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November 3, 2022 - The RightLine Report
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NOTES FROM THE EDITOR
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Though most traders aspire to be adaptable in all market conditions, many place limits on themselves in ways they aren't even aware of. For example, a large percentage of traders still don't use shorting as a way to increase profits. So why don't more folks take advantage of this powerful trading method?
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"QUICK LIST"
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Stock 11/03 11/03 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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SNBR 24.73 -0.37 25.91 23.67 2.24/1.12 3.86
HTBI 23.89 0.03 24.28 1.73/0.87 1.12
INBK 24.12 -0.10 24.7 23.27 1.43/0.72 2.86
KDNY 21.65 0.02 / 0
ZNTL 24.23 -0.27 24.9 23 1.9/0.95 2.52
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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US stocks were lower on Thursday following the Federal Reserve Bank's fourth-consecutive 75-basis point rate hike Wednesday, along with some hawkish comments from Fed Chairman Jerome Powell. On the economic front, unemployment claims were down, third quarter productivity rebounded less than predicted, the trade balance increased more than expected, and labor costs cooled off a bit. In equities, eBay (EBAY $39), Booking Holdings (BKNG $1,826) and Marriott International (MAR $146) all topped profit expectations. The USD/dollar and treasury yields were noticeably higher, oil prices and gold traded lower. Nov 2, 2022 Nov 3, 2022
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Dow 32,147.76 -505.44 32,001.25 -146.51
Nasdaq 10,524.80 -366.05 10,342.94 -181.86
S&P 500 3,759.69 -96.41 3,719.89 -39.80
NYSE Volume 4.93B 4.65B
NYSE Advancers 709 1,297
NYSE Decliners 2,469 1,889
Nasdaq Volume 5.47B 5.12B
Nasdaq Advancers 1,192 1,835
Nasdaq Decliners 3,428 2,760
New Highs/Lows
10/27 10/28 10/31 11/01 11/02 11/03
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NYSE New Highs 76 89 94 98 67 52
NYSE New Lows 128 113 109 89 142 264
Nasdaq New Highs 109 121 138 140 116 73
Nasdaq New Lows 183 197 167 162 249 374
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TRADER'S TIP:
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TRADER'S TIP: "Mistakes" "The greatest mistake you can make in life is to be continually fearing you will make one." ~ Elbert Hubbard **************************
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 - 3719.89 November 3, 2022 52-Week High: 4818.62 52-Week Low: 3491.58 Daily Trend: DOWN Weekly trend: DOWN Weekly Pivot Levels Resistance 3: 4176.91 Resistance 2: 4013.14 Resistance 1: 3957.10 Pivot: 3849.37 Support 1: 3793.33 Support 2: 3685.60 Support 3: 3521.83 https://www.prorightline.com/rlch/110322SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, October 31, 2022: 31-Oct 9:45 am Chicago PMI Tuesday, November 01, 2022: 01-Nov 9:45 am 01-Nov 10 am ISM manufacturing index 01-Nov 10 am Jobs openings 01-Nov 10 am Quits 01-Nov 10 am Construction spending 01-Nov Varies Motor vehicle sales (SAAR) Wednesday, November 02, 2022: 02-Nov 8:15 am ADP employment report (level change) 02-Nov 10 am Rental vacancy rate 02-Nov 2 pm FOMC announcement 02-Nov 2:30 pm Fed Chair Jerome Powell press conference Thursday, November 03, 2022: 03-Nov 8:30 am Initial jobless claims 03-Nov 8:30 am Continuing jobless claims 03-Nov 8:30 am Foreign trade deficit 03-Nov 8:30 am Productivity (SAAR) 03-Nov 8:30 am Unit labor costs (SAAR) Friday, November 04, 2022: 04-Nov 8:30 am Nonfarm payrolls (level change) 04-Nov 8:30 am Unemployment rate 04-Nov 8:30 am Average hourly earnings 04-Nov 8:30 am Labor-force participation rate, ages 25-54 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: "Monthly Stock Options Expirations" US stock options expire at 11:59AM on the third Saturday of each month. Since most retail traders can't trade options on Saturday, this equates to 4:00pm Eastern Time closing bell. This date changes to the third Thursday at 4:00pm whenever Friday is a holiday. ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR Sleep Number Corporation (SNBR: Consumer Cyclical/Furnishings, Fixtures & Appliances) - SQUEEZE PLAY. SNBR is caught in a dilemma. The stock's compressed price range on Thursday 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. SNBR is now at 24.73. We can capture price action either way by placing a BUY trigger at 25.91 and a SELL short trigger at 23.67. Once SNBR 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 2.24. When you acquire a 3.86 profit, tighten the stop to 1.12. Earnings Report Date: N/A. Beta: 1.98. Market-Cap: 544.085M. Optionable. FINANCIAL SERVICES SECTOR HomeTrust Bancshares, Inc. (HTBI: Financial Services/Banks-Regional) - BULLISH BOUNCE. Up-trending stocks like HTBI have a tendency to bounce their way skyward rather than travel higher in a straight line. After touching down to a moving average support level on Thursday, HTBI is poised to lift off again. To take advantage of this setup, prepare to BUY shares at 24.28 if positive price action occurs. As always, follow your entry with a trailing stop. A 1.73 trailer should work well with HTBI. Tighten it to 0.87 on a 1.12 gainer. Earnings Report Date: Jan 25, 2023. Beta: 0.58. Market-Cap: 373.456M. Optionable. First Internet Bancorp (INBK: Financial Services/Banks-Regional) - SQUEEZE PLAY. A look at INBK'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 24.7 and a SELL short trigger at 23.27. Once INBK shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.43 and tighten to 0.72 on a 2.86 gain. INBK closed Thursday at 24.12. Earnings Report Date: Jan 17, 2023. Beta: 0.64. Market-Cap: 224.096M. Optionable. HEALTHCARE SECTOR Chinook Therapeutics, Inc. (KDNY: Healthcare/Biotechnology) - 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 Thursday's session to close at 21.65. Anticipate the rebound to continue, and be ready to buy KDNY at . Follow your entry with a trailing stop of which can be tightened to on a 0 profit. Earnings Report Date: Nov 03, 2022. Beta: 0.46. Market-Cap: 1.362B. Optionable. Zentalis Pharmaceuticals, Inc. (ZNTL: Healthcare/Biotechnology) - SQUEEZE PLAY. Thursday's trading action forced ZNTL'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 ZNTL 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 24.9 if ZNTL moves higher, and place your order to SELL short at 23 if price declines to that level. As usual follow your entry with a trailing stop, 1.9 should be sufficient. Reduce your stop to 0.95 on a 2.52 gain. ZNTL closed Thursday at 24.23. Earnings Report Date: Nov 08, 2022. Beta: 1.88. Market-Cap: 1.381B. 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 ---------------- ------- -------- ------- ------ ------- Copart CPRT 11/4/2022 11/4/2022 2-for-1 Yes For a closer look at the different stages of a Stock Split go to: https://prorightline.com/index.php/trading-stock-splits-stages/ ======================================================================
Best of luck and have a Great Week!
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