September 8, 2022 - The RightLine Report
Notes From The Editor
In today's age of instant information, technical traders have access to an endless variety of data to help them make decisions. Stock charts, while still combining the same basic features they always have, offer more and more indicators every year. Then there's the matter of deciding which intervals to use. At times it can seem daunting!
When it comes to chart intervals for swing trading, we've found the daily chart to be highly effective. Anything smaller, such as the 30-minute or 15-minute, tends to reveal short-lived trends that are difficult to capitalize on for those who aren't daytraders.
Many short-term traders think that weekly charts are best left to long-term traders and investors. Swing traders, however, can also take advantage of the weekly interval. This is especially true during strong Bull markets, when hundreds of stocks are lifted to their highest point on the daily chart. When you run across one of these, you very well might be looking at an equity that's trading at all-time highs.
On the other hand, a stock might be trading at multi-year highs, but just a few points beneath strong historical resistance. These congestion or reversal zones don't show up on a daily chart, because they were created further back in time. The weekly chart reveals these levels in the past, giving you a clear sense for the potential risk/reward and allowing you to gauge upside targets.
When considering a long play in a stock that's trading at or near a 52-week peak, always pull back to the weekly chart to see how far it might run.
Whenever contemplating a trade set-up, it never hurts to take a quick glance at the weekly or monthly, even if a stock isn't breaking to long-term highs. During pullbacks you may notice that price action is approaching a key moving average. You'll often find that stocks stage strong reversals from these levels (typically the 50-week and 200-week MA's), especially when they converge with other bounce points such as horizontal support or a rising trendline.
As for the indicators, momentum oscillators like the MACD and stochastics can be predictive on weekly charts. However, swing traders should pay more attention to what these are doing on the daily interval. A weekly stochastic reversal, for example, might take a relatively long time to play itself out, whereas a daily stochastic reversal can start to produce results within a matter of days.
Here's to profits!
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 09/08 09/08 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
BYND 21.69 -0.27 22.26 20.44 1.82/0.91 6.72
CRT 20.66 0.21 21.38 19.56 1.82/0.91 2.02
DSGN 23.30 0.17 23.91 22.09 1.82/0.91 3.38
VERA 20.61 0.40 21.27 19.51 1.76/0.88 3.36
GDS 22.03 -0.98 22.75 21.22 1.53/0.77 2.72
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 Thursday after traders absorbed several key events, including comments from Federal Reserve Bank Chairman Jerome Powell in which he maintained a hawkish tone that showed his determination to reduce the painfully high inflation rate in the USA and the globe. In addition, the European Central Bank (ECB) raised its benchmark interest rates by 75 basis points, the biggest increase in its history. In light equities news, American Eagle Outfitters (AEO $11) fell short of quarterly profit forecasts and suspended its dividend, while McCormick & Company (MKC $79) lowered its full-year guidance due to the current inflationary environment. The economic calendar was similarly quiet, as consumer credit expanded less than projected and unemployment claims declined. The USD/dollar and gold finished lower, oil prices were up, as were treasury yields.
Sep 7, 2022 Sep 8, 2022
-------------------- --------------------
Dow 31,581.28 435.98 31,774.52 193.24
Nasdaq 11,791.90 246.99 11,862.13 70.23
S&P 500 3,979.87 71.68 4,006.18 26.31
NYSE Volume 3.93B 3.97B
NYSE Advancers 2,442 1,744
NYSE Decliners 764 1,431
Nasdaq Volume 4.47B 4.35B
Nasdaq Advancers 3,300 2,712
Nasdaq Decliners 1,280 1,833
New Highs/Lows
09/01 09/02 09/05 09/06 09/07 09/08
--------------------------------------------
NYSE New Highs 14 18 0 17 16 23
NYSE New Lows 252 101 0 222 141 101
Nasdaq New Highs 34 42 0 35 31 34
Nasdaq New Lows 425 217 0 398 291 200
Stocks Covered Today Stock Splits
TRADER'S TIP: "Stick With One Method"
Though exceptional brainpower isn't a requirement for trading, the ability to choose a method and stick with it is. Many traders jump quickly from one trading system to another, never spending enough time with a single approach to find out if it really works. We suggest selecting a method, consistently trade it for at least three months, measure the results and see how it performs. If it works well, stick with it. If it doesn't, then find out why, and fix or replace it. Keep in mind that most winning routines contain robust stock selection, risk management, and exit strategies - components included in the RightLine Report approach.
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 - 4006.18 September 8, 2022
52-Week High: 4818.62
52-Week Low: 3636.85
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4282.31
Resistance 2: 4122.97
Resistance 1: 4023.61
Pivot: 3963.63
Support 1: 3864.27
Support 2: 3804.29
Support 3: 3644.95
NASDAQ Composite - 11862.13 September 8, 2022
52-Week High: 16212.23
52-Week Low: 10565.14
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 12924.11
Resistance 2: 12345.76
Resistance 1: 11988.31
Pivot: 11767.41
Support 1: 11409.96
Support 2: 11189.06
Support 3: 10610.71
Dow Industrials - 31774.52 September 8, 2022
52-Week High: 36952.65
52-Week Low: 29653.27
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 33894.70
Resistance 2: 32751.63
Resistance 1: 32035.03
Pivot: 31608.56
Support 1: 30891.96
Support 2: 30465.49
Support 3: 29322.42
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): MONDAY, SEPT. 5 Labor Day holiday - None scheduled TUESDAY, SEPT. 6 9:45 am S&P U.S. services PMI (final) Aug 10 am ISM services index Aug WEDNESDAY, SEPT. 7 8 am Cleveland Fed President Loretta Mester speaks 8:30 am International trade balance July 2 pm Beige Book THURSDAY, SEPT. 8 8:30 am Initial jobless claims Sept 8:30 am Continuing jobless claims Aug 10 am Quarterly services 3 pm Consumer credit July FRIDAY, SEPT.9 10 am Wholesale inventories revision 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: "Know Before You Go"
Before entering a trade, carefully plan "what you will do" and "when you will do it" once you are in the position. Actually, this is much more important than finding the "perfect" entry. And always include an exit plan for three possible scenarios: the trade moves favorably, unfavorably, or doesn't move at all. Be sure to include the specific exit price when planning stop-losses. When using the trailing stop method to lock in gains, make certain that you decide in advance at what point the trailing stop will be adjusted.
Stocks Covered in This Issue
CONSUMER DEFENSIVE SECTOR
Beyond Meat, Inc. (BYND: Consumer Defensive/Packaged Foods) - SQUEEZE PLAY. Thursday's narrow price range has created a potentially profitable setup in BYND, as sellers and buyers find themselves in a near tie for control of price direction. The next short-term trend could go either way, so prepare for a move out of the draw within the next day or so. Set a BUY entry at 22.26 and a SELL short entry at 20.44. Let BYND's price action determine your long or short entry. Once the order is filled, place a 1.82 trailing stop, and tighten it to 0.91 upon getting a 6.72 gain. BYND closed Thursday at 21.69. Earnings Report Date: Nov 08, 2022. Beta: 1.80. Market-Cap: 1.381B. Optionable.
ENERGY SECTOR
Cross Timbers Royalty Trust (CRT: Energy/Oil & Gas E&P) - SQUEEZE PLAY. Traders are feeling the pressure as CRT's intra-day price range on Thursday shrunk to the narrowest spread in over a week. The tension between buyers and sellers should provide enough pent-up engergy for a breakout move in the days ahead, so get ready to trade with the new trend. To achieve that, place a BUY entry at 21.38 and a SELL short entry at 19.56. CRT's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.82 trailing stop. Tighten it to 0.91 after you get a 2.02 gain. CRT closed Thursday at 20.66. Earnings Report Date: N/A. Beta: 0.65. Market-Cap: 123.96M. Not Optionable.
HEALTHCARE SECTOR
Design Therapeutics, Inc. (DSGN: Healthcare/Biotechnology) - SQUEEZE PLAY. Thursday's trading session left DSGN 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 23.91 and your SELL short trigger at 22.09. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.82 trailing stop. Once you have a 3.38 profit, reduce the stop to 0.91. Earnings Report Date: Nov 07, 2022. Beta: N/A. Market-Cap: 1.3B. Optionable.
Vera Therapeutics, Inc. (VERA: Healthcare/Biotechnology) - SQUEEZE PLAY. VERA 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 21.27 and a SELL short entry at 19.51. Once your trade is filled, enter a 1.76 trailing stop. Tighten it to 0.88 after a 3.36 gain. VERA closed on Thursday at 20.61. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 559.386M. Not Optionable.
TECHNOLOGY SECTOR
GDS Holdings Limited (GDS: Technology/Information Technology Services) - SQUEEZE PLAY. A look at GDS's daily chart shows what a price squeeze is all about. The constricted high-low daily trading range has produced a setup similar to a tightly coiled spring. Expect price to move sharply soon, with the direction yet to be determined. Let the upcoming market action resolve whether you will buy shares or sell short. To capture a move either way, place a BUY trigger at 22.75 and a SELL short trigger at 21.22. Once GDS shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.53 and tighten to 0.77 on a 2.72 gain. GDS closed Thursday at 22.03. Earnings Report Date: Nov 14, 2022. Beta: 0.76. Market-Cap: 4.374B. 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
---------------- ------- -------- ------- ------ -------
Nasdaq Inc NDAQ 7/20/2022 8/29/2022 3-for-1 Yes
Tesla TSLA 8/5/2022 8/25/2022 3-for-1 Yes
Palo Alto Net PANW 8/23/22 9/14/22 3-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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