October 17, 2023 - The RightLine Report
Notes From The Editor
As traders we often focus on the short-term, yet the larger market is made up of buyers and sellers in all time frames. This huge crowd tends to behave in repetitive ways as they respond to a wide variety of events. When given an adequate stimulus such as an important news event or a significant moving average, the market always reacts.
Due to the emotional nature of crowd psychology, these reactions quickly turn into over-reactions. As word spreads, more and more individuals line up like dominos. Since greed and fear are the two basic motives behind emotional decisions, this chain reaction often leads to temporary euphoria when Bulls are in charge, or panic when Bears take over.
It certainly pays to be aware of the forces that drive folks to either buy or sell. Price movement is a direct result of the market's reaction to any stimulus. Price charts are the footprints of the market. In any chosen time frame, charts allow us to locate the optimum price zones where the crowd is likely to over-react, or where the crowd's over reaction has finally reached its limit.
These pivotal intersections are where trades can be entered or exited with high potential for profit and low risk for loss. This is an important component in the RightLine approach to trading. When used with our Risk Control System this method virtually eliminates the need to predict market direction. However, some of us just can't resist the temptation to try a little market "forecasting" from time to time.
If you find yourself in this group (as we all do sometimes) just remember this; your ability to accurately forecast price direction depends on your ability to read the market's reaction whenever price reaches important support or resistance levels.
Trade well!
Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 10/17 10/17 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
RBLX 31.00 0.59 31.62 2.53/1.27 1.94
INMD 21.23 -0.09 22.31 20.41 1.9/0.95 2.18
ZLAB 24.94 -0.09 25.62 23.98 1.64/0.82 2.06
CORT 28.33 0.23 28.93 27.24 1.69/0.85 2.86
FORM 34.30 0.02 35.25 3.62/1.81 2.46
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
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Stocks Covered Today Stock Splits
Market Summary
The S&P 500 Index (SPX) and Dow Jones Industrial Average (DJI) kicked off Tuesday on a strong note but later lost momentum to close near even as an unexpectedly robust retail sales report prompted another uptick in Treasury yields, leading investors to reassess their inflation and interest rate outlook.
The 10-year Treasury note yield (TNX) came close to its recent peak of 4.90% after the Commerce Department's September retail sales report surprisingly indicated that consumers continued to spend, even with the Federal Reserve implementing interest rates at their highest point in 22 years to curb inflation.
Later in the day, the Atlanta Federal Reserve contributed to the stock market pressure by revising its third-quarter economic growth forecast to 5.4%, up from the previous 5.1%.The Atlanta GDP upgrade strengthens the notion that third-quarter growth outperformed forecasts, thereby reinforcing the Federal Reserve's dedication to sustaining elevated interest rates for an extended duration.
Despite stronger-than-anticipated earnings reports from companies such as Goldman Sachs (GS), Bank of America (BAC), and Johnson & Johnson (JNJ), concerns over how the Fed would respond to these recent signs of economic resilience took precedence.
echnology shares were among the weakest performers, with the Philadelphia Semiconductor Index (SOX) experiencing a decline of over 1%. Conversely, banks and retailers performed better, with the KBW Regional Banking Index (KRX) climbing 2% and reaching a nearly four-week high. Small-cap stocks also had a good day, as the Russell 2000 Index (RUT) gained over 1%.
Oct 16, 2023 Oct 17, 2023
-------------------- --------------------
Dow 33,984.54 314.25 33,997.65 13.11
Nasdaq 13,567.98 160.75 13,533.75 -34.24
S&P 500 4,373.63 45.85 4,373.20 -0.43
NYSE Volume 3.41B 3.81B
NYSE Advancers 2,132 1,686
NYSE Decliners 758 1,203
Nasdaq Volume 4.32B 4.43B
Nasdaq Advancers 2,773 2,430
Nasdaq Decliners 1,467 1,790
New Highs/Lows
10/10 10/11 10/12 10/13 10/16 10/17
--------------------------------------------
NYSE New Highs 42 35 37 27 38 53
NYSE New Lows 27 52 166 162 100 140
Nasdaq New Highs 55 50 42 30 38 43
Nasdaq New Lows 179 210 331 347 233 190
Stocks Covered Today Stock Splits
TRADER'S TIP: "Stocks, Motion, and Consolidation"
As Newton's Theory describes, an object in motion tends to remain in motion. In a similar fashion, once a trend is underway, it usually remains in motion with periodic periods of rest and consolidation. This is the reason that stocks generally leave a period of consolidation in the same direction that they entered it. Unless evidence based on chart action indicates otherwise, it is usually a good idea to trade in the direction of a stock prior to its entry into consolidation.
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 - 4373.20 October 17, 2023
52-Week High: 4607.07
52-Week Low: 3638.65
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4536.59
Resistance 2: 4434.53
Resistance 1: 4381.15
Pivot: 4332.47
Support 1: 4279.09
Support 2: 4230.41
Support 3: 4128.35
NASDAQ Composite - 13533.75 October 17, 2023
52-Week High: 14446.55
52-Week Low: 10207.47
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 14339.60
Resistance 2: 13902.94
Resistance 1: 13655.08
Pivot: 13466.28
Support 1: 13218.42
Support 2: 13029.62
Support 3: 12592.96
Dow Industrials - 33997.65 October 17, 2023
52-Week High: 35679.13
52-Week Low: 30206.28
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 35035.29
Resistance 2: 34331.26
Resistance 1: 34000.77
Pivot: 33627.23
Support 1: 33296.74
Support 2: 32923.20
Support 3: 32219.17
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, OCT. 16 8:30 am Empire State manufacturing survey 10:30 am Philadelphia Fed President Patrick Harker speaks 4:30 pm Philadelphia Fed President Patrick Harker speaks TUESDAY, OCT. 17 8:30 am U.S. retail sales 8:30 am Retail sales minus autos 9:15 am Industrial production 9:15 am Capacity utilization 10:30 am Fed Gov. Michelle Bowman speaks 10:00 am Business inventories Aug. 10:00 am Home builder confidence index 10:45 am Richmond Fed President Tom Barkin speaks 10:30 am Minneapolis Fed President Neel Kashkari speaks WEDNESDAY, OCT. 18 8:30 am Housing starts 8:30 am Building permits 12 pm Fed Gov. Chris Waller speaks 12:30 pm New York Fed President John Williams speaks 2:00 pm Fed Beige Book 6:55 pm Fed Gov. Lisa Cook speaks THURSDAY, OCT. 19 8:30 am Initial jobless claims 8:30 am Philadelphia Fed manufacturing survey 10:00 am Existing home sales 10:00 am U.S. leading economic indicators 12:00 pm Fed Chairman Jerome Powell speaks 1:20 pm Chicago Fed President Austan Goolsbee speaks 1:30 pm Fed Vice-Chair for Banking Michael Barr speaks 4:00 pm Atlanta Fed President Raphael Bostic speaks 6:40 pm Dallas Fed President Lorie Logan speaks FRIDAY, OCT. 20 12:15 pm Cleveland Fed President Loretta Mester speaks 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: "Time, Risk, and Reward"
Profit is the reward traders get for doing the right things at the right time. The objective is to be in a trade for the least amount of time possible in order to minimize risk, yet long enough to realize the existing profit potential. While risk tends to increase over time, profit potential doesn't. As a result, holding onto a slightly profitable trade for too long raises risk enough to offset any profit potential.
Stocks Covered in This Issue
COMMUNICATION SERVICES SECTOR
Roblox Corporation (RBLX: Communication Services/Electronic Gaming & Multimedia) - BULLISH BOUNCE. Up-trending stocks like RBLX 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, RBLX is poised to lift off again. To take advantage of this setup, prepare to BUY shares at 31.62 if positive price action occurs. As always, follow your entry with a trailing stop. A 2.53 trailer should work well with RBLX. Tighten it to 1.27 on a 1.94 gainer. Earnings Report Date: Nov 08, 2023. Beta: 1.60. Market-Cap: 19.12B. Optionable.
HEALTHCARE SECTOR
InMode Ltd. (INMD: Healthcare/Medical Devices) - SQUEEZE PLAY. Traders are feeling the pressure as INMD's intra-day price range on Tuesday shrunk to the narrowest spread in over a week. The tension between buyers and sellers should provide enough pent-up engergy for a breakout move in the days ahead, so get ready to trade with the new trend. To achieve that, place a BUY entry at 22.31 and a SELL short entry at 20.41. INMD's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.9 trailing stop. Tighten it to 0.95 after you get a 2.18 gain. INMD closed Tuesday at 21.23. Earnings Report Date: Nov 02, 2023. Beta: 2.18. Market-Cap: 1.767B. Optionable.
Zai Lab Limited (ZLAB: Healthcare/Biotechnology) - SQUEEZE PLAY. Tuesday's narrow price range has created a potentially profitable setup in ZLAB, as sellers and buyers find themselves in a near tie for control of price direction. The next short-term trend could go either way, so prepare for a move out of the draw within the next day or so. Set a BUY entry at 25.62 and a SELL short entry at 23.98. Let ZLAB's price action determine your long or short entry. Once the order is filled, place a 1.64 trailing stop, and tighten it to 0.82 upon getting a 2.06 gain. ZLAB closed Tuesday at 24.94. Earnings Report Date: Nov 07, 2023. Beta: 1.06. Market-Cap: 2.465B. Optionable.
Corcept Therapeutics Incorporated (CORT: Healthcare/Biotechnology) - SQUEEZE PLAY. A look at CORT'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 28.93 and a SELL short trigger at 27.24. Once CORT shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.69 and tighten to 0.85 on a 2.86 gain. CORT closed Tuesday at 28.33. Earnings Report Date: Nov 01, 2023. Beta: 0.43. Market-Cap: 2.905B. Optionable.
TECHNOLOGY SECTOR
FormFactor, Inc. (FORM: Technology/Semiconductors) - BULLISH BOUNCE. If you are looking for another bouncer with profits in mind, FORM 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 34.30, plan to buy shares at 35.25 and use a 3.62 trailing stop. Tighten the stop to 1.81 on a 2.46 gain. Earnings Report Date: Nov 01, 2023. Beta: 1.19. Market-Cap: 2.664B. 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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