Notes From The Editor

Trading Rule #1 - Take Full Responsibility

Even though the dictionary has a different meaning for the word "responsibility," I like to think of it as the ability to respond appropriately to any challenge or situation. Awareness of our "Responsibility" leads to massive improvement in our "Response Ability." Enhanced response-ability lets us make effective changes in the way we approach the stock market. All it takes is a little practice and a lot of humility ...

Many years ago I told a friend that a well-known broker in Chicago was managing my investment account. I also told him that after only three months my account was down more than 30-percent. He said, "Wow Thomas, at that rate all your money will be gone in six months!"

I replied, "Yes, I know! What do you think should I do?" He scratched his head, thought for a few seconds and said, "I'm not much of an investor, but I'm sure I can beat your Chicago broker." Then with a mischievous grin he said, "You give me the rest of the money in your account, and I guarantee it will take at least SEVEN months before it's all gone!"

Of course he was kidding, and believe me I got the point. My friend was trying to wake me up to the fact that I needed to take responsibility for how my account was managed. Now I'm grateful that he was willing to say what he did, for it helped me to snap out of my investor-hypnotic trance and get serious about a real financial education.

Someone please tell me why the average investor spends virtually zero time learning how to trade, yet still expects to make money in stocks?

By the way, there are some good brokers out there. A few even use the RightLine Reports to help guide their clients in a positive direction. In fact, our Reports make it easier for brokers to explain why it is so important for individuals to take full responsibility for their financial outcome.

And in my humble opinion, deciding to take full responsibility is the most important step any trader can take.

- Thomas Sutton, Editor

Quick List

    
Stock     11/08     11/08      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

RCKY      23.06      0.18     23.65     22.01        1.64/0.82         2
AMAL      23.77     -0.03     24.25                  1.95/0.98      1.44
ALBO      22.15     -0.23                                    /         0
NTNX      26.65      0.10      27.4                     1.99/1      2.14
AEHR      21.66      0.34     22.33     20.42        1.91/0.96      3.64

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

Questions? Send us an email using our Contact Form.

Market Summary

The major US stock indexes were higher on Tuesday following the release of data from a relatively light economic docket showing that Small Business Optimism has gone down in line with expectations. On the equities front, earnings news headlines included Lyft (LYFT $11) posting a bigger loss than predicted, while DuPont (DD $66) and Activision Blizzard (ATVI $72) both topped profit estimates. Oil prices, treasury yields and the USD/dollar finished the session lower, while gold surged higher.

                        Nov 7, 2022            Nov 8, 2022    
                  --------------------   --------------------
Dow                 32,827.00   423.78     33,160.83   333.83
Nasdaq              10,564.52    89.27     10,616.20    51.68
S&P 500              3,806.80    36.25      3,828.11    21.31

NYSE Volume                      4.39B                  4.61B
NYSE Advancers                   2,007                  1,947
NYSE Decliners                   1,155                  1,232

Nasdaq Volume                     4.5B                  5.15B
Nasdaq Advancers                 2,549                  2,366
Nasdaq Decliners                 2,088                  2,213

                                 New Highs/Lows

                   11/01  11/02  11/03  11/04  11/07  11/08
                 --------------------------------------------
NYSE New Highs        98     67     52     85     79     77
NYSE New Lows         89    142    264    217    145     97
Nasdaq New Highs     140    116     73     93    101    111
Nasdaq New Lows      162    249    374    353    272    297
   

TRADER'S TIP: "Changing Horses In The Middle Of The Stream"

Here's another good reason to avoid changing rules in the middle of a trade. Waiting to finish the trade before making rule changes emphasizes the importance of having a "formal" set of trading procedures. Including a rule that regulates how and when you change your rules implies that you respect for your own rules. This one rule alone will improve your bottom line and set you apart from casual traders with no consistent methods.

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 - 3828.11 November 8, 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

NASDAQ Composite - 10616.20 November 8, 2022

52-Week High: 16212.23
52-Week Low: 10088.83
Daily Trend: DOWN
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 - 33160.83 November 8, 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
 

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

TRADER'S TIP: "Looking for a Good Fortune Teller?"

You don't really need a psychic if you plan each position with a "what if" approach. Before entering any trade always ask - "What will I do if price moves in my favor, and what will I do if it moves against me?" Since most traders and investors never consider these questions at all, simply writing down specific answers will put you WAY ahead of the game. Remember to set any bias aside, and play the hand that's dealt.

Stocks Covered in This Issue

CONSUMER CYCLICAL SECTOR

Rocky Brands, Inc. (RCKY: Consumer Cyclical/Footwear & Accessories) - 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. RCKY traders reached this state of stand-off on Tuesday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 23.65 and a SELL short trigger at 22.01. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.64 which can be tightened to 0.82 on a 2 gain. RCKY closed Tuesday at 23.06. Earnings Report Date: N/A. Beta: 0.82. Market-Cap: 168.851M. Not Optionable.

FINANCIAL SERVICES SECTOR

Amalgamated Financial Corp. (AMAL: Financial Services/Banks-Regional) - BULLISH BOUNCE. Among other strengths, the Bullish Bounce protects traders from buying a stock "at the top" of its current cycle. The entry into this setup always takes place in upward-moving stocks that have retreated a bit under normal conditions. Now sitting at 23.77, AMAL is on our radar for a BUY entry at 24.25. If you purchase shares of AMAL, be sure to also place a trailing stop of 1.95. Snug it up to 0.98 on a 1.44 gain. Earnings Report Date: Jan 25, 2023. Beta: 0.78. Market-Cap: 738.843M. Optionable.

HEALTHCARE SECTOR

Albireo Pharma, Inc. (ALBO: Healthcare/Biotechnology) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in ALBO's narrowest trading range of the past seven sessions. With neither group able to take complete control on Tuesday, 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 and a SELL order at . Regardless of which order is triggered, cancel the other one and follow your entry with a trailing stop. Tighten the stop to once you have a 0 gain. ALBO closed Tuesday at 22.15. Earnings Report Date: Nov 08, 2022. Beta: 0.79. Market-Cap: 434.417M. Optionable.

TECHNOLOGY SECTOR

Nutanix, Inc. (NTNX: Technology/Software-Infrastructure) - BULLISH BOUNCE. Everyone familiar with price charts knows that a stock tends to bounce its way higher rather than move in a straight line. The lower levels of these short-term rebounds offer a safe and often early entry into stocks that are in the process of establishing longer-term uptrends. NTNX's reaction to support on Tuesday created a Bullish Bounce setup with a BUY entry trigger at 27.4. Use a 1.99 trailing stop, which should work well with NTNX's typical daily range. Tighten it to 1 on a 2.14 profit. NTNX closed at 26.65 on Tuesday. Earnings Report Date: Nov 30, 2022. Beta: 1.23. Market-Cap: 6.222B. Optionable.

Aehr Test Systems (AEHR: Technology/Semiconductor Equipment & Materials) - SQUEEZE PLAY. Trader indecision has put AEHR squarely in the center of a Bull versus Bear standoff. This tight spot should soon give way to a clear winner in the short-term, and we want to be in position for the move. To do that we've set a BUY entry at 22.33 and a SELL short entry at 20.42. Now it's up to AEHR to show us which entry will be filled. Once the trade is underway place a 1.91 trailing stop, which can be tightened to 0.96 after you achieve a 3.64 profit. AEHR closed on Tuesday at 21.66. Earnings Report Date: Jan 04, 2023. Beta: 1.65. Market-Cap: 595.55M. 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  
---------------- -------     --------    -------     ------  -------   
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.

Disclaimer

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