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November 5, 2022 - The RightLine Report
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NOTES FROM THE EDITOR
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Driving With the Trend: Why Fight It When you Can Flow With It?
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"QUICK LIST"
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Stock 11/04 11/04 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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CTRN 21.89 0.92 22.21 2.04/1.02 2.28
TRDA 22.05 0.17 22.69 21.05 1.64/0.82 2.46
NUVL 30.76 1.50 31.26 27.36 3.9/1.95 3.08
SAVE 21.49 0.55 21.77 1.43/0.72 1.34
HCKT 20.95 0.11 21.35 1.26/0.63 1.06
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 averages chalked up a weekly loss despite closing higher on Friday following news of an increase in the unemployment rate and a rise in October nonfarm payrolls. In equities, Starbucks (SBUX $92) reported a profit along with a drop in China sales, Amgen (AMGN $269) topped expectations and raised its guidance, PayPal (PYPL $73) announced positive results and a collaboration with Apple (AAPL $139), and shares of DoorDash (DASH $50) were up although the food delivery firm posted a bigger loss than expected. Gold and oil prices moved upward, the USD/dollar was lower, treasuries were mixed. Friday On The Week
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Dow 32,403.22 401.97 -458.58 -1.4%
Nasdaq 10,475.25 132.31 -627.2 -5.65%
S&P 500 3,770.55 50.66 -130.51 -3.35%
NYSE Volume 5.42B
NYSE Advancers 2,245
NYSE Decliners 913
Nasdaq Volume 5.48B
Nasdaq Advancers 2,689
Nasdaq Decliners 1,897
New Highs/Lows
10/28 10/31 11/01 11/02 11/03 11/04
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NYSE New Highs 89 94 98 67 52 85
NYSE New Lows 113 109 89 142 264 217
Nasdaq New Highs 121 138 140 116 73 93
Nasdaq New Lows 197 167 162 249 374 353
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TRADER'S TIP:
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TRADER'S TIP: "Sector Timeframes" When trading with the flow of sector rotation, it's wise to keep a clear view of the strategic timeframe being used for a holding period. On a micro scale, money flows across the trading floor rapidly throughout the day, moving in and out of specific industries as the Street looks for direction. Some days the morning session strongly favors one sector, only to abandon that same industry by midday as more attractive opportunities arise. It's fast paced, and following that price movement intra-day is for short-term traders with real-time tools and considerable experience. Longer-term investors, on the other hand, are usually better off watching support and resistance areas for the index as a whole (such as watching the $SOX when monitoring semiconductors). A chart of the index reads much like individual stocks, and often sheds light on the group's future direction. The bottom line is that we can all follow sector rotation and take advantage of the opportunities generated, as long as we keep an appropriate timeframe. **************************
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 - 3770.55 November 4, 2022 52-Week High: 4818.62 52-Week Low: 3491.58 Daily Trend: DOWN 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 https://www.prorightline.com/rlch/110422SPX.jpg--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" 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: "A Bane or Boon?" Volatility can be a double-edged sword when trading, but a few reminders can help keep things in perspective. First of all, recall that volatility is what creates trading opportunities, so as long as we focus on the short term, share prices that move dramatically should be welcomed. Secondly, risk management is a must when volatile conditions prevail. Make absolutely certain that exit strategies are pre-planned in order to avoid unwanted losses. And finally, use the Gap Open Strategy to help determine buy and sell points. You'll be glad you did! For more on the Gap Open Strategy go to: http://www.rightline.net/education/gapopen.html ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR Citi Trends, Inc. (CTRN: Consumer Cyclical/Apparel Retail) - BULLISH BOUNCE. This trader-friendly setup turns repetitive stock behavior into real profits. Based on the tendency for up-trending stocks to drop briefly and then resume the up-trend, the Bullish Bounce places traders into excellent stocks when conditions are primed for more skyward movement. CTRN's current price action near moving average support signals a potential BUY entry at 22.21, followed by a 2.04 trailing stop which can be tightened to 1.02 upon earning 2.28. CTRN closed Friday at 21.89. Earnings Report Date: Nov 28, 2022. Beta: 2.01. Market-Cap: 183.425M. Optionable. HEALTHCARE SECTOR Entrada Therapeutics, Inc. (TRDA: Healthcare/Biotechnology) - 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 TRDA. A move to the upside will trigger our BUY entry at 22.69, while a drop to 21.05 will trigger our SELL short entry. Follow your position with a 1.64 trailing stop. Tighten the stop to 0.82 once you have a 2.46 gain. TRDA closed Friday at 22.05. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 691.675M. Not Optionable. Nuvalent, Inc. (NUVL: Healthcare/Biotechnology) - SQUEEZE PLAY. One interesting trait of price volatility is that it cycles back and forth through periods of expansion and contraction. Stocks that have recently seen their daily price range shift from an average or wide range to an extremely contracted state are ideal candidates for expansive price moves. In many cases the next move is relatively fast and covers a sizable amount of territory. To take advantage of these trades we use both a BUY and a SELL entry. This allows us to enter in whichever direction the breakout takes. In NUVL's case we will enter a BUY should it reach the 31.26 level, or a SELL short trade if it drops to 27.36. As usual a trailing stop is essential, 3.9 which should be tightened to 1.95 on a 3.08 gain. NUVL closed Friday at 30.76. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.489B. Not Optionable. INDUSTRIALS SECTOR Spirit Airlines, Inc. (SAVE: Industrials/Airlines) - BULLISH BOUNCE. If you are looking for another bouncer with profits in mind, SAVE fits the bill. Shares have been in retreat-mode lately, but now this stock is in the process of bouncing from support. Currently priced at 21.49, plan to buy shares at 21.77 and use a 1.43 trailing stop. Tighten the stop to 0.72 on a 1.34 gain. Earnings Report Date: N/A. Beta: 1.09. Market-Cap: 2.339B. Optionable. TECHNOLOGY SECTOR The Hackett Group, Inc. (HCKT: Technology/Information Technology Services) - BULLISH BOUNCE. HCKT has charted an upward weekly trend until recently when sellers showed up to push prices lower. On Friday the selling ran into solid support. A potential bounce up from this level should attract buyers and likely return HCKT to the previously established uptrend. The Bullish Bounce set-up is the basis for our BUY entry, so be ready to go long on a rise to our trigger at 21.35. Set a trailing stop of 1.26, tightening to 0.63 on a 1.06 profit. HCKT closed at 20.95 on Friday. Earnings Report Date: Nov 08, 2022. Beta: 0.69. Market-Cap: 663.759M. 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/ **********************************
TRADER'S CORNER
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"Program Trading" The financial news media often refers to "program trading," and CNBC even goes so far as to report program trading buy and sell levels for every session. According to Wikipedia, "as of 2009, high frequency trading firms account for 73% of all US equity trading volume." So exactly what are they all talking about? Let's take a brief look at "program trading." This is a general term that refers to trades that are automatically executed by computers, usually in large volume "baskets" of stocks. There are different types of program trading, but the most common, and the one referred to on CNBC, is a type of securities trading intended to profit from temporary differences between an index like the S&P 500, and the actual value of the stocks that make up the index. This sort of program trading is called "index arbitrage," and is based purely on the price relationship between the two - not on any fundamental reason. The individual company's earnings, dividends, and growth prospects are not factors, and neither is any economic reason, like inflation, changes in interest rates, or government actions. Other frequently used program trading terms are "Fair Value" and "the premium," or "spread." - Fair Value is the total value of the stocks underlying an index security plus the cost of any expenses incurred while a position is being held, such as interest and trading commissions. - The "premium" (commonly referred to as the "PREM" or "spread") is the difference between the most active S&P 500 Index Futures Contract minus the actual cash value of the S&P 500 Stock Index. That difference makes up the profit that program trading is based on. When the PREM, or spread, rises to a certain level, computer-driven "buy" programs are automatically activated by large institutional clients, who buy the individual stocks in the S&P 500 Stock Index and sell the S&P 500 Stock Index Futures Contract against those positions. When the "spread" drops to a certain level, "sell" programs activate and the exact opposite takes place. These extremely low-risk transactions allow institutional traders to capture a few points of profit before the PREM returns to normal, or Fair Value. There you have a quick look at program trading and how it works. In the days ahead we will review some companies that offer fee-based information services for individual active traders and investors, and also examine the circuit breakers and curbs used by major stock exchanges to minimize the sometimes negative effects of program trading. In the meanwhile, always use Risk Control and strategically placed exit stops to insure that the tidal waves produced by these events give you profits and prevent any erosion to your trading account! For more on Risk Control go to: https://prorightline.com/education/riskcontrol.html ======================================================================
Best of luck and have a Great Week!
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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. |