October 11, 2022 - The RightLine Report
Notes From The Editor
Common Trading Mistakes...And How to Avoid Them (Part IV)
Here's part IV of our ongoing series on trading pitfalls that can get in the way of your long-term success. Take heed of the following two mistakes; they're especially dangerous!
Mistake #9: Failure to control emotions
Bad things happen when emotions run amuck. A lack of control can lead to decisions that are misguided, risky, or just plain stupid. Frustration at missing out on a great trade, for example, can trigger a haphazard decision to jump headlong at the next potential set-up. Blind hope can lead to positions that are based on emotions, rather than technical merits. Greed can cause you to cast your stop-loss strategy aside, because you don't want to miss out on further profits.
The best traders are objective. Although they feel greed, fear, and hope - just like every other human on this blue orb - they don't let those emotions influence their decisions. They take a cool, calm, and collected approach. They vent their emotions in a constructive way, away from the intensity of live market action. Their heightened self-awareness insulates them from the dangers of emotional trading.
Mistake #10: Trading with money you can't afford to lose
It's a dream of many market junkies to reach the point where they can honestly say that trading is their profession. Can it be done? Absolutely. But if you're trading for your next rent check or car payment, trouble may be just around the corner.
The reason is simple, and directly related to the previous mistake; when you're trading for your livelihood, it's next to impossible to control your emotions. Fear over losing money can cause you to bail out of a position before it hits your stop. The need to make money can cause you to take less-than-ideal positions. And in the worst-case scenario, desperation can cause you to cast all risk management aside, holding on to losing positions indefinitely.
To avoid this scenario, never trade with money you need to live. If you make enough to live on your profits, more power to you! But always be sure that you have a cushion - a savings account, for example, or other sources of income. Trading can (and will) lead to occasional losses, and you should always be able to handle those losses without worrying about paying your bills.
Here's to profits,
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 10/11 10/11 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
SGML 28.50 -0.07 29.66 3.28/1.64 4.12
AREN 12.60 0.64 12.89 1.63/0.82 1.94
SCHL 31.27 -0.23 32.1 29.82 2.28/1.14 3.78
DK 28.16 -1.12 29.5 27.1 2.4/1.2 2.88
DSGR 27.08 -0.22 27.73 25.99 1.74/0.87 3.76
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 major US stock indices were mixed on Tuesday following news that the Bank of England has set a three-day deadline to terminate its bond buying initiative and for pension funds within the UK to rebalance their holdings. Monday the BoE announced liquidity measures and stepped in with another emergency intervention in an attempt to prevent a "fire sale" of UK bonds by desperate pension funds. In light economic headlines, small business optimism is unexpectedly up but for the ninth month in a row remains below the 48-year average. Equities headlines highlighted furniture and engineered components company Leggett & Platt (LEG $32), who lowered their full-year outlook, and Semiconductor manufacturing company KLA Corporation (KLAC $281), who stopped some of its business with China-based customers following export restrictions. Gold and oil prices were lower, treasuries were mixed, and the USD/dollar was higher.
Oct 10, 2022 Oct 11, 2022
-------------------- --------------------
Dow 29,202.88 -93.91 29,239.19 36.31
Nasdaq 10,542.10 -110.30 10,426.19 -115.91
S&P 500 3,612.39 -27.27 3,588.84 -23.55
NYSE Volume 3.84B 4.78B
NYSE Advancers 1,034 1,392
NYSE Decliners 2,143 1,827
Nasdaq Volume 4.01B 4.77B
Nasdaq Advancers 1,649 1,847
Nasdaq Decliners 2,920 2,811
New Highs/Lows
10/04 10/05 10/06 10/07 10/10 10/11
--------------------------------------------
NYSE New Highs 30 32 28 19 25 14
NYSE New Lows 78 122 163 397 426 580
Nasdaq New Highs 67 59 41 40 56 40
Nasdaq New Lows 161 199 163 401 658 824
Stocks Covered Today Stock Splits
TRADER'S TIP: "Try a Few Diamonds and Spiders!"
If you are new to shorting, a good place to start is with index "stocks" like QQQ (NASDAQ 100 Trust), DIA (Dow Diamonds), or SPY (Spiders). While they aren't actually "stocks," these popular instruments are widely traded in virtually the same fashion.
However, there is one distinct advantage. Unlike individual stocks, each index "stock" represents a broad list of securities. The DIA includes 30 stocks, the QQQ contains 100, and the SPY consists of 500. As a result, trading this type of index security lowers the risk associated with holding positions in specific companies.
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 - 3588.84 October 11, 2022
52-Week High: 4818.62
52-Week Low: 3568.45
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4087.79
Resistance 2: 3885.81
Resistance 1: 3762.73
Pivot: 3683.83
Support 1: 3560.75
Support 2: 3481.85
Support 3: 3279.87
NASDAQ Composite - 10426.19 October 11, 2022
52-Week High: 16212.23
52-Week Low: 10351.98
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 12125.34
Resistance 2: 11472.79
Resistance 1: 11062.59
Pivot: 10820.24
Support 1: 10410.04
Support 2: 10167.69
Support 3: 9515.14
Dow Industrials - 29239.19 October 11, 2022
52-Week High: 36952.65
52-Week Low: 28715.85
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 32733.92
Resistance 2: 31134.71
Resistance 1: 30215.75
Pivot: 29535.50
Support 1: 28616.54
Support 2: 27936.29
Support 3: 26337.08
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Wednesday, October 12, 2022: 12-Oct 8:30 am Producer price index, final demand 12-Oct 2 pm FOMC minutes Thursday, October 13, 2022: 13-Oct 8:30 am Consumer price index 13-Oct 8:30 am Core CPI 13-Oct 8:30 am Core CPI (three-month SAAR) 13-Oct 8:30 am CPI (year-on-year) 13-Oct 8:30 am Core CPI (year-on-year) 13-Oct 8:30 am Initial jobless claims 13-Oct 8:30 am Continuing jobless claims Friday, October 14, 2022: 14-Oct 8:30 am Retail sales 14-Oct 8:30 am Retail sales ex-motor vehicles 14-Oct 8:30 am Import price index 14-Oct 10 am UMich consumer sentiment index (early) 14-Oct 10 am UMich 5-year inflation expectations 14-Oct 10 am Business inventories 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: "Concentrate on Execution"
"The last thing you should have to worry about during market hours is where the market is going, and whether to be long or short. Your strategy will tell you all of this. You should not be concerned about the news, or even if you are making or losing money. You should not be concerned with analyzing the market, always reserve this for when the market is closed.
The only thing you should be doing during market hours is concentrating on effectively executing your strategy. If you can't execute your strategy effectively, there really is no point in trading. There are two sides to trading, strategy development and trading execution. During market hours is when you should concentrate on execution and nothing else."
~ Charlie Wright, Veteran Trader and Hedge Fund Manager
Stocks Covered in This Issue
BASIC MATERIALS SECTOR
Sigma Lithium Corporation (SGML: Basic Materials/Other Industrial Metals & Mining) - 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 Tuesday's session to close at 28.50. Anticipate the rebound to continue, and be ready to buy SGML at 29.66. Follow your entry with a trailing stop of 3.28 which can be tightened to 1.64 on a 4.12 profit. Earnings Report Date: Nov 17, 2022. Beta: 0.02. Market-Cap: 2.841B. Optionable.
COMMUNICATION SERVICES SECTOR
The Arena Group Holdings, Inc. (AREN: Communication Services/Internet Content & Information) - BULLISH BOUNCE. Up-trending stocks like AREN 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 Tuesday, AREN is poised to lift off again. To take advantage of this setup, prepare to BUY shares at 12.89 if positive price action occurs. As always, follow your entry with a trailing stop. A 1.63 trailer should work well with AREN. Tighten it to 0.82 on a 1.94 gainer. Earnings Report Date: Nov 14, 2022. Beta: 0.37. Market-Cap: 224.839M. Not Optionable.
Scholastic Corporation (SCHL: Communication Services/Publishing) - SQUEEZE PLAY. SCHL 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. SCHL is now at 31.27. We can capture price action either way by placing a BUY trigger at 32.1 and a SELL short trigger at 29.82. Once SCHL 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 2.28. When you acquire a 3.78 profit, tighten the stop to 1.14. Earnings Report Date: Dec 14, 2022. Beta: 1.03. Market-Cap: 1.076B. Optionable.
ENERGY SECTOR
Delek US Holdings, Inc. (DK: Energy/Oil & Gas Refining & Marketing) - SQUEEZE PLAY. Tuesday's trading action forced DK'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 DK 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 29.5 if DK moves higher, and place your order to SELL short at 27.1 if price declines to that level. As usual follow your entry with a trailing stop, 2.4 should be sufficient. Reduce your stop to 1.2 on a 2.88 gain. DK closed Tuesday at 28.16. Earnings Report Date: Nov 02, 2022. Beta: 1.46. Market-Cap: 2B. Optionable.
INDUSTRIALS SECTOR
Distribution Solutions Group, Inc. (DSGR: Industrials/Industrial Distribution) - SQUEEZE PLAY. A look at DSGR'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 27.73 and a SELL short trigger at 25.99. Once DSGR shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.74 and tighten to 0.87 on a 3.76 gain. DSGR closed Tuesday at 27.08. Earnings Report Date: Oct 26, 2022. Beta: N/A. Market-Cap: 526.562M. Not 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
---------------- ------- -------- ------- ------ -------
Nasdaq Inc NDAQ 7/20/2022 8/29/2022 3-for-1 Yes
Tesla TSLA 8/5/2022 8/25/2022 3-for-1 Yes
Palo Alto Net PANW 8/23/22 9/14/22 3-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
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
Click Here To Unsubscribe