October 27, 2022 - The RightLine Report
Notes From The Editor
Stocks sometimes race higher for no apparent reason, thrilling traders with unexpected gains. Then there are days when the bottom drops out unexpectedly, injecting chills of anguish. It can be an emotional roller coaster at times.
Here are a few things to consider when the market weather doesn't quite meet your preferences . . .
~ The market is much bigger than any of us. There is nothing we can do to control or change it. However, we can control our behavior and make wise choices.
~ The market isn't aware of our desires. It doesn't care about what we want. Don't take it personally - that's just the way it is.
~ The market doesn't "make" us feel any particular way. Our feelings about the market only exist in our minds. These feelings are the result of our individual beliefs.
~ We can decide what to believe. As we shape our beliefs to reflect the "real" market, our feelings about the market change too.
~ The market offers us opportunity for both profit and pain. We choose between the two.
~ Reacting emotionally to price movement disrupts our ability to make intelligent decisions.
~ The market can't hurt us ... unless we let it. Risk Control provides a simple way to stay dry and warm in stormy weather - even when others are left out in the rain.
Trade well!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 10/27 10/27 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
HPK 23.88 -1.02 25.76 23.13 2.63/1.32 2.92
UPST 23.35 -0.32 24.19 21.95 2.24/1.12 3.58
HLVX 21.02 -0.02 21.81 20.01 1.8/0.9 4.82
MRUS 21.11 -0.23 22.22 19.9 2.32/1.16 2.16
TASK 20.21 0.46 20.71 18.9 1.81/0.91 2.28
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
The major US stock indices were mixed on Thursday following the release of economic data showing GDP growth for the third quarter was better than expected, weekly initial unemployment claims were lower than predicted, and durable goods orders fell short of forecasts. In equities, shares of Facebook owner Meta Platforms (META $98) fell hard after the company announced disappointing earnings results and predicted much higher than expected capital expenditures, while Honeywell (HON $196), Merck (MRK $100), Caterpillar (CAT $212) and McDonald's (MCD $265) all rallied after topping earnings expectations. Treasuries, the USD/dollar and oil prices were higher, gold closed lower.
Oct 26, 2022 Oct 27, 2022
-------------------- --------------------
Dow 31,839.11 2.37 32,033.28 194.17
Nasdaq 10,970.99 -228.12 10,792.67 -178.32
S&P 500 3,830.60 -28.51 3,807.30 -23.30
NYSE Volume 4.85B 4.7B
NYSE Advancers 1,924 1,746
NYSE Decliners 1,306 1,423
Nasdaq Volume 5.26B 4.81B
Nasdaq Advancers 2,746 2,203
Nasdaq Decliners 1,957 2,439
New Highs/Lows
10/20 10/21 10/24 10/25 10/26 10/27
--------------------------------------------
NYSE New Highs 37 40 66 70 82 76
NYSE New Lows 412 548 333 114 97 128
Nasdaq New Highs 72 69 68 105 132 109
Nasdaq New Lows 372 454 443 188 144 183
Stocks Covered Today Stock Splits
TRADER'S TIP: "Closing Positions Before Earnings And Getting Back In"
Because price action immediately after earnings announcements often ends up surprising traders, we suggest closing positions before the company releases their earnings report. However, if a stock is moving in a solid trend - long or short - and earnings support that trend, you may want to jump back into the trade after the company reports earnings. This can be profitable at times, but don't chase the stock. If it has jumped more than 5% beyond your exit point, let it go.
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 - 3807.30 October 27, 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 - 10792.67 October 27, 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 - 32033.28 October 27, 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: "Reversals"
When it comes to reversals on daily charts, the closing price is the key price. Also, it's a good idea to give any reversal from support or resistance at least one day to confirm itself.
Stocks Covered in This Issue
ENERGY SECTOR
HighPeak Energy, Inc. (HPK: Energy/Oil & Gas E&P) - SQUEEZE PLAY. HPK shareholders know what it feels like to be squeezed. Thursday'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. HPK closed Thursday at 23.88. The plan is to enter in the right direction by placing a BUY trigger at 25.76 and a SELL short trigger at 23.13. Once HPK establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 2.63. After you've collected a 2.92 profit, tighten the stop to 1.32. Earnings Report Date: Nov 07, 2022. Beta: 0.71. Market-Cap: 2.702B. Optionable.
FINANCIAL SERVICES SECTOR
Upstart Holdings, Inc. (UPST: Financial Services/Credit Services) - SQUEEZE PLAY. Sometimes when Bulls and Bears face off in the market arena for a typical day-long battle, there is no clear winner. This is evident when the daily price range contracts to an unusually narrow state. UPST found itself in this condition on Thursday when neither buyers or sellers were able to push ahead. This setup provides traders a chance to hop on board the next breakout - whether it's to the upside or down - with little risk of loss. To do this place a BUY order at 24.19 and a SELL short trigger at 21.95. When UPST moves outside of Thursday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 2.24 trailing stop. After you've got a 3.58 profit, tighten the stop to 1.12. UPST closed at 23.35 on Thursday. Earnings Report Date: Nov 08, 2022. Beta: N/A. Market-Cap: 1.899B. Optionable.
HEALTHCARE SECTOR
HilleVax, Inc. (HLVX: Healthcare/Biotechnology) - 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. HLVX 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 21.81 and a SELL short trigger at 20.01. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.8 which can be tightened to 0.9 on a 4.82 gain. HLVX closed Thursday at 21.02. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 702.64M. Not Optionable.
Merus N.V. (MRUS: Healthcare/Biotechnology) - SQUEEZE PLAY. MRUS 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 22.22 and a SELL short trigger at 19.9. When one of the orders is filled, cancel the remaining order and enter a 2.32 trailing stop. When you've reached a 2.16 paper profit, tighten the stop to 1.16. MRUS closed at 21.11 on Thursday. Earnings Report Date: Oct 31, 2022. Beta: 0.94. Market-Cap: 968.489M. Optionable.
TECHNOLOGY SECTOR
TaskUs, Inc. (TASK: Technology/Information Technology Services) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in TASK'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 20.71 and a SELL order at 18.9. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.81 trailing stop. Tighten the stop to 0.91 once you have a 2.28 gain. TASK closed Thursday at 20.21. Earnings Report Date: Nov 07, 2022. Beta: N/A. Market-Cap: 1.984B. 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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