October 31, 2023 - The RightLine Report 

 
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                      NOTES FROM THE EDITOR
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When you talk with successful traders you'll hear one suggestion repeated over and over ... "If you want to be a good trader, learn how to control your emotions." Though this simple piece of advice sounds easy enough, it's like someone telling you to do a back flip or walk on your hands.

You may know that these types of acrobatics are possible for some people, yet believe that they're just not for you. Fortunately, emotional control doesn't require special athletic skills or Olympic genetics. With practice and patience, almost anyone can learn to control their emotions while trading.

Some people mistakenly think that emotional control means having no emotions at all. Nothing could be further from the truth. In fact, emotional control enables you to experience a wider range of positive emotions than ever before. The key is learning how to intentionally change harmful emotions to constructive emotions. To do this you need to understand how emotions work.

We are born with a limited set of emotions, though many of them don't appear until certain phases of growth. Studies show that our emotions develop and mature as we grow from infants into children, and then into adults. Research also shows that a large number of emotional responses are learned through experience. This learning occurs through two basic methods - Classical Conditioning and Operant Conditioning.

Classical Conditioning ...

Classical Conditioning takes place when an event is consistently paired with or followed by a punishment or a reward. This is how an infant learns to associate their mother's voice and face with joy and love.

Babies learn to relate what they see and hear to the smiling person providing food and comfort. These positive interactions between a child and a mother produce positive emotions.

Negative emotions are learned the same way. For example, a young child who is bitten by a dog often learns to associate dogs with anxiety or pain. This negative experience typically causes a fearful emotion whenever the child is near a dog.

Operant Conditioning ...

The second kind of learning is referred to as Operant Conditioning. This occurs when a person learns to do things that produce rewards, and learns NOT to do things that result in punishments.

For instance, if a mother always picks up her young baby whenever he cries, and then cuddles him until he stops crying, she may unintentionally teach her baby that crying increases the amount of positive attention he gets. As a result, when the baby gets older he may continue to depend on crying as a way to get attention.

On the other hand, a mother who rewards her six-year old child for completing his homework, and a teacher who gives extra playtime to children who finish projects are both using Operant Conditioning to teach positive behaviors.

Bottom Line: Most emotions and feelings are conditioned responses that are triggered by different situations and circumstances. We all go through learning experiences that condition our emotions and affect our behaviors. Some are positive and some are negative, yet they all combine to influence the quality of our lives.

In upcoming issues of The RightLine Report we'll look at a practical methods to increase the amount of positive emotions we experience, and as a result extract more profits from our trading experiences.

Trade well!

~ Thomas Sutton, Editor 


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                           "QUICK LIST"
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Stock     10/31     10/31      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

SUN       50.19      0.43     50.95                  2.81/1.41      2.22
ZLAB      25.20     -0.19     25.64      23.8        1.84/0.92      2.02
CDRE      28.05      0.34     28.53                  1.78/0.89       1.5
AEHR      23.56     -0.34     24.66     22.22        2.44/1.22       5.7
AEHR      23.56     -0.34     24.66     22.22        2.44/1.22       5.7
XEL       59.27      0.52     60.18                  3.33/1.67      2.62


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" at https://prorightline.com/index.php/rightline-report-quick-list/. In addition,always use the RightLine Risk Calculator before entering any position. For access to the Risk Calculator, go to https://prorightline.com/index.php/risk-calculator/.

To learn more about controlling risk go to the RightLine Risk Control System at https://prorightline.com/index.php/rightline-risk-control-system/

For a glossary of terms unique to The RightLine Report go to: https://prorightline.com/index.php/glossary/

Questions? Send us an email using our contact form at: https://prorightline.com/index.php/contact-us/ 

 
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                           MARKET SUMMARY
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Stocks closed out October on a positive note on Tuesday, with the S&P 500 Index (SPX) marking a second consecutive day of broad gains. This upward momentum came as investors turned their attention to the conclusion of a Federal Reserve policy meeting and upcoming key jobs data later in the week.

Despite this brief uptick, October presented several challenges. The S&P 500, Dow Jones Industrial Average (DJI), and Nasdaq Composite (COMP) all registered their third consecutive monthly declines. This marked the longest such downward trend since the early days of the pandemic in March 2020. The decline was driven by a combination of surging Treasury yields, ongoing conflicts in the Middle East, and mounting concerns about interest rates.

Against this backdrop, investors grappled with mixed corporate earnings reports, and the Federal Open Market Committee (FOMC) began a two-day meeting. The general expectation was that central bank leaders would maintain current benchmark rates. Yields remain a key focus in the market, and the encouraging development is that the 10-year Treasury note (TNX) at the 5.0% level seems to attract willing buyers.

In summary, the major benchmarks for the day ended positively, and real estate and financial shares saw strong performance. Semiconductor companies also experienced gains. However, energy shares lagged due to declining crude oil futures, which fell to approximately $81 a barrel, marking a two-month low. The US dollar index (DXY) strengthened, nearing 11-month highs.


                       Oct 30, 2023           Oct 31, 2023   
                  --------------------   --------------------
Dow                 32,928.96   511.37     33,052.87   123.91
Nasdaq              12,789.48   146.47     12,851.24    61.75
S&P 500              4,166.82    49.45      4,193.80    26.98

NYSE Volume                      3.92B                  4.25B
NYSE Advancers                   1,999                  2,069
NYSE Decliners                     882                    834

Nasdaq Volume                    4.16B                  4.33B
Nasdaq Advancers                 2,658                  2,673
Nasdaq Decliners                 1,639                  1,594

                                 New Highs/Lows

                   10/24  10/25  10/26  10/27  10/30  10/31
                 --------------------------------------------
NYSE New Highs         8     12     16     20     15     15
NYSE New Lows        198    421    297    369    238    119
Nasdaq New Highs      26     22     25     20     25     18
Nasdaq New Lows      347    602    515    615    421    302

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                              TRADER'S TIP:  
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TRADER'S TIP: "Consistency and Discipline"

. . . He (Richard Dennis) placed classified ads proclaiming 'trader wanted,' he got some 1,000 responses from people eager to learn his methods. He settled on fewer than two dozen novices--among them two professional gamblers and a fantasy-game designer--and after a two-week training program, he gave them money to trade under his firm's auspices. Several went on to become top commodity-fund managers, including Jerry Parker of Chesapeake Capital Corp., who now manages more than US$1 billion. 'It was sink or swim. Sort of an experiment,' recalls Parker, a former accountant. Dennis ran the training, Parker says, 'because he wanted to have a certain chunk of money traded using systematic rules' while he went on and tried out new techniques.

~ Business Week

"The key is consistency and discipline. Almost anybody can come up with a list of rules that are 80% as good as what we taught. What they can't do is give people the confidence to stick to those rules even when things are going bad."

~ Richard Dennis 

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                         THE TECHNICAL ANALYST
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This section contains important technical data for the three major market averages -- the S&P 500, the Nasdaq Comp Index, and the Dow Industrial Average.

For guidance on how to use this information, go to: https://prorightline.com/index.php/technical-analyst-section-rightline-report/ 

S&P 500 - 4193.80 October 31, 2023

52-Week High: 4607.07
52-Week Low: 3698.15
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4471.37
Resistance 2: 4315.77
Resistance 1: 4216.57
Pivot: 4160.17
Support 1: 4060.97
Support 2: 4004.57
Support 3: 3848.97
https://www.prorightline.com/rlch/103123SPX.jpg

NASDAQ Composite - 12851.24 October 31, 2023

52-Week High: 14446.55
52-Week Low: 10207.47
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 14038.81
Resistance 2: 13412.28
Resistance 1: 13027.64
Pivot: 12785.75
Support 1: 12401.11
Support 2: 12159.22
Support 3: 11532.69


Dow Industrials - 33052.87 October 31, 2023

52-Week High: 35679.13
52-Week Low: 31429.82
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 34562.30
Resistance 2: 33617.31
Resistance 1: 33017.45
Pivot: 32672.32
Support 1: 32072.46
Support 2: 31727.33
Support 3: 30782.34


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                             MARKET CALENDAR
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--ECONOMIC REPORTS AND EVENTS (all times are Eastern): 

MONDAY, OCT. 30					
None scheduled
				
TUESDAY, OCT. 31					
8:30 am	Employment cost index	
9:45 am	Chicago Business Barometer			
10:00 am	Consumer confidence
				
WEDNESDAY, NOV. 1					
8:15 am	ADP employment			
9:45 am	S&P U.S. manufacturing PMI				
10:00 am	Job openings				
10:00 am	ISM manufacturing				
10:00 am	Construction spending				
2:00 pm	Federal Reserve decision on interest rates				
2:30 pm	Fed Chairman Powell press conference
				
THURSDAY, NOV. 2					
8:30 am	Initial jobless claims				
8:30 am	U.S. productivity	
10:00 am	Factory orders
		
FRIDAY, NOV. 3					
8:30 am	U.S. nonfarm payroll	
8:30 am	U.S. unemployment rate	
8:30 am	U.S. hourly wages	
8:30 am	Hourly wages year over year		
9:45 am	S&P U.S. services PMI			
10:00 am	ISM services

For a chart of typical Up or Down market reactions to specific major US economic reports, go to "Economic Indicator Effects" at this link: https://prorightline.com/index.php/economic-indicator-effects/ 
 
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                              TRADER'S TIP: 
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TRADER'S TIP: "Only Ten Percent"

Although only ten percent of individual traders use "money management," it is by far the most important aspect of any trading plan. Leave it out of any trade and you immediately place that position in a high-risk category. Many people believe they can ignore money management just because they have a small trading account, while in fact these vital concepts can be used successfully with any amount of capital. Establishing good habits with a small account not only allows your money to grow, it also prepares you to trade intelligently when you have a much larger account. 


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                      STOCKS COVERED IN THIS ISSUE    
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ENERGY SECTOR

Sunoco LP (SUN: Energy/Oil & Gas Refining & Marketing) - BULLISH BOUNCE. SUN's positive weekly uptrend is still intact despite recent selling that has driven share prices lower. Price action on Tuesday 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 SUN back in step with the bullish weekly trend, so our BUY entry trigger is set at 50.95. Once you hold a position, trail a stop of 2.81. Tighten it to 1.41 on a 2.22 gain. SUN closed at 50.19 on Tuesday. Earnings Report Date: Nov 01, 2023. Beta: 1.26. Market-Cap: 4.219B. Optionable.

HEALTHCARE SECTOR

Zai Lab Limited (ZLAB: Healthcare/Biotechnology) - SQUEEZE PLAY. ZLAB traders on both sides of the fence are now locked in a head-to-head shootout. Tuesday'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 25.64 and a SELL short trigger at 23.8. When one of the orders is filled, cancel the remaining order and enter a 1.84 trailing stop. When you've reached a 2.02 paper profit, tighten the stop to 0.92. ZLAB closed at 25.20 on Tuesday. Earnings Report Date: Nov 07, 2023. Beta: 1.06. Market-Cap: 2.491B. Optionable.

INDUSTRIALS SECTOR

Cadre Holdings, Inc. (CDRE: Industrials/Aerospace & Defense) - BULLISH BOUNCE. Positive price behavior near moving average support on Tuesday qualifies CDRE for a Bullish Bounce setup. After several sessions of declining prices, CDRE should soon begin trading in step with its established weekly uptrend. Tell your broker to BUY shares if CDRE moves up to our entry trigger set at 28.53. You can also enter a 1.78 trailing stop, to be replaced with a 0.89 trailing stop when you obtain a 1.5 profit. CDRE closed Tuesday at 28.05. Earnings Report Date: Nov 08, 2023. Beta: N/A. Market-Cap: 1.054B. Optionable.

TECHNOLOGY SECTOR

Aehr Test Systems (AEHR: Technology/Semiconductor Equipment & Materials) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in AEHR's narrowest trading range of the past seven sessions. With neither group able to take complete control on Tuesday, 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 24.66 and a SELL order at 22.22. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.44 trailing stop. Tighten the stop to 1.22 once you have a 5.7 gain. AEHR closed Tuesday at 23.56. Earnings Report Date: Jan 03, 2024. Beta: 2.02. Market-Cap: 678.511M. Optionable.

Aehr Test Systems (AEHR: Technology/Semiconductor Equipment & Materials) - 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. AEHR traders reached this state of stand-off on Tuesday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 24.66 and a SELL short trigger at 22.22. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 2.44 which can be tightened to 1.22 on a 5.7 gain. AEHR closed Tuesday at 23.56. Earnings Report Date: Jan 03, 2024. Beta: 2.02. Market-Cap: 678.511M. Optionable.

UTILITIES SECTOR

Xcel Energy Inc. (XEL: Utilities/Utilities - Regulated Electric) - BULLISH BOUNCE. The charts for XEL show that despite the downward pressure from sellers recently, the weekly uptrend is still going strong. Buyers showed up again on Tuesday, 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 60.18, and follow your entry with a trailing stop of 3.33. Tighten it to 1.67 when a 2.62 profit is reached. XEL ended the latest session at 59.27. Earnings Report Date: Jan 24, 2024. Beta: 0.45. Market-Cap: 32.706B. Optionable.


IMPORTANT: Before entering any recommended positions, always use the RightLine "Risk Control System" to determine the level of acceptable risk and the maximum number of shares to buy.
Link: https://prorightline.com/index.php/rightline-risk-control-system/

Use "Gap Adjusted Entries" to reset the Entry Price for stocks that gap beyond recommended entry levels.
Link: https://prorightline.com/index.php/gap-adjusted-entries-increase-profits/ 

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                           STOCK SPLIT SUMMARY
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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 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.

For a closer look at the different stages of a Stock Split go to: https://prorightline.com/index.php/trading-stock-splits-stages/ 

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Best of luck and have a Great Week!
 
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