October 12, 2023 - The RightLine Report
Notes From The Editor
Immature traders often scoff at the idea that an appropriate mindset and a good attitude is needed to consistently make money in the markets. These arrogant guys never admit to a losing trade, and constantly honed their one-upmanship skills to promote their narcissistic self images. Unfortunately, their chosen style of "self-confidence" usually leads them to blindly self-destruct.
In the real world, traders who lack genuine confidence in their methods and abilities inevitably fail. This is due in large part to the fact they haven't developed the humility required to be truly successful. The absence of any self-control and respect for others reveals an inability to follow reasonable guidelines, hence their ever-changing "rules." As a result, they inevitably give up and move on to something else.
Traders who are respectful and understand what they are doing are much more inclined to be successful. They generally stick with the details of a trading plan, even when faced with challenges and temporary setbacks.
So why is mental and emotional conditioning so important? No system for making money in the market is perfect - all of us will go through periods of losses. It's unavoidable. Losses are a part of any trading or investment strategy. Whenever this happens, the temptation to quit is much easier to overcome when we have the proper frame of mind.
Giving up insures failure. Persistence and experience combined with risk management insures victory. Realizing that conflicting actions result from different mindsets allows us to wisely choose between them. A negative emotional state virtually guarantees bad choices. A confident, calm and assertive state of mind allows us to see beyond a short-term setback.
When faced with making choices, I always think about this somewhat paradoxical old saying: "Good judgment comes from experience, and experience comes from bad judgment."
Live and learn... Everyone has said, "If I'd only known then what I know now." Well guess what. You now know what you wish you'd know then. And with the right attitude you can be successful trading stocks despite the mistakes you make. Just do your best to trade your best. On those rare occasions when you don't, you will make the best of it.
Trade well!
~ Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 10/12 10/12 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
BFH 31.99 -0.30 30.46 2.11/1.06 1.72
WAL 45.47 -0.03 46.28 43.07 3.21/1.61 3.24
ARWR 25.88 -0.58 25.07 1.88/0.94 2.16
LMB 30.03 0.06 31.1 28.73 2.37/1.19 3.34
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
On Thursday, the S&P 500 Index (SPX) and the Nasdaq Composite (COMP) experienced declines, putting an end to a four-day winning streak. These losses were attributed to an unexpectedly robust inflation report and the subsequent increase in Treasury yields.
Early on Thursday, the Labor Department published its Consumer Price Index (CPI) for September, revealing a 0.4% increase from the previous month. While this was a decrease from the 0.6% rise seen in August, it still exceeded analysts' expectations of a 0.3% gain. Core CPI, which excludes food and energy prices, matched predictions with a 0.3% increase. These CPI figures followed a separate report on producer prices that had also surpassed expectations.
A less robust than expected weekly Treasury auction indicated weaker demand for long-term bonds, pushing yields higher and adding pressure to the stock market. The inverse relationship between bond yields and prices suggested that investors might be seeking higher yields to compensate for the perceived risk of prolonged elevated interest rates and inflation.
In summary, this week's inflation data, while showing signs of strength, were supportive of the expectation that the Federal Reserve can avoid further interest rate hikes. Interest rates are expected to stay relatively high for a while, but it still appears that the Federal Reserve won't be raising rates again this year.
Oct 11, 2023 Oct 12, 2023
-------------------- --------------------
Dow 33,804.87 65.57 33,631.14 -173.73
Nasdaq 13,659.68 96.83 13,574.22 -85.46
S&P 500 4,376.95 18.71 4,349.61 -27.34
NYSE Volume 3.61B
NYSE Advancers 1,759 486
NYSE Decliners 1,114 2,405
Nasdaq Volume 4.17B 4.87B
Nasdaq Advancers 1,908 1,113
Nasdaq Decliners 2,312 3,174
New Highs/Lows
10/05 10/06 10/09 10/10 10/11 10/12
--------------------------------------------
NYSE New Highs 10 27 28 42 35 37
NYSE New Lows 221 99 27 52 166
Nasdaq New Highs 9 33 39 55 50 42
Nasdaq New Lows 93 314 321 179 210 331
Stocks Covered Today Stock Splits
TRADER'S TIP: "Your Trading Journal"
A Trading Journal has no physical specifications - it can be a notebook, pages you put in a binder, a spreadsheet or possibly copies of trade confirmations with notes written on them. Choose whatever is easiest for you to work with, since it's the details inside the journal that are important.
At a minimum, the content of your trading Journal should be broken into three major categories:
1) The Numbers (date, symbol, position size, cost, gain or loss, etc.)
2) The Decision-Making Process (Why did you chose to do what you did?)
3) What Can I Learn From the Trade?
This is where the rubber meets the road! Although a trade may end when you exit a position, this is often when the learning begins. A trading journal or diary will help answer the questions, "Now that I see the past with 20/20 vision, what would I have done differently? What did I do right? Did my emotional state of mind affect my success? Did I follow my trading plan? Did I use Risk Control? Did I set my stop at reasonable level?"
When you review your trades after the fact, it's amazing how easy it is to find important information that will help you with your next trades. We can't force stocks to do what we want them to, but we can obtain valuable insight from each trade we make. Moreover, the difference between progress and stagnation is our ability to learn from our experiences.
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 - 4349.61 October 12, 2023
52-Week High: 4607.07
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4498.31
Resistance 2: 4390.66
Resistance 1: 4349.58
Pivot: 4283.01
Support 1: 4241.93
Support 2: 4175.36
Support 3: 4067.71
NASDAQ Composite - 13574.22 October 12, 2023
52-Week High: 14446.55
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 14231.41
Resistance 2: 13767.74
Resistance 1: 13599.54
Pivot: 13304.07
Support 1: 13135.87
Support 2: 12840.40
Support 3: 12376.73
Dow Industrials - 33631.14 October 12, 2023
52-Week High: 35679.13
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 34692.23
Resistance 2: 33981.48
Resistance 1: 33694.53
Pivot: 33270.73
Support 1: 32983.78
Support 2: 32559.98
Support 3: 31849.23
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, OCT 9 9:00 am Dallas Fed President Logan speaks 12:50 pm Fed Gov. Jefferson speaks TUESDAY, OCT 10 6:00 am NFIB optimism index 10:00 am Wholesale inventories WEDNESDAY, OCT 11 8:30 am Producer price index 8"30 am Core PPI 8:30 am PPI year over year 8:30 am Core PPI year over year 2:00 pm Minutes of Fed's September FOMC meeting THURSDAY, OCT 12 8:30 am Initial jobless claims 8:30 am Consumer price index 8"30 am Core CPI 8:30 am CPI year over year 8:30 am Core CPI year over year FRIDAY, OCT 13 8:30 am Import price index 8:30 am Import price index minus fuel 10:00 am Consumer sentiment (preliminary) 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: "Hot Zones"
While up and down price behavior reflects the impact of news and sentiment, heavy hitters like market makers and institutional traders use technical analysis to locate potential breakout and reversal zones. Some of these areas are easy to see, for they line up with previous high and low pivot points. Others are less obvious. Trend lines, Bollinger Bands, Fibonacci overlays, and other technical tools are used to locate the hot spots.
Where two or more of these converge, support or resistance is stronger. Bullish moves beyond these limits occur when sellers give in and join the buyers. Bearish moves occur in the same fashion, only in reverse. As traders we can anticipate these points, and manage positions by preparing for possible breakouts or reversals at these junctions.
It doesn't pay to be stubborn! If a trade tells us it wants to break through support or resistance, we can play it that way. If it decides to reverse, we can follow along. One measure of a trader's strength is the ability to quickly adapt and go with the current price flow. To a large degree, this is what is meant by the saying, "let the market tell you what to do."
Stocks Covered in This Issue
FINANCIAL SERVICES SECTOR
Bread Financial Holdings, Inc. (BFH: Financial Services/Credit Services) - BEARISH U-TURN. During Thursday's trading action, BFH encountered solid resistance near its 50 EMA (Exponential Moving Average) and looks ready for a possible reversal. The resulting Bearish U-Turn set-up is the basis for a potential SHORT play, so get ready to enter a position in BFH on a further decline to our trigger at 30.46. Set a 2.11 trailing stop, tightening to 1.06 on a 1.72 gain. BFH ended the latest session at 31.99. Earnings Report Date: Oct 26, 2023. Beta: 2.00. Market-Cap: 1.607B. Optionable.
Western Alliance Bancorporation (WAL: Financial Services/Banks - Regional) - 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. WAL traders reached this state of stand-off on Thursday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 46.28 and a SELL short trigger at 43.07. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 3.21 which can be tightened to 1.61 on a 3.24 gain. WAL closed Thursday at 45.47. Earnings Report Date: Oct 18, 2023. Beta: 1.40. Market-Cap: 4.979B. Optionable.
HEALTHCARE SECTOR
Arrowhead Pharmaceuticals, Inc. (ARWR: Healthcare/Biotechnology) - BEARISH U-TURN. Shares of ARWR have experienced the pain of selling pressure for a while, yet a recent bounce has given shareholders some welcome yet perhaps temporary relief. On Thursday the upward bounce ran into a brick wall at a Moving Average. ARWR now appears ready to head lower again. A continuation of this bearish reversal would signal a retracement of the recent gains, so prepare for SHORT entries at 25.07, using a 1.88 stop. Tighten to 0.94 on a gain of 2.16. Thursday's closing tick was 25.88. Earnings Report Date: Nov 27, 2023. Beta: 0.87. Market-Cap: 2.774B. Optionable.
INDUSTRIALS SECTOR
Limbach Holdings, Inc. (LMB: Industrials/Engineering & Construction) - SQUEEZE PLAY. LMB traders on both sides of the fence are now locked in a head-to-head shootout. Thursday's price range was the narrowest in over a week, as neither Bears or Bulls have been able to clearly gain the upper hand. This gives us an opportunity to catch the next directional move with little risk of loss. To do this we'll place both a long and a short trigger with a BUY at 31.1 and a SELL short trigger at 28.73. When one of the orders is filled, cancel the remaining order and enter a 2.37 trailing stop. When you've reached a 3.34 paper profit, tighten the stop to 1.19. LMB closed at 30.03 on Thursday. Earnings Report Date: Nov 07, 2023. Beta: 1.10. Market-Cap: 330.432M. 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
---------------- ------- -------- ------- ------ -------
NOTE: The number of stock split announcments goes up during Bull markets,
and goes down during Bear market cycles. There are currently no upcoming
stock splits that meet RightLine's proprietary criteria for split ratio,
trading volume and price action.
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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