friday                 On The Week      
                  --------------------   --------------------
Dow                 33,674.38   546.64      -423.78    -1.24%
Nasdaq              12,235.41   269.01        +8.83     0.07%
S&P 500              4,136.25    75.03       -33.23     -0.8%

NYSE Volume                      4.19B                       
NYSE Advancers                   2,549                       
NYSE Decliners                     438                       

Nasdaq Volume                    4.58B                       
Nasdaq Advancers                 3,224                       
Nasdaq Decliners                 1,183                       

                                 New Highs/Lows

                   04/28  05/01  05/02  05/03  05/04  05/05
                 --------------------------------------------
NYSE New Highs        72     83     41     79     38     48
NYSE New Lows         37     35    152    104    258     49
Nasdaq New Highs      71    103     62     78     60    101
Nasdaq New Lows      153    198    443    281    476    135
   

TRADER'S TIP: "Know Before You Go"

Before entering a trade, carefully plan "what you will do" and "when you will do it" once you are in the position. Actually, this is much more important than finding the "perfect" entry. And always include an exit plan for three possible scenarios: the trade moves favorably, unfavorably, or doesn't move at all. Be sure to include the specific exit price when planning stop-losses. When using the trailing stop method to lock in gains, make certain that you decide in advance at what point the trailing stop will be adjusted.

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 - 4136.25 May 5, 2023

52-Week High: 4325.28
52-Week Low: 3491.58
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4401.09
Resistance 2: 4262.45
Resistance 1: 4199.35
Pivot: 4123.81
Support 1: 4060.71
Support 2: 3985.17
Support 3: 3846.53

NASDAQ Composite - 12235.41 May 5, 2023

52-Week High: 13181.09
52-Week Low: 10088.83
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 12820.79
Resistance 2: 12481.33
Resistance 1: 12358.37
Pivot: 12141.87
Support 1: 12018.91
Support 2: 11802.41
Support 3: 11462.95
        
Dow Industrials - 33674.38 May 5, 2023

52-Week High: 34712.28
52-Week Low: 28660.94
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 36263.89
Resistance 2: 34943.56
Resistance 1: 34308.97
Pivot: 33623.23
Support 1: 32988.64
Support 2: 32302.90
Support 3: 30982.57
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, May 08, 2023:
08-May  MONDAY, MAY 8   
08-May  10:00 am   Wholesale inventories
08-May  2:00 pm   Fed Senior Loan Survey
08-May  TUESDAY, MAY 9   

Tuesday, May 09, 2023:
09-May  6:00 am   NFIB optimism index
09-May  WEDNESDAY, MAY 10   

Wednesday, May 10, 2023:
10-May  8:30 am   Consumer price index
10-May  8:30 am   Core CPI
10-May  8:30 am   CPI year over year
10-May  8:30 am   Core CPI year over year
10-May  THURSDAY, MAY 11   

Thursday, May 11, 2023:
11-May  8:30 am   Producer price index
11-May  8:30 am   Core PPI
11-May  8:30 am   PPI year over year
11-May  8:30 am   Core PPI year over year
11-May  8:30 am   Initial jobless claims
11-May  8:30 am   Continuing jobless claims
11-May  FRIDAY, MAY 12   

Friday, May 12, 2023:
12-May  8:30 am   Import price index
12-May  8:30 am   Import price index minus fuel
12-May  10:00 am   Consumer sentiment (preliminary)


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

TRADER'S TIP: "Successful Trading: In Search of the Rules"

Assuming a new trader doesn't quit early in the game, they will gradually begin to realize that there are certain rules that can't be violated without severe consequence. When they accept this, much of the stress and frustration they have felt disappears. Unfortunately the majority of new traders give up before discovering that they lost their money because they were breaking most if not all of the rules.

Once a trader opens up to the possibility that there are some very important aspects of trading that they must know to be successful, it becomes much easier for them to recognize what the rules are.

Stocks Covered in This Issue

COMMUNICATION SERVICES SECTOR Fiverr International Ltd. (FVRR: Communication Services/Internet Content & Information) - SQUEEZE PLAY. Sometimes when Bulls and Bears face off in the market arena for a typical day-long battle, there is no clear winner. This is evident when the daily price range contracts to an unusually narrow state. FVRR found itself in this condition on Friday when neither buyers or sellers were able to push ahead. This setup provides traders a chance to hop on board the next breakout - whether it's to the upside or down - with little risk of loss. To do this place a BUY order at 27.68 and a SELL short trigger at 25.73. When FVRR moves outside of Friday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 1.95 trailing stop. After you've got a 2.56 profit, tighten the stop to 0.98. FVRR closed at 26.76 on Friday. Earnings Report Date: May 11, 2023. Beta: 1.72. Market-Cap: 1.119B. Optionable.

HEALTHCARE SECTOR

Baxter International Inc. (BAX: Healthcare/Medical Instruments & Supplies) - BULLISH BOUNCE. Here is another example of a stock in an established uptrend that has recently experienced a counter-trend drop. The sliding price action has now found support near a moving average zone, bouncing upward during Friday's session to close at 46.05. Anticipate the rebound to continue, and be ready to buy BAX at 46.78. Follow your entry with a trailing stop of 2.85 which can be tightened to 1.43 on a 1.8 profit. Earnings Report Date: Jul 26, 2023. Beta: 0.56. Market-Cap: 24.179B. Optionable.

Viking Therapeutics, Inc. (VKTX: 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. VKTX 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 23.38 and a SELL short trigger at 21.25. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 2.13 which can be tightened to 1.07 on a 2.48 gain. VKTX closed Friday at 22.86. Earnings Report Date: Jul 25, 2023. Beta: N/A. Market-Cap: 2.276B. Optionable.

INDUSTRIALS SECTOR

Matthews International Corporation (MATW: Industrials/Conglomerates) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Friday MATW seemed intent on initiating a rebound. With moving average support nearby, MATW is at a logical place for Bulls to regroup and extend the familiar uptrend that shareholders have become accustomed to. On continued buying, plan on taking long entries with a BUY at 38.69. Manage risk with a 2.54 stop. Tighten your stop to 1.27 when you have a 1.56 profit. MATW ended the day at 38.08. Earnings Report Date: Jul 26, 2023. Beta: 1.12. Market-Cap: 1.16B. Optionable.

Civeo Corporation (CVEO: Industrials/Specialty Business Services) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in CVEO'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 20.48 and a SELL order at 19.22. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.26 trailing stop. Tighten the stop to 0.63 once you have a 1.78 gain. CVEO closed Friday at 20.19. Earnings Report Date: Jul 27, 2023. Beta: 2.61. Market-Cap: 315.083M. 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.

Trader's Corner

"Index and Sector Stocks"

Want to trade the entire Nasdaq, Dow, or S&P 500 in one stock? Index stocks and sector stocks (formally known as ETFs, or Exchange Traded Funds) provide a convenient way to invest in ALL of the leading companies in a top index or industry. Similar to mutual funds, sector and index stocks provide access to a "basket" of stocks in an entire index or industry sector through a single transaction.

Sector and index stocks trade just like any other stock and can be used for short-term or longer-term strategies. Short-term traders love them because they are very liquid, can easily be traded both long or short on margin, and tend to move closely with their related indices. For long-term investors, these stocks provide unique tax advantages, and unlike mutual funds there are no management fees.

Just as "normal" stocks represent ownership in a publicly traded company, sector and index stocks signify ownership in a Unit Investment Trust, or UIT - a collection of securities (stocks for our purposes) bundled together in a trust. Due to the number of stocks in each group, sector and index stocks provide an element of safety through diversification, and are usually less volatile than the individual stocks they represent. They generally provide a lower-stress way to trade highly volatile markets.

Sector stocks are represented by individual stock symbols - here are several examples:

SPY - Formally named Standard & Poor's Depositary Receipts, SPDRs are commonly called "Spiders" and represent the basket of stocks in the S&P 500 (SPX). This was the first index stock and was created by the American Stock Exchange in January 1993.

DIA - The Dow Industrial Average Model of New Depository Shares (DIAMONDS) represent the basket of 30 stocks in the DOW (DJX or INDU).

QQQQ - Represents the stocks in the Nasdaq 100 (NDX).

HOLDRS - HOLding Company Depositary ReceiptS represent the common stock of companies from a specific industry segment. Merrill Lynch launched HOLDRS for trading on the Amex stock exchange, which is now the NYSE MKT LLC Equities exchange. For more information on Merrill Lynch's current HOLDRS and the stocks represented by each one, go to the following webpage:
https://www.holdrs.com/holdrs/main/index.asp?Action=Outstanding

FFX - Fortune 500 index represents the companies in the Fortune 500.

FEX - Fortune e-50 index represents the top 50 Internet economy companies.

IShares Sector Funds provide investment vehicles similar to HOLDRS and are modeled after specific index funds based on the Russell 2000, Morgan Stanley Capital International (MSCI) Index Fund Series, S&P 500, and the DOW indices. Ishares are the world's most extensive family of Exchange Traded Funds (ETFs).

You can trade index and sector stocks exactly the same way you trade regular stocks through any brokerage. HOLDRS require a minimum purchase of 100 shares, but you can buy a single share of the other sector stocks. The lower volatility of sector stocks makes them relatively easy on the nerves to trade, but as with any trade, risk management is critical and stops must be used to protect against the market moving against a position.

Good luck!

Note: For more on Index and Sector Funds (ETFs) go to the following webpage: https://prorightline.com/education/etfs.html

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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