October 18, 2022 - The RightLine Report
Notes From The Editor
The Dow vs. the S&P 500: Which Is More Important?
When it comes to tracking the market, media attention is usually focused most heavily on the Dow Industrial Average. Although it is good to monitor the Dow if you are trading one of it's components or DIA, the fact that it consists of only 30 stocks makes the Dow too easily manipulated to be of much help when reading the larger market.
In contrast, the S&P 500 is made up of 500 stocks representing the most powerful companies in the world. When it comes to accurately assessing market performance at critical junctions, this broad index has proven to be much more reliable than either the Dow or the Nasdaq.
Similar to how the movement of a school of fish influences the movement of each individual fish in the school, the larger market influences the price movement of the individual stocks that make up the market.
Not all stocks move in exactly the same direction and same speed as the larger market, yet the greater "school" of stocks significantly affects the price action of most individual stocks.
Bottom Line: It pays to know the pivotal price levels in the S&P 500, which we include in the Technical Analyst section of the RightLine Report This is a good rule of thumb for anyone who trades individual stocks, and especially important for trading the SPY.
Trade well,
Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 10/18 10/18 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
LTHM 28.66 0.70 29.64 27.44 2.2/1.1 3.74
SIX 20.44 0.44 19.77 1.74/0.87 2.42
TMCI 24.27 1.19 24.66 22.79 1.87/0.94 2.46
VRNS 26.71 0.54 25.33 2.52/1.26 2.4
MAXR 20.84 0.59 21.34 19.93 1.41/0.71 1.98
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
US stocks were higher on Tuesday following some tabilization in the global bond and currency markets which have been volatility of late. In economic headlines, homebuilder sentiment fell more than predicted, and the Federal Reserve Bank released an industrial production and capacity utilization report showing both categories were up more than expected. In equities, Johnson & Johnson(JNJ $166) and Goldman Sachs (GS $314) beat quarterly earnings estimates, as did Lockheed Martin(LMT $432) who also reaffirmed their full-year guidance and announced a $4 billion in accelerated share repurchasing during the final quarter of the year. Oil prices and gold were lower, the USD/dollar and treasuries closed near even.
Oct 17, 2022 Oct 18, 2022
-------------------- --------------------
Dow 30,185.82 550.99 30,523.80 337.98
Nasdaq 10,675.80 354.41 10,772.40 96.60
S&P 500 3,677.95 94.88 3,719.98 42.03
NYSE Volume 4.37B 4.5B
NYSE Advancers 2,670 2,301
NYSE Decliners 552 911
Nasdaq Volume 4.46B 5.08B
Nasdaq Advancers 3,469 3,008
Nasdaq Decliners 1,163 1,597
New Highs/Lows
10/11 10/12 10/13 10/14 10/17 10/18
--------------------------------------------
NYSE New Highs 14 8 29 29 43 40
NYSE New Lows 580 464 934 218 120 115
Nasdaq New Highs 40 31 71 61 70 76
Nasdaq New Lows 824 613 958 336 208 157
Stocks Covered Today Stock Splits
TRADER'S TIP: "Sometimes You Gotta ..."
The fear of "missing out" can cloud a trader's judgment, so be sure to base all buy or sell decisions on careful planning instead of emotional reactions. The market is full of opportunities - there's plenty for everyone. Rushing in can lead to problems, so remember the old saying "sometimes you gotta slow down to go fast!"
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 - 3719.98 October 18, 2022
52-Week High: 4818.62
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4036.39
Resistance 2: 3815.97
Resistance 1: 3699.51
Pivot: 3595.55
Support 1: 3479.09
Support 2: 3375.12
Support 3: 3154.70
NASDAQ Composite - 10772.40 October 18, 2022
52-Week High: 16212.23
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 11748.02
Resistance 2: 11070.16
Resistance 1: 10695.77
Pivot: 10392.30
Support 1: 10017.91
Support 2: 9714.44
Support 3: 9036.58
Dow Industrials - 30523.80 October 18, 2022
52-Week High: 36952.65
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 33110.62
Resistance 2: 31342.74
Resistance 1: 30488.78
Pivot: 29574.86
Support 1: 28720.90
Support 2: 27806.98
Support 3: 26039.10
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, October 24, 2022: 17-Oct 8:30 am Empire State manufacturing index Tuesday, October 18, 2022: 18-Oct 9:15 am Industrial production index 18-Oct 9:15 am Capacity utilization rate 18-Oct 10 am NAHB home builders' index Wednesday, October 19, 2022: 19-Oct 8:30 am Building permits (SAAR) 19-Oct 8:30 am Housing starts (SAAR) 19-Oct 2 pm Beige Book Thursday, October 20, 2022: 20-Oct 8:30 am Initial jobless claims 20-Oct 8:30 am Continuing jobless claims 20-Oct 8:30 am Philadelphia Fed manufacturing index 20-Oct 10 am Existing home sales (SAAR) 20-Oct 10 am Leading economic indicators Friday, October 21, 2022: 21-Oct 12 noon Index of common inflation expectations, 5-10 years 21-Oct 12 noon Index of common inflation expectations, 10 year 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: "Using The Gap Open Tactic When Selling Short"
The Gap Open Tactic works as well when we sell short as it does when we buy a stock. If the stock gaps down at the open, wait for it to take out its low of the first half-hour then enter 0.25 below that point. For more on the Gap Open Tactic go to:http://www.rightline.net/education/gapopen.html
Stocks Covered in This Issue
BASIC MATERIALS SECTOR
Livent Corporation (LTHM: Basic Materials/Specialty Chemicals) - SQUEEZE PLAY. Tuesday's trading session left LTHM in a very narrow price range after buyers and sellers fought to a near stalemate. Both sides are looking for some traction, and a breakout either way could provide a nice gain in the short term. To get aboard, set your BUY trigger at 29.64 and your SELL short trigger at 27.44. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 2.2 trailing stop. Once you have a 3.74 profit, reduce the stop to 1.1. Earnings Report Date: Nov 01, 2022. Beta: 1.80. Market-Cap: 5.138B. Optionable.
CONSUMER CYCLICAL SECTOR
Six Flags Entertainment Corporation (SIX: Consumer Cyclical/Leisure) - BEARISH U-TURN. SIX's chronic decline over the past weeks was relieved by a recent upward bounce that has boosted hope for weary shareholders. Unfortunately for them, Tuesday's price action near moving average support indicates the bullish rebound may be over. If this turns out to be the case, short-sellers can enter a SELL position at 19.77. Control risk with a 1.74 stop that can be resized to 0.87 on a gain of 2.42. SIX closed at 20.44 on Tuesday. Earnings Report Date: Nov 10, 2022. Beta: 2.16. Market-Cap: 1.666B. Optionable.
HEALTHCARE SECTOR
Treace Medical Concepts, Inc. (TMCI: Healthcare/Medical Devices) - SQUEEZE PLAY. The ticker for Tuesday's session shows TMCI is now stuck in a tight price band. With the cyclical contraction and expansion nature of volatility in force, we should see a new period of price expansion in the days ahead. To improve the odds of catching the next directional wave, place a BUY trigger at 24.66 and a SELL short trigger at 22.79. When TMCI starts moving out of its narrow range, your order will be triggered. Once you're in the trade, cancel the opposing trigger and set a 1.87 trailing stop. Upon reaching a 2.46 profit, resize the stop to 0.94. Earnings Report Date: Nov 02, 2022. Beta: N/A. Market-Cap: 1.345B. Optionable.
TECHNOLOGY SECTOR
Varonis Systems, Inc. (VRNS: Technology/Software-Infrastructure) - BEARISH U-TURN. A quick look at the charts for VRNS show that despite the upward pressure caused by recent buying, the weekly downtrend is still in place. Tuesday's chart shows a potential return to that downtrend is in the works. This Bearish U-Turn set-up offers a potential entry point for a SHORT play. Set your trigger to SELL shares at 25.33, and follow your entry with a trailing stop of 2.52. Tighten the stop to 1.26 after reaching a 2.4 profit. VRNS ended the latest session at 26.71. Earnings Report Date: Oct 31, 2022. Beta: 1.08. Market-Cap: 2.935B. Optionable.
Maxar Technologies Inc. (MAXR: Technology/Communication Equipment) - SQUEEZE PLAY. MAXR shareholders know what it feels like to be squeezed. Tuesday's slim price range reveals uncertainty on both sides of the table, a situation which often resolves itself by either Bears or Bulls quickly gaining a clear advantage. The question is "who will win?" Near-term market action tell us whether we should sell short or we should buy shares instead. MAXR closed Tuesday at 20.84. The plan is to enter in the right direction by placing a BUY trigger at 21.34 and a SELL short trigger at 19.93. Once MAXR establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.41. After you've collected a 1.98 profit, tighten the stop to 0.71. Earnings Report Date: Nov 01, 2022. Beta: 1.37. Market-Cap: 1.546B. 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
---------------- ------- -------- ------- ------ -------
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.
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