October 3, 2023 - The RightLine Report
Notes From The Editor
Playing By The Rules
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 in the trade. It's extremely difficult to make intelligent trading decisions when you have money on the table, much less make smart rule revisions.
Also, waiting to finish the trade before making rule changes emphasizes the importance of having a "formal" set of trading procedures. Including a rule that regulates how and when you change your rules shows that you have respect for your rules. This sets you apart from most casual traders who don't follow a consistent approach and have no concept of the value of creating a procedure to monitor the effectiveness of their trading.
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 many, but are too broad for traders who have learned to play brief counter-trends successfully.
Bottom Line: When I was a kid I wasn't very fond of rules. However when I began trading stocks I quickly learned that personal trading rules are very important. In fact, I still occasionally fall off the wagon. While it's normal to take a few "shortcuts" every now and then, every successful trader I know is disciplined enough to follow his or her own rules near 100% of the time.
Following your rules is 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 10/03 10/03 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
YY 38.55 -0.18 39.22 2.33/1.17 2.28
OII 24.96 0.31 25.36 1.56/0.78 2
QTRX 26.74 0.03 27.79 2.28/1.14 2.18
TNDM 21.00 -0.99 20.27 1.86/0.93 3.16
PTCT 20.43 -0.81 21.63 19.78 1.85/0.93 3.48
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
The relentless rise in Treasury yields led to widespread losses in US equities on Tuesday, pushing the S&P 500Index (SPX) and Nasdaq Composite (COMP) to their lowest levels in four months.
The 10-year Treasury note yield (TNX), which has been steadily climbing since August, surpassed 4.80% on Tuesday, a level not witnessed since 2007. This increase reflects growing concerns that the Federal Reserve's commitment to higher interest rates might endure longer than previously expected. Tuesday's bearish move downward was likely prompted by a robust labor market report released earlier in the day, which raised expectations of another interest rate hike later this year.
Companies of all sizes were caught in the resulting market turmoil. Goldman Sachs (GS) led the decline among Dow Jones Industrial Average (DJIA) stocks, falling over 4% to a 9-month low. Elevated rates can negatively impact financial sector companies, including banks, by squeezing their profit margins. The KBW Regional Bank Index (KRX) also dropped over 2% to a two-month low. Small-cap stocks were not immune, with the Russell 2000 Index (RUT) slipping 1.7% to its lowest closing level in six months. Expectations of volatility, as gauged by Cboe's Volatility Index (VIX), reached their highest point since late May.
The 16-year high in 10-year yields is likely the primary factor exerting downward pressure on equities. Energy shares were among the few gainers, as WTI crude oil futures rebounded after a four-session decline following a steep drop from a 13-month high above $95 per barrel. The US dollar index (DXY) strengthened for the third consecutive day, reaching its highest level since November, reflecting the belief that interest rates will remain elevated.
Oct 2, 2023 Oct 3, 2023
-------------------- --------------------
Dow 33,433.35 -74.15 33,002.38 -430.97
Nasdaq 13,307.77 88.45 13,059.47 -248.31
S&P 500 4,288.39 0.34 4,229.45 -58.94
NYSE Volume 3.95B 3.96B
NYSE Advancers 545 475
NYSE Decliners 2,358 2,473
Nasdaq Volume 4.56B 4.69B
Nasdaq Advancers 1,242 967
Nasdaq Decliners 3,014 3,353
New Highs/Lows
09/26 09/27 09/28 09/29 10/02 10/03
--------------------------------------------
NYSE New Highs 19 33 42 29 17 10
NYSE New Lows 287 307 223 89 277 443
Nasdaq New Highs 32 35 38 37 18 20
Nasdaq New Lows 386 340 306 146 388 562
Stocks Covered Today Stock Splits
TRADER'S TIP: "Charles Dow's Three Trends"
Charles Dow - who developed the Dow Jones Averages - taught that there are always three "trends" occurring in the stock market at the same time.
~ The first trend is the Primary Trend, which can be either bullish or bearish. These trends tend to last anywhere from a year up to several years, and can sometimes run for much longer.
~ The next trend is the Secondary Trend. These "counter trends" move in the opposite direction to the Primary Trend, and usually last anywhere from a week to a few months. They present themselves as rallies in Bear markets and pullbacks, or corrections in Bull markets. Secondary trends will often retrace between one-third to two-thirds of the most recent prior secondary trend.
~ The third trend is the Minor Trend. These are the very short-term intra and inter day trends that Dow referred to as "Tertiary Movements." Though it may seem like a paradox at first, it's easy to see these three separate trends at work simultaneously when looking at stock charts in monthly, weekly, daily, and intra-day time frames.
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 - 4229.45 October 3, 2023
52-Week High: 4607.07
52-Week Low: 3491.58
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4488.15
Resistance 2: 4388.27
Resistance 1: 4338.16
Pivot: 4288.39
Support 1: 4238.28
Support 2: 4188.51
Support 3: 4088.63
NASDAQ Composite - 13059.47 October 3, 2023
52-Week High: 14446.55
52-Week Low: 10088.83
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 14028.12
Resistance 2: 13608.30
Resistance 1: 13413.81
Pivot: 13188.48
Support 1: 12993.99
Support 2: 12768.66
Support 3: 12348.84
Dow Industrials - 33002.38 October 3, 2023
52-Week High: 35679.13
52-Week Low: 28660.94
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 35032.90
Resistance 2: 34321.67
Resistance 1: 33914.58
Pivot: 33610.44
Support 1: 33203.35
Support 2: 32899.21
Support 3: 32187.98
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): WEDNESDAY, OCT. 4 8:15 am ADP employment 9:45 am S&P final U.S. services PMI 10:00 am Factory orders 10:00 am ISM services THURSDAY, OCT. 5 8:30 am Initial jobless claims 8:30 am U.S. trade deficit FRIDAY, OCT. 6 8:30 am U.S. employment report 8:30 am U.S. unemployment rate 8:30 am U.S. hourly wages 8:30 am Hourly wages year over year 3:00 pm Consumer credit 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: "Let The Trade Come To You"
It rarely pays to chase a stock, so don't chase it - let the trade come to you. You have two options when you realize a move is already underway. Either forget the trade and look for another one, or wait for the price to move back to support or resistance THEN enter on the rebound. Waiting for a pullback usually provides a relatively low risk entry - because you can place a tight stop just beyond the support or resistance level. Remember - don't worry if you miss a trade, there is always another.
Stocks Covered in This Issue
COMMUNICATION SERVICES SECTOR
JOYY Inc. (YY: Communication Services/Internet Content & Information) - BULLISH BOUNCE. This trader-friendly setup turns repetitive stock behavior into real profits. Based on the tendency for up-trending stocks to drop briefly and then resume the up-trend, the Bullish Bounce places traders into excellent stocks when conditions are primed for more skyward movement. YY's current price action near moving average support signals a potential BUY entry at 39.22, followed by a 2.33 trailing stop which can be tightened to 1.17 upon earning 2.28. YY closed Tuesday at 38.55. Earnings Report Date: Nov 27, 2023. Beta: 0.64. Market-Cap: 2.39B. Optionable.
ENERGY SECTOR
Oceaneering International, Inc. (OII: Energy/Oil & Gas Equipment & Services) - BULLISH BOUNCE. If you are looking for another bouncer with profits in mind, OII fits the bill. Shares have been in retreat-mode lately, but now this stock is in the process of bouncing from support. Currently priced at 24.96, plan to buy shares at 25.36 and use a 1.56 trailing stop. Tighten the stop to 0.78 on a 2 gain. Earnings Report Date: Oct 25, 2023. Beta: 2.86. Market-Cap: 2.515B. Optionable.
HEALTHCARE SECTOR
Quanterix Corporation (QTRX: Healthcare/Medical Devices) - BULLISH BOUNCE. QTRX has charted an upward weekly trend until recently when sellers showed up to push prices lower. On Tuesday the selling ran into solid support. A potential bounce up from this level should attract buyers and likely return QTRX to the previously established uptrend. The Bullish Bounce set-up is the basis for our BUY entry, so be ready to go long on a rise to our trigger at 27.79. Set a trailing stop of 2.28, tightening to 1.14 on a 2.18 profit. QTRX closed at 26.74 on Tuesday. Earnings Report Date: Nov 06, 2023. Beta: 1.31. Market-Cap: 1.004B. Optionable.
Tandem Diabetes Care, Inc. (TNDM: Healthcare/Medical Devices) - BEARISH U-TURN. TNDM'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 20.27. Control risk with a 1.86 stop that can be resized to 0.93 on a gain of 3.16. TNDM closed at 21.00 on Tuesday. Earnings Report Date: Oct 31, 2023. Beta: 0.87. Market-Cap: 1.367B. Optionable.
PTC Therapeutics, Inc. (PTCT: Healthcare/Biotechnology) - SQUEEZE PLAY. Tuesday's trading session left PTCT 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 21.63 and your SELL short trigger at 19.78. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.85 trailing stop. Once you have a 3.48 profit, reduce the stop to 0.93. Earnings Report Date: Oct 25, 2023. Beta: 0.37. Market-Cap: 1.539B. 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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