October 25, 2022 - The RightLine Report
Notes From The Editor
Almost all traders enjoy discussing different trading strategies and the merits of one stock or sector over another. However there is one important subject that rarely gets much attention - "discipline." The very thought of discipline often conjures up images of punishment and pain. Fortunately when it comes to trading, the word carries a different meaning.
Forget about the usual negative definitions associated with discipline. For our purposes "discipline" simply means drafting a set of trading rules that we believe in, then sticking with them. While the rules can be changed to reflect a trader's growth, they shouldn't be arbitrarily deleted or ignored.
It's rarely a good idea to change your trading rules while you're in an open position. If you see or learn something that causes you to consider revising your methods, always exit the position under the old rules before implementing new ones.
Why? Because it prevents overreacting to every minor price move or some other distraction when you are emotionally wrapped up the trade. It's extremely difficult to make intelligent trading decisions when you have money on the table.
The wisest approach to "rule change" is to stay with your plan until it takes you out of the position, or intentionally exit the trade before making a rule change. Waiting to finish the trade before making rule changes emphasizes the importance of having a "formal" set of trading procedures.
Having a rule that regulates how and when you change your rules implies that you respect for your own rules. This alone will set you apart from most casual traders who don't follow any consistent methods.
Some rules never change. For example "Use the Risk Control Calculator to determine position size" should always be on the list. On the other hand, "only go long in a bull market" or "only go short in a bear market" are rules that work well for some traders, but may be too broad for others who have learned to play counter-trends successfully.
Bottom Line: When I was a kid I wasn't particularly fond of rules, and no one ever accused me of being disciplined. In fact, I still fall off the wagon from time to time. I guess it's normal to take a few "shortcuts" occasionally, but I've found things tend to work out best when I follow my own rules.
Discipline - just another way of showing you have the self-respect to be a winner.
Trade well,
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 10/25 10/25 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
STNG 48.54 1.26 49.47 4.39/2.2 5.14
TNP 17.45 -0.09 18.11 1.6/0.8 1.84
PARR 23.06 0.06 23.66 22.08 1.58/0.79 1.8
TREE 22.45 0.88 23.12 20.63 2.49/1.25 3.78
JAMF 23.67 0.38 24.29 22.72 1.57/0.79 2.24
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
Stocks were higher on Tuesday despite reports showing a drop in consumer confidence and a larger decline in regional manufacturing than forecasted. In equities, earnings announcements were mixed as 3M Company (MMM $119) announced an upbeat profit surprise yet lowered guidance for the full year. General Electric (GE $72) missed earnings predictions and also lowered guidance, while Coca-Cola (KO $59) topped earnings estimates and raised its outlook. Oil prices and gold were higher, treasury yields and the USD/dollar finished the session lower.
Oct 24, 2022 Oct 25, 2022
-------------------- --------------------
Dow 31,499.62 417.06 31,836.74 337.12
Nasdaq 10,952.61 92.90 11,199.12 246.50
S&P 500 3,797.34 44.59 3,859.11 61.77
NYSE Volume 4.79B 4.87B
NYSE Advancers 1,835 2,731
NYSE Decliners 1,347 519
Nasdaq Volume 4.84B 5.18B
Nasdaq Advancers 2,333 3,636
Nasdaq Decliners 2,240 991
New Highs/Lows
10/18 10/19 10/20 10/21 10/24 10/25
--------------------------------------------
NYSE New Highs 40 33 37 40 66 70
NYSE New Lows 115 310 412 548 333 114
Nasdaq New Highs 76 53 72 69 68 105
Nasdaq New Lows 157 326 372 454 443 188
Stocks Covered Today Stock Splits
TRADER'S TIP: "Earnings: Holding Through or Getting Back In"
It's no secret that we believe in avoiding undue risk. Because earnings reports often end up surprising traders, we often suggest closing out positions before the company announces earnings. However, if a stock is moving in a solid trend (long or short) and earnings estimates support that trend, experienced traders will often elect to drastically reduce the number of shares in their position and hold them through the earnings announcement.
In some cases traders jump back into the trade after the company reports better than expected earnings. This can be profitable at times, but don't chase the stock. If it has jumped more than 5% beyond your exit point, you're probably better off waiting for price to pull back to a moving average support level.
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 - 3859.11 October 25, 2022
52-Week High: 4818.62
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 3966.34
Resistance 2: 3842.20
Resistance 1: 3797.47
Pivot: 3718.06
Support 1: 3673.33
Support 2: 3593.92
Support 3: 3469.78
NASDAQ Composite - 11199.12 October 25, 2022
52-Week High: 16212.23
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 11652.78
Resistance 2: 11222.24
Resistance 1: 11040.98
Pivot: 10791.70
Support 1: 10610.44
Support 2: 10361.16
Support 3: 9930.62
Dow Industrials - 31836.74 October 25, 2022
52-Week High: 36952.65
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 32976.44
Resistance 2: 31854.80
Resistance 1: 31468.67
Pivot: 30733.15
Support 1: 30347.02
Support 2: 29611.49
Support 3: 28489.84
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, October 24, 2022: 24-Oct 8:30 am Chicago Fed national activity index 24-Oct 9:45 am 24-Oct 9:45 am Tuesday, October 25, 2022: 25-Oct 9 am 25-Oct 9 am FHFA U.S. home price index (SAAR) 25-Oct 10 am Consumer confidence index Wednesday, October 26, 2022: 26-Oct 8:30 am Trade in goods (advance) 26-Oct 10 am New home sales (SAAR) Thursday, October 27, 2022: 27-Oct 8:30 am Real gross domestic product, first estimate (SAAR) 27-Oct 8:30 am Real final sales to domestic purchasers, first estimate (SAAR) 27-Oct 8:30 am Initial jobless claims 27-Oct 8:30 am Continuing jobless claims 27-Oct 8:30 am Durable goods orders 27-Oct 8:30 am Core capital equipment orders Friday, October 28, 2022: 28-Oct 8:30 am Employment cost index (SAAR) 28-Oct 8:30 am PCE price index (SAAR) 28-Oct 8:30 am Core PCE price index (SAAR) 28-Oct 8:30 am PCE price index (12-month change) 28-Oct 8:30 am Core PCE price index (12-month change) 28-Oct 8:30 am Real disposable income (SAAR) 28-Oct 8:30 am Real consumer spending 28-Oct 10 am UMich consumer sentiment index (late) 28-Oct 10 am UMich consumer 5-year inflation expectations (late) 28-Oct 10 am Pending home sales index 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: "Learn As You Earn"
Short term trading is a great teaching vehicle. Through repetition we quickly learn how to select the correct number of shares for each position, and how to control risk using stops. We also rapidly learn how to trade in harmony with the trend, and become adept at managing each trade on its own merits.
Stocks Covered in This Issue
ENERGY SECTOR
Scorpio Tankers Inc. (STNG: Energy/Oil & Gas Midstream) - NEW HIGH DIP. As a rule of thumb, outstanding stocks like STNG continue to perform well for extended periods of time. The recent pullback from a new 52-week high gives us a chance to enter a position without taking much risk. STNG's price behavior on Tuesday points to another move higher, so prepare to BUY shares at the trigger price of 49.47. Once in, follow the purchase with a 4.39 trailing stop. Change the stop to 2.2 upon gaining 5.14 points. STNG closed Tuesday at 48.54. Earnings Report Date: Nov 01, 2022. Beta: 0.46. Market-Cap: 2.866B. Optionable.
Tsakos Energy Navigation Limited (TNP: Energy/Oil & Gas Midstream) - BULLISH BOUNCE. Another bullish bouncer, TNP appears ready to resume trading in an uptrend after recent selling forced the stock lower for several days. Tuesday's positive price action near Moving Average support says it's time to BUY shares if TNP reaches our entry trigger set at 18.11. Also place a 1.6 trailing stop which can be narrowed to 0.8 when you reach a 1.84 profit. TNP closed Tuesday at 17.45. Earnings Report Date: Dec 14, 2022. Beta: 0.07. Market-Cap: 510.421M. Optionable.
Par Pacific Holdings, Inc. (PARR: Energy/Oil & Gas Refining & Marketing) - 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 PARR's case we will enter a BUY should it reach the 23.66 level, or a SELL short trade if it drops to 22.08. As usual a trailing stop is essential, 1.58 which should be tightened to 0.79 on a 1.8 gain. PARR closed Tuesday at 23.06. Earnings Report Date: Nov 01, 2022. Beta: 1.96. Market-Cap: 1.388B. Optionable.
FINANCIAL SERVICES SECTOR
LendingTree, Inc. (TREE: Financial Services/Financial Conglomerates) - 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 TREE. A move to the upside will trigger our BUY entry at 23.12, while a drop to 20.63 will trigger our SELL short entry. Follow your position with a 2.49 trailing stop. Tighten the stop to 1.25 once you have a 3.78 gain. TREE closed Tuesday at 22.45. Earnings Report Date: Nov 03, 2022. Beta: 1.73. Market-Cap: 293.965M. Optionable.
TECHNOLOGY SECTOR
Jamf Holding Corp. (JAMF: Technology/Software-Application) - SQUEEZE PLAY. Trader indecision has put JAMF 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 24.29 and a SELL short entry at 22.72. Now it's up to JAMF to show us which entry will be filled. Once the trade is underway place a 1.57 trailing stop, which can be tightened to 0.79 after you achieve a 2.24 profit. JAMF closed on Tuesday at 23.67. Earnings Report Date: Nov 09, 2022. Beta: 0.60. Market-Cap: 2.857B. 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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