October 29, 2022 - The RightLine Report


Notes From The Editor

Ask the question "What is a stock trader's main goal?" and you'll probably hear something like "To make a lot of money!" It surprises many people to find that the major goal of a truly successful trader isn't to make money, but to make the best trades possible.

Most folks don't understand stock trading, and many believe that traders spend all day just thinking about money. It helps for them to look at other professions for comparison. Teachers, contractors, attorneys, doctors, and mechanics are all paid for what they do, but most don't count their money while they're working. Those that constantly think of money instead of the job at hand pay a severe price for not focusing on what's truly important. How would you feel if your doctor always wanted to talk about was how much money he or she was making?

Repeatedly calculating the amount of money in a trade sends a warning signal that a trader's emotions are running too high. In a highly emotional state of mind it's easy to let feelings substitute for intelligent trade management. Uneasiness over how much money is on the table quickly moves a trader from relaxation to apprehension. Fortunately it's not that hard to switch back to a much more productive trading mindset.

Here's how to do it. Immediately after entering a trade and putting initial stops in place, write down your feelings in your trading journal. If you are uneasy or feel overly concerned about the trade, take a short break away from your desk. Depending on which you prefer, either go for brief walk, or lie down with your eyes closed for at least ten to fifteen minutes.

As you are walking or resting, think about the fact that you have done everything needed to protect against any serious financial damage that might result from the trade. Calmly consider that you use the risk calculator to determine the number of shares in your position, and you set stops to prevent any possible harm.

As you begin to relax, feel the satisfaction that comes from knowing you are trading intelligently. Realize that it really doesn't matter whether price moves in the desired direction for this specific trade or not. Remind yourself that trading successfully doesn't depend on any one trade.

Contemplate the concept that trading with risk control prevents even a series of losses from spoiling your trading success. Take comfort in the reality that trading is a repetitive process that allows you to learn and improve your skills as you progress.

When you resume trading, you may still feel the temptation to concentrate on the cash in play. Just remember that money doesn't have to be the center of your focus. Money is simply the byproduct of the thoughts and subsequent actions you take while calmly trading stocks.

It helps tremendously to put your attention on the different aspects of your personal trading routine. By highlighting the importance of stock selection, trade planning, risk control, and execution, the money will soon become just a pleasant afterthought. And yes, it's certainly okay to enjoy counting the profits once the trade is closed!

Trade well,

- Thomas Sutton, Editor

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
Stocks Covered Today    Stock Splits      Trader's Corner

Quick List

Stock     10/28     10/28      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

DICE      34.52      0.74     35.52                  3.44/1.72      5.86
OSH       20.48      0.52     20.81     19.01          1.8/0.9      2.92
OC        84.61      1.16     86.14                   5.7/2.85      5.84
ZI        45.18     -0.93     46.01                  3.56/1.78      4.32
EBIX      20.40      0.59     20.76     19.24        1.52/0.76      2.12

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.

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
Stocks Covered Today    Stock Splits      Trader's Corner

Market Summary

US stocks were sharply higher on Friday, as earnings and economic news encouraged bulls to take on new positions ahead of the weekend. On the economic front, pending home sales declined, consumer sentiment was revised higher, personal income and spending were upbeat, and third quarter employment costs remained high. In equities, Apple (AAPL $156) topped profit expectations on weak iPhone revenues, while Amazon (AMZN $103) earnings were also above forecasts, but revenues were below par and the company released a disappointing outlook. Chevron (CVX $180), Intel (INTC $29) and Exxon Mobil (XOM $111) all beat analysts' predictions. Treasury yields and the USD/dollar advanced higher, gold and oil prices were lower.

                      Friday                 On The Week      
                  --------------------   --------------------
Dow                 32,861.80   828.52     +1779.24     5.72%
Nasdaq              11,102.45   309.78      +242.73     2.24%
S&P 500              3,901.06    93.76      +148.31     3.95%

NYSE Volume                      4.47B                       
NYSE Advancers                   2,420                       
NYSE Decliners                     760                       

Nasdaq Volume                    4.76B                       
Nasdaq Advancers                 3,160                       
Nasdaq Decliners                 1,477                       

                                 New Highs/Lows

                   10/21  10/24  10/25  10/26  10/27  10/28
NYSE New Highs        40     66     70     82     76     89
NYSE New Lows        548    333    114     97    128    113
Nasdaq New Highs      69     68    105    132    109    121
Nasdaq New Lows      454    443    188    144    183    197

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
Stocks Covered Today    Stock Splits      Trader's Corner

TRADER'S TIP: "Husband and Wife"

It's okay to fall in love with a stock, but never marry it. Keeping an objective view of a trade is essential if you want to be able to exit without 'psychological' hang-ups. Do not become overly committed to a stock - the cost can be way too high.

The Technical Analyst

SPX Daily Chart

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 - 3901.06 October 28, 2022

52-Week High: 4818.62
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4176.91
Resistance 2: 4013.14
Resistance 1: 3957.10
Pivot: 3849.37
Support 1: 3793.33
Support 2: 3685.60
Support 3: 3521.83

NASDAQ Composite - 11102.45 October 28, 2022

52-Week High: 16212.23
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 12002.82
Resistance 2: 11505.77
Resistance 1: 11304.11
Pivot: 11008.72
Support 1: 10807.06
Support 2: 10511.67
Support 3: 10014.62
Dow Industrials - 32861.80 October 28, 2022

52-Week High: 36952.65
52-Week Low: 28660.94
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 35761.14
Resistance 2: 34032.74
Resistance 1: 33447.27
Pivot: 32304.34
Support 1: 31718.87
Support 2: 30575.94
Support 3: 28847.53

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
Stocks Covered Today    Stock Splits      Trader's Corner

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, October 31, 2022:
31-Oct  9:45 am   Chicago PMI

Tuesday, November 01, 2022:
01-Nov  9:45 am   
01-Nov  10 am   ISM manufacturing index
01-Nov  10 am   Jobs openings
01-Nov  10 am   Quits
01-Nov  10 am   Construction spending
01-Nov  Varies   Motor vehicle sales (SAAR)

Wednesday, November 02, 2022:
02-Nov  8:15 am   ADP employment report (level change)
02-Nov  10 am   Rental vacancy rate
02-Nov   2 pm   FOMC announcement
02-Nov  2:30 pm   Fed Chair Jerome Powell press conference

Thursday, November 03, 2022:
03-Nov  8:30 am   Initial jobless claims
03-Nov  8:30 am   Continuing jobless claims
03-Nov  8:30 am   Foreign trade deficit
03-Nov  8:30 am   Productivity (SAAR)
03-Nov  8:30 am   Unit labor costs (SAAR)

Friday, November 04, 2022:
04-Nov  8:30 am   Nonfarm payrolls (level change)
04-Nov  8:30 am   Unemployment rate
04-Nov  8:30 am   Average hourly earnings
04-Nov  8:30 am   Labor-force participation rate, ages 25-54

For a chart of typical Up or Down market reactions to specific major US economic reports 
go to:  Economic Indicator Effects

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
Stocks Covered Today    Stock Splits      Trader's Corner

TRADER'S TIP: "Fire Drill"

At some time or another, every online trader will experience a "technical problem." Computers, Internet Service Providers, charting tools, data feeds, broker access - even the phone and electrical power can break down temporarily. These interruptions are inevitable, so you might as well plan for them.

Arrange a backup for every aspect of your trading process, then conduct a "fire drill" so you will know exactly what to do when the real disruptions come. You'll certainly be glad you did!

Stocks Covered in This Issue


DICE Therapeutics, Inc. (DICE: Healthcare/Biotechnology) - BULLISH BOUNCE. The charts for DICE show that despite the downward pressure from sellers recently, the weekly uptrend is still going strong. Buyers showed up again on Friday, resulting in the early stages of a rebound that started near moving average support. The resulting Bullish Bounce set-up offers a potential entry point for a long play. Set your trigger to BUY shares at 35.52, and follow your entry with a trailing stop of 3.44. Tighten it to 1.72 when a 5.86 profit is reached. DICE ended the latest session at 34.52. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.603B. Optionable.

Oak Street Health, Inc. (OSH: Healthcare/Medical Care Facilities) - SQUEEZE PLAY. OSH is stuck in a Bull/Bear deadlock. Fortunately for traders this impasse should be resolved soon, with one side or the other taking control. We want to be positioned for a potential quick move up or down, so get ready to catch this train with a BUY entry at 20.81 and a SELL short entry at 19.01. Once your trade is filled, enter a 1.8 trailing stop. Tighten it to 0.9 after a 2.92 gain. OSH closed on Friday at 20.48. Earnings Report Date: Nov 07, 2022. Beta: 2.71. Market-Cap: 4.95B. Optionable.


Owens Corning (OC: Industrials/Building Products & Equipment) - BULLISH BOUNCE. OC's positive weekly uptrend is still intact despite recent selling that has driven share prices lower. Price action on Friday shows that traders are aware of the moving average support zone now in play, and they are ready to consider buying again. A shift up from this point will attract even more buyers. The new buying should move OC back in step with the bullish weekly trend, so our BUY entry trigger is set at 86.14. Once you hold a position, trail a stop of 5.7. Tighten it to 2.85 on a 5.84 gain. OC closed at 84.61 on Friday. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 7.907B. Optionable.


ZoomInfo Technologies Inc. (ZI: Technology/Software-Application) - BULLISH BOUNCE. Positive price behavior near moving average support on Friday qualifies ZI for a Bullish Bounce setup. After several sessions of declining prices, ZI should soon begin trading in step with its established weekly uptrend. Tell your broker to BUY shares if ZI moves up to our entry trigger set at 46.01. You can also enter a 3.56 trailing stop, to be replaced with a 1.78 trailing stop when you obtain a 4.32 profit. ZI closed Friday at 45.18. Earnings Report Date: Nov 01, 2022. Beta: 1.32. Market-Cap: 18.228B. Optionable.

Ebix, Inc. (EBIX: Technology/Software-Application) - SQUEEZE PLAY. Friday's trading session left EBIX 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 20.76 and your SELL short trigger at 19.24. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.52 trailing stop. Once you have a 2.12 profit, reduce the stop to 0.76. Earnings Report Date: Nov 07, 2022. Beta: 2.62. Market-Cap: 630.462M. 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.

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
Stocks Covered Today    Stock Splits      Trader's Corner

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.

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
Stocks Covered Today    Stock Splits      Trader's Corner

Trader's Corner

"Index and Sector Stocks"

Want to trade the entire Nasdaq, Dow, or S&P 500 in one stock? Index stocks and sector stocks (formally known as ETFs, or Exchange Traded Funds) provide a convenient way to invest in ALL of the leading companies in a top index or industry. Similar to mutual funds, sector and index stocks provide access to a "basket" of stocks in an entire index or industry sector through a single transaction.

Sector and index stocks trade just like any other stock and can be used for short-term or longer-term strategies. Short-term traders love them because they are very liquid, can easily be traded both long or short on margin, and tend to move closely with their related indices. For long-term investors, these stocks provide unique tax advantages, and unlike mutual funds there are no management fees.

Just as "normal" stocks represent ownership in a publicly traded company, sector and index stocks signify ownership in a Unit Investment Trust, or UIT - a collection of securities (stocks for our purposes) bundled together in a trust. Due to the number of stocks in each group, sector and index stocks provide an element of safety through diversification, and are usually less volatile than the individual stocks they represent. They generally provide a lower-stress way to trade highly volatile markets.

Sector stocks are represented by individual stock symbols - here are several examples:

SPY - Formally named Standard & Poor's Depositary Receipts, SPDRs are commonly called "Spiders" and represent the basket of stocks in the S&P 500 (SPX). This was the first index stock and was created by the American Stock Exchange in January 1993.

DIA - The Dow Industrial Average Model of New Depository Shares (DIAMONDS) represent the basket of 30 stocks in the DOW (DJX or INDU).

QQQQ - Represents the stocks in the Nasdaq 100 (NDX).

HOLDRS - HOLding Company Depositary ReceiptS represent the common stock of companies from a specific industry segment. Merrill Lynch launched HOLDRS for trading on the Amex stock exchange, which is now the NYSE MKT LLC Equities exchange. For more information on Merrill Lynch's current HOLDRS and the stocks represented by each one, go to the following webpage:

FFX - Fortune 500 index represents the companies in the Fortune 500.

FEX - Fortune e-50 index represents the top 50 Internet economy companies.

IShares Sector Funds provide investment vehicles similar to HOLDRS and are modeled after specific index funds based on the Russell 2000, Morgan Stanley Capital International (MSCI) Index Fund Series, S&P 500, and the DOW indices. Ishares are the world's most extensive family of Exchange Traded Funds (ETFs).

You can trade index and sector stocks exactly the same way you trade regular stocks through any brokerage. HOLDRS require a minimum purchase of 100 shares, but you can buy a single share of the other sector stocks. The lower volatility of sector stocks makes them relatively easy on the nerves to trade, but as with any trade, risk management is critical and stops must be used to protect against the market moving against a position.

Good luck!

Note: For more on Index and Sector Funds (ETFs) go to the following webpage:

RightLine Risk Control Calculator 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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