October 19, 2023 - The RightLine Report
Notes From The Editor
Think education is expensive? Try ignorance. RightLine embraced this wisdom back in 1997 and adopted it as a company motto. Ever since, we have stressed the importance of personal trading education as a doorway to financial betterment. As constant learners in the world of markets, we understand that each day brings fresh challenges, and within these challenges, we discover new prospects. Certainly, obtaining an education demands effort, but, as the saying goes, it's far less costly than ignorance.
Regrettably, many investors, often without realizing it, opt for the path of "trying ignorance." While some still regard stock trading as a gamble, their lack of knowledge often bars them from some of the most valuable profit-generating tools and training accessible.
Trading stands as a highly valuable resource for any market enthusiast, as it efficiently imparts profit-generating skills. I can hardly think of a more efficient method for condensing a wealth of practical experience into such a brief span of time. Once you've mastered the art of trading, you can apply your skills across any time frame, from minutes to years. The repetitive process of strategic planning, executing live trades, implementing risk management, and steering trades towards the exit sharpens your abilities at an astonishing rate.
Regardless of the approach one selects for learning or how they perceive the fluctuations of stock prices, we can be sure that market cycles will keep on repeating. There will be variations in the magnitude of ascents and descents between the reversal points, but these upward and downward cycles will persist, spanning all time frames.
Since these cycles are a certainty, it follows that to succeed in the market, adopting the role of a student is the wisest choice. Why? Because this viewpoint enables us to utilize the knowledge we amass to refine our abilities. Students are open to regarding mistakes as an integral part of the learning journey and are ready to make adjustments along the way.
The wisdom gleaned in the role of a student is formidable. It empowers us to attribute great worth to the experience of the voyage, in addition to the destination. The advantages of embracing this mindset are tangible, and once you're prepared, you can essentially set your own value.
Trade wisely,
Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 10/19 10/19 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
ONON 25.27 0.03 25.95 24.24 1.71/0.86 2.6
VIST 31.22 0.03 32 29.87 2.13/1.07 2.62
UPST 26.68 -0.12 27.76 25.42 2.34/1.17 3.04
RVMD 29.00 -1.50 30.66 27.99 2.67/1.34 2.76
MPTI 27.49 0.45 27.92 25.89 2.03/1.02 2.54
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
US stocks declined for a third consecutive day, pushing both the S&P 500 Index (SPX) and the Nasdaq Composite (COMP) to their lowest levels in two weeks. This drop was accompanied by the 10-year Treasury yield (TNX) nearing the significant 5% mark. Federal Reserve Chair Jerome Powell, in a speech at the Economic Club of New York, reinforced expectations that the central bank will maintain higher interest rates for an extended period.
Powell recognized a decrease in price pressures but stressed that the Federal Reserve still has work to do to ensure sustainable inflation at its long-term target of 2%. Despite Powell's comments largely echoing his earlier statements, the speech coincided with the 10-year yield reaching 4.996%, its highest level since July 2007. Powell's comments briefly created optimism among investors before they realized that his message was in line with market expectations.
Multiple uncertainties are currently weighing on equities, including rising crude oil prices, political turmoil in Washington, D.C., and the ongoing conflict between Israel and Hamas. These concerns seem to be outweighing any positive impact from expectations that the Fed will keep interest rates on hold.
In summary, US stock markets faced a challenging day marked by declining stock values and rising Treasury yields. Powell's comments and the continuing geopolitical issues added to the overall market unease. Powell's speech and the performance of Treasury yields did somewhat diminish the impact of earnings reports from major firms. Notably, Netflix (NFLX) saw its shares surge by 16% due to robust quarterly results that exceeded expectations.
However, aside from this positive development, many segments of the market experienced declines. Consumer discretionary and real estate were among the sectors with weaker performance. In contrast, energy shares fared relatively better, supported by a five-day streak of rising crude oil futures, which concluded at nearly a three-week high above $89 per barrel. Additionally, gold futures recorded a 1% increase, closing near a three-month high.
Oct 18, 2023 Oct 19, 2023
-------------------- --------------------
Dow 33,665.08 -332.57 33,414.17 -250.91
Nasdaq 13,314.30 -219.44 13,186.18 -128.13
S&P 500 4,314.60 -58.60 4,278.00 -36.60
NYSE Volume 3.69B 4.03B
NYSE Advancers 483 582
NYSE Decliners 2,412 2,286
Nasdaq Volume 4.63B 5.1B
Nasdaq Advancers 992 1,038
Nasdaq Decliners 3,234 3,220
New Highs/Lows
10/12 10/13 10/16 10/17 10/18 10/19
--------------------------------------------
NYSE New Highs 37 27 38 53 26 16
NYSE New Lows 166 162 100 140 257 355
Nasdaq New Highs 42 30 38 43 28 17
Nasdaq New Lows 331 347 233 190 303 471
Stocks Covered Today Stock Splits
TRADER'S TIP: "Have You Heard . . .?"
"Nobody ever went broke taking a quick profit." A common saying, yet it isn't necessarily so. The most common theme among losing traders is the tendency to take a fast profit and hang onto losing positions. In fact, the combination is often lethal.
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 - 4314.60 October 18, 2023
52-Week High: 4607.07
52-Week Low: 3647.42
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 - 13186.18 October 19, 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 - 33414.17 October 19, 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: "Switching Emotions"
Most of us are motivated by a variety of emotions that can be roughly grouped under two headings - hope and fear. For example, when the average investor is caught in a losing position, they usually do nothing other than hope that each day will be the last that the stock goes down. As a result, they end up losing more than if they had not "hoped" as much. On the other hand, when someone holds a winning position, they usually become fearful that the next session will take away their profits, so they get out the trade too soon. In effect, fear keeps them from making as much as they should.
Successful traders know how to reverse their emotions in these circumstances - to use fear when most people would hope, and use hope when most people would fear. It's much more profitable to fear that our losses will grow bigger, and hope that our profits will grow bigger. Research shows that this lesson can be difficult to accept, because it goes against human nature and is the complete opposite of what most people would do. However uncomfortable it may feel when you first attempt it, this simple reversal of emotions during normal trading situations is a valuable "brain tool" that will help you make wise decisions - sell losing positions and hold on to winners!
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
On Holding AG (ONON: Consumer Cyclical/Footwear & Accessories) - SQUEEZE PLAY. ONON is caught in a dilemma. The stock's compressed price range on Thursday 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. ONON is now at 25.27. We can capture price action either way by placing a BUY trigger at 25.95 and a SELL short trigger at 24.24. Once ONON 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 1.71. When you acquire a 2.6 profit, tighten the stop to 0.86. Earnings Report Date: N/A. Beta: 2.22. Market-Cap: 8.035B. Optionable.
ENERGY SECTOR
Vista Energy, S.A.B. de C.V. (VIST: Energy/Oil & Gas E&P) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in VIST's narrowest trading range of the past seven sessions. With neither group able to take complete control on Thursday, 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 32 and a SELL order at 29.87. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.13 trailing stop. Tighten the stop to 1.07 once you have a 2.62 gain. VIST closed Thursday at 31.22. Earnings Report Date: N/A. Beta: 0.13. Market-Cap: 3.162B. Optionable.
FINANCIAL SERVICES SECTOR
Upstart Holdings, Inc. (UPST: Financial Services/Credit Services) - SQUEEZE PLAY. When a stock's daily price range contracts to an unusually low point, you can safely assume that in most cases a breakout from that range will result in a nice price move. To capture a portion of this potential movement we have set both a long and a short entry into UPST. A move to the upside will trigger our BUY entry at 27.76, while a drop to 25.42 will trigger our SELL short entry. Follow your position with a 2.34 trailing stop. Tighten the stop to 1.17 once you have a 3.04 gain. UPST closed Thursday at 26.68. Earnings Report Date: Nov 07, 2023. Beta: 2.04. Market-Cap: 2.238B. Optionable.
HEALTHCARE SECTOR
Revolution Medicines, Inc. (RVMD: Healthcare/Biotechnology) - SQUEEZE PLAY. Trader indecision has put RVMD 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 30.66 and a SELL short entry at 27.99. Now it's up to RVMD to show us which entry will be filled. Once the trade is underway place a 2.67 trailing stop, which can be tightened to 1.34 after you achieve a 2.76 profit. RVMD closed on Thursday at 29.00. Earnings Report Date: Nov 06, 2023. Beta: 1.41. Market-Cap: 3.174B. Optionable.
TECHNOLOGY SECTOR
M-tron Industries, Inc. (MPTI: Technology/Electronic Components) - SQUEEZE PLAY. One interesting trait of price volatility is that it cycles back and forth through periods of expansion and contraction. Stocks that have recently seen their daily price range shift from an average or wide range to an extremely contracted state are ideal candidates for expansive price moves. In many cases the next move is relatively fast and covers a sizable amount of territory. To take advantage of these trades we use both a BUY and a SELL entry. This allows us to enter in whichever direction the breakout takes. In MPTI's case we will enter a BUY should it reach the 27.92 level, or a SELL short trade if it drops to 25.89. As usual a trailing stop is essential, 2.03 which should be tightened to 1.02 on a 2.54 gain. MPTI closed Thursday at 27.49. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 74.969M. 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
---------------- ------- -------- ------- ------ -------
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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