November 10, 2022 - The RightLine Report
Notes From The Editor
Have you ever heard of Cesar Millan? He's known for his uncanny ability to transform out-of-control dogs into well-behaved pets. Also known as the "Dog Whisperer," Cesar's consistent advice to pet owners is to "stay calm and assertive." Apparently this serene yet strong attitude promotes healthy relationships between humans and their animals.
As a trader I can see how effective a similar "calm and assertive" approach is when applied to the stock market. One of the biggest temptations when trading is to become too emotionally involved with the markets. In some folks this tendency to personalize the trader-market relationship leads to the desire to know every detail about anything pertaining to stocks.
Unfortunately there's an infinite amount of market-related information available, so it's easy to get over- stimulated, overloaded and overwhelmed.
As Cesar says, the solution is to stay calm and assertive. Filter out the noise -- things that have little to do with your success as a trader -- and focus on the things that are important. So how do you tell the difference between the two?
Always ask the question "Does this information actually help me to make money trading stocks?" Keep in mind that the national media knows very little about successful trading, but they know an awful lot about getting and keeping your attention. As a result, television is rarely the best place to get the information you need.
From a trader's perspective most financial news is just another data bit. It may make the headlines both online and offline, but does it fit the criteria for information that helps you to make money trading. If not, then it's just noise to be filtered out so you can focus on what's important.
Stay calm and assertive!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 11/10 11/10 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
SRI 24.16 0.54 24.66 23.05 1.61/0.81 1.34
MRO 31.60 0.97 32.1 2.38/1.19 2.24
AR 37.63 1.90 38.3 3.47/1.74 3.96
ACLX 22.53 0.87 23.04 21.18 1.86/0.93 2.76
SCSC 31.08 1.60 31.85 2.58/1.29 1.64
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
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Stocks Covered Today Stock Splits
Market Summary
The top US stock indexes rallied on Thursday for the largest single session gain since 2020. The bullish move came on the heels of October's CPI - Consumer Price Inflation report - showing inflation continues to increase, yet by a lower amount than expected. Additional economic news showed unemployment claims are up more than predicted compared to last week. In equities, Rivian Automotive (RIVN $33) and Wynn Resorts (WYNN $72) both reported an earnings loss for the quarter, yet both also presented encouraging guidance. The USD/dollar and treasury yields declined, gold and oil prices traded higher.
Nov 9, 2022 Nov 10, 2022
-------------------- --------------------
Dow 32,513.94 -646.89 33,715.37 1,201.43
Nasdaq 10,353.17 -263.02 11,114.15 760.97
S&P 500 3,748.57 -79.54 3,956.37 207.80
NYSE Volume 4.67B 5.81B
NYSE Advancers 615 2,903
NYSE Decliners 2,563 376
Nasdaq Volume 5B 6.47B
Nasdaq Advancers 1,094 3,824
Nasdaq Decliners 3,527 930
New Highs/Lows
11/03 11/04 11/07 11/08 11/09 11/10
--------------------------------------------
NYSE New Highs 52 85 79 77 37 75
NYSE New Lows 264 217 145 97 167 50
Nasdaq New Highs 73 93 101 111 85 139
Nasdaq New Lows 374 353 272 297 511 212
Stocks Covered Today Stock Splits
TRADER'S TIP: "Position Size: Finding The Right Fit"
"Many people believe that in order to make healthy profits in the market that they need to own a large position (a thousand shares or whatever your big block is for you) or more. I have found repeatedly that this is not the case. In fact, it may even work against you. Trading is tremendously psychological. When you have a position that is large enough that normal fluctuations, a point or two movement in the wrong direction causes you to start to mentally calculate how much money you have lost, you begin to make decisions out of fear. Big block positions also are a leading cause of ulcers (don't worry - I made that up).
When you make your trading decisions from a basis of fear and greed - you betcha, they are lousy decisions. Think in these terms. A 200-share position, that moves 20 points made you a $4,000 profit. You were able to keep a 3 or 4 point trailing stop loss on the stock meaning you were only at risk $600 to $800 at any time. An aura of tranquility pervades. When you have this feeling of tranquility is when you make your better decisions. I guarantee it.
The rule of thumb is this. If your stock goes down a couple of points and your mind becomes a mental calculator, constantly calculating that you are now down two grand, then your block size is probably bigger than necessary. If you think about the trade calmly and in terms of the boundaries of your trading plan, then you are likely on track."
~ Roger Perry
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 - 3956.37 November 10, 2022
52-Week High: 4818.62
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4220.77
Resistance 2: 4007.13
Resistance 1: 3888.84
Pivot: 3793.49
Support 1: 3675.20
Support 2: 3579.85
Support 3: 3366.21
NASDAQ Composite - 11114.15 November 10, 2022
52-Week High: 16212.23
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 12418.35
Resistance 2: 11524.93
Resistance 1: 11000.09
Pivot: 10631.51
Support 1: 10106.67
Support 2: 9738.09
Support 3: 8844.67
Dow Industrials - 33715.37 November 10, 2022
52-Week High: 36952.65
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 35090.49
Resistance 2: 33745.61
Resistance 1: 33074.41
Pivot: 32400.73
Support 1: 31729.53
Support 2: 31055.85
Support 3: 29710.97
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, November 07, 2022: 07-Nov 3 pm Consumer credit (level change) Tuesday, November 08, 2022: 08-Nov Election Day 08-Nov 6 am NFIB small-business index Wednesday, November 09, 2022: 09-Nov 10 am Wholesale inventories (revision) Thursday, November 10, 2022: 10-Nov 8:30 am Consumer price index (monthly change) 10-Nov 8:30 am Core CPI (monthly change) 10-Nov 8:30 am CPI (12-month change) 10-Nov 8:30 am Core CPI (12-month change) 10-Nov 8:30 am CPI (3-month SAAR) 10-Nov 8:30 am Core CPI (3-month SAAR) 10-Nov 8:30 am Initial jobless claims 10-Nov 8:30 am Continuing jobless claims 10-Nov 2 pm Federal budget (compared with year ago) Friday, November 11, 2022: 11-Nov Veterans Day holiday 11-Nov 10 am UMich consumer sentiment (early) 11-Nov 10 am UMich consumer 5-year inflation expectations (early) 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: "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
CONSUMER CYCLICAL SECTOR
Stoneridge, Inc. (SRI: Consumer Cyclical/Auto Parts) - 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. SRI found itself in this condition on Thursday 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 24.66 and a SELL short trigger at 23.05. When SRI moves outside of Thursday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 1.61 trailing stop. After you've got a 1.34 profit, tighten the stop to 0.81. SRI closed at 24.16 on Thursday. Earnings Report Date: N/A. Beta: 1.29. Market-Cap: 660.211M. Optionable.
ENERGY SECTOR
Marathon Oil Corporation (MRO: Energy/Oil & Gas E&P) - 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. MRO's behavior on Thursday could very well be a sign that a new bounce is underway. Place a BUY trigger at 32.1. In the event your trigger is met, also place a 2.38 trailing stop which can be trimmed down to 1.19 when you have a 2.24 profit. MRO closed Thursday at 31.60. Earnings Report Date: N/A. Beta: 2.48. Market-Cap: 20.068B. Optionable.
Antero Resources Corporation (AR: Energy/Oil & Gas E&P) - BULLISH BOUNCE. Another bullish bouncer, AR 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 AR reaches our entry trigger set at 38.3. Also place a 3.47 trailing stop which can be narrowed to 1.74 when you reach a 3.96 profit. AR closed Thursday at 37.63. Earnings Report Date: N/A. Beta: 3.56. Market-Cap: 11.294B. Optionable.
HEALTHCARE SECTOR
Arcellx, Inc. (ACLX: Healthcare/Biotechnology) - SQUEEZE PLAY. ACLX traders on both sides of the fence are now locked in a head-to-head shootout. Thursday's price range was the narrowest in over a week, as neither Bears or Bulls have been able to clearly gain the upper hand. This gives us an opportunity to catch the next directional move with little risk of loss. To do this we'll place both a long and a short trigger with a BUY at 23.04 and a SELL short trigger at 21.18. When one of the orders is filled, cancel the remaining order and enter a 1.86 trailing stop. When you've reached a 2.76 paper profit, tighten the stop to 0.93. ACLX closed at 22.53 on Thursday. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 987.247M. Optionable.
TECHNOLOGY SECTOR
ScanSource, Inc. (SCSC: Technology/Electronics & Computer Distribution) - 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 SCSC which met our setup criteria on Thursday. The BUY trigger for this trade is at 31.85, and the trailing stop is sized at 2.58. Resize the stop to 1.29 upon collecting a 1.64 point gain. SCSC closed Thursday at 31.08. Earnings Report Date: Feb 06, 2023. Beta: 1.43. Market-Cap: 784.621M. 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
---------------- ------- -------- ------- ------ -------
Copart CPRT 11/4/2022 11/4/2022 2-for-1 Yes
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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