November 15, 2022 - The RightLine Report
Notes From The Editor
"Playing the Momenteum" is a trading method focusing on stocks that are moving in one direction on high volume. This type of momentum setup pays little or no concern to the company's fundamentals. Traders who follow this strategy know that trending stocks are more likely to continue in the same direction versus stocks which are not trending.
Most of us are momentum traders in some sense. Anyone who understands price momentum and believes that "the trend is your friend" would probably agree. However, momentum plays are just one of several trading methods that we can use to make money.
For example, just as RightLine's Bullish Bounce and New High Dip setups are built on the solid trading principles of momentum and trend, the RightLine Squeeze Play is founded on the principle of volatility expansion. Volatility has a proven tendency to contract, and then expand, and then contract again.
This contraction/expansion cycle is repetitive. Once the contraction phase ends and the expansion phase begins, you can usually count on the expansion period to continue long enough to gain a profit from the related price move.
Successful traders often disagree over how to pick the best stocks, or which entry methods to use. Yet most, if not all winning traders use a methodology grounded in risk management.
No matter what you call it, a consistently profitable trading method is a good trading method. Some investors look down their noses at others as if to say "My method is the only good method." This is an area where were should be careful to keep an open mind. Prejudice against other types of investing and trading can cause us to overlook profitable tactics that sometimes turn out to be based on solid market principles.
Trade well!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 11/15 11/15 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
GIII 21.19 0.71 21.94 20.34 1.6/0.8 1.66
PTLO 22.54 -2.33 23.26 21.71 1.55/0.78 1.68
SDGR 22.27 0.68 23.04 21.32 1.72/0.86 2.24
BE 21.99 0.42 22.97 21.27 1.7/0.85 2.02
PWSC 21.03 0.67 21.53 20.01 1.52/0.76 1.38
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 top US stock indices chalked up gains following the release of data showing wholesale price inflation isn't growing as fast as expected. This follows other recent reports of less-agressive consumer price inflation, which appear to be lowering market expectations about how aggressive the Fed could remain with its current hawkish monetary policy tightening stance. The economic calendar also included the Empire Manufacturing Index which indicated manufacturing activity is expanding in the New York region, versus predictions of it remaining in a contraction zone. In equities news, Home Depot (HD $312) and Walmart (WMT $147) both topped earnings expectations. Treasury yields and the USD/dollar were lower, gold and oil prices rallied higher.
Nov 14, 2022 Nov 15, 2022
-------------------- --------------------
Dow 33,536.70 -211.16 33,592.92 56.22
Nasdaq 11,196.22 -127.11 11,358.41 162.19
S&P 500 3,957.25 -35.68 3,991.73 34.48
NYSE Volume 4.61B 5.03B
NYSE Advancers 941 2,428
NYSE Decliners 2,267 777
Nasdaq Volume 5.07B 5.64B
Nasdaq Advancers 1,776 3,117
Nasdaq Decliners 2,925 1,563
New Highs/Lows
11/08 11/09 11/10 11/11 11/14 11/15
--------------------------------------------
NYSE New Highs 77 37 75 81 54 65
NYSE New Lows 97 167 50 35 24 28
Nasdaq New Highs 111 85 139 110 83 107
Nasdaq New Lows 297 511 212 152 113 124
Stocks Covered Today Stock Splits
TRADER'S TIP: "Market Direction & Economic Reports"
For a quick and easy table that shows what price movement to expect from just about any economic report, go to: http://www.rightline.net/education/economic.html.
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 - 3991.73 November 15, 2022
52-Week High: 4818.62
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4427.39
Resistance 2: 4170.13
Resistance 1: 4081.53
Pivot: 3912.87
Support 1: 3824.27
Support 2: 3655.61
Support 3: 3398.35
NASDAQ Composite - 11358.41 November 15, 2022
52-Week High: 16212.23
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 13023.43
Resistance 2: 12015.01
Resistance 1: 11669.17
Pivot: 11006.59
Support 1: 10660.75
Support 2: 9998.17
Support 3: 8989.75
Dow Industrials - 33592.92 November 15, 2022
52-Week High: 36952.65
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 36116.20
Resistance 2: 34723.23
Resistance 1: 34235.54
Pivot: 33330.26
Support 1: 32842.57
Support 2: 31937.30
Support 3: 30544.33
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, November 21, 2022: 14-Nov 11 am NY Fed 1-year inflation expectations 14-Nov 11 am NY Fed 5-year inflation expectations Tuesday, November 15, 2022: 15-Nov 8:30 am Producer price index final demand 15-Nov 8:30 am Empire state manufacturing index 15-Nov 11 am Real household debt (SAAR) 15-Nov 11 am Real mortgage debt (SAAR) Wednesday, November 16, 2022: 16-Nov 8:30 am Retail sales 16-Nov 8:30 am Retail sales excluding vehicles 16-Nov 8:30 am Import price index 16-Nov 9:15 am Industrial production 16-Nov 9:15 am Capacity utilization rate 16-Nov 10 am Business inventories 16-Nov 10 am NAHB home builders' index Thursday, November 17, 2022: 17-Nov 8:30 am Initial jobless claims 17-Nov 8:30 am Continuing jobless claims 17-Nov 8:30 am Building permits (SAAR) 17-Nov 8:30 am Housing starts (SAAR) 17-Nov 8:30 am Philadelphia Fed manufacturing index Friday, November 18, 2022: 18-Nov 10 am Existing home sales (SAAR) 18-Nov 10 am Leading economic indicators 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: "Learning To Fly"
Low-cost access to the markets via the Internet has without a doubt been the biggest single change to ever impact the stock market. In fact, it has literally revolutionized the entire industry. But cheap and fast trading tools don't produce successful traders and investors any more than cheap and fast planes produce good pilots. Just like learning to fly, learning to maneuver through the market profitably takes time, training, and sincere effort.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
G-III Apparel Group, Ltd. (GIII: Consumer Cyclical/Apparel Manufacturing) - SQUEEZE PLAY. A look at GIII'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 21.94 and a SELL short trigger at 20.34. Once GIII shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.6 and tighten to 0.8 on a 1.66 gain. GIII closed Tuesday at 21.19. Earnings Report Date: Nov 29, 2022. Beta: 2.52. Market-Cap: 1.006B. Optionable.
Portillo's Inc. (PTLO: Consumer Cyclical/Restaurants) - SQUEEZE PLAY. When a stock's daily price range contracts to an unusually low point, you can safely assume that in most cases a breakout from that range will result in a nice price move. To capture a portion of this potential movement we have set both a long and a short entry into PTLO. A move to the upside will trigger our BUY entry at 23.26, while a drop to 21.71 will trigger our SELL short entry. Follow your position with a 1.55 trailing stop. Tighten the stop to 0.78 once you have a 1.68 gain. PTLO closed Tuesday at 22.54. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 955.766M. Optionable.
HEALTHCARE SECTOR
Schrödinger, Inc. (SDGR: Healthcare/Health Information Services) - SQUEEZE PLAY. SDGR is caught in a dilemma. The stock's compressed price range on Tuesday has resulted in a condition comparable to a wound up rubber band. We anticipate that this undecided equity will take off soon, but with the direction still in question we'll let upcoming market action tell us whether to buy shares or sell short. SDGR is now at 22.27. We can capture price action either way by placing a BUY trigger at 23.04 and a SELL short trigger at 21.32. Once SDGR reveals its direction, enter your triggered order and disregard the other one. As soon as your position is in place, follow up with a trailing stop of 1.72. When you acquire a 2.24 profit, tighten the stop to 0.86. Earnings Report Date: N/A. Beta: 1.06. Market-Cap: 1.586B. Optionable.
INDUSTRIALS SECTOR
Bloom Energy Corporation (BE: Industrials/Electrical Equipment & Parts) - SQUEEZE PLAY. Tuesday's trading action forced BE'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 BE 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 22.97 if BE moves higher, and place your order to SELL short at 21.27 if price declines to that level. As usual follow your entry with a trailing stop, 1.7 should be sufficient. Reduce your stop to 0.85 on a 2.02 gain. BE closed Tuesday at 21.99. Earnings Report Date: Feb 08, 2023. Beta: 2.87. Market-Cap: 4.292B. Optionable.
TECHNOLOGY SECTOR
PowerSchool Holdings, Inc. (PWSC: Technology/Software-Application) - SQUEEZE PLAY. Tuesday's narrow price range has created a potentially profitable setup in PWSC, 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 21.53 and a SELL short entry at 20.01. Let PWSC's price action determine your long or short entry. Once the order is filled, place a 1.52 trailing stop, and tighten it to 0.76 upon getting a 1.38 gain. PWSC closed Tuesday at 21.03. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 4.194B. 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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