Notes From The Editor

We inevitably run into problems if we decide that we "know enough already." The Greek philosopher Epictetus, who rose from Roman slavery to become a respected teacher, once said, "It is impossible for anyone to begin to learn what he believes he already knows."

It takes an open and humble mind to learn. On the flip side, prideful arrogance disrupts learning and the natural state of sincere curiosity. Narcissistic pride closes minds instead of opening them. It is a psychological and emotional condition that distorts perception and leads to self-deceptive actions.

As traders, we can all benefit from an assessment of our knowledge and skill levels. With that information in hand we can quickly add to our positive abilities. The road to improvement never ends, and we're always an apprentice in the art of trading.

Being a student means that we constantly engage the market. Live trading is the field of play where we test and refine our skills. The Risk Control System protects our trading capital and prevents us from getting hurt as we learn.

The key to making money in stocks is to focus on what should be done in response to market movement. This simply involves planning your trades to include all possibilities. When you filter out the market and media noise you'll find that stocks can really only do three simple things;

(1) move up, (2) move down, or (3) stay the same price.

By selecting stocks that tend to move, the third option rarely lasts for very long - so we generally deal with up or down movement. Instead of spending a lot of time trying to figure out why stocks are going up or down, spend your time planning what you will do when they inevitably DO go up or down. It's much more productive.

Trade well,

- Thomas Sutton, Editor

Quick List

    
Stock     04/21     04/21      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

HUN       35.13     -0.29               33.84        2.47/1.24      2.26
AX        42.37     -0.01               40.69        3.22/1.61      3.52
ARCT      22.59     -1.88      23.7      21.3          2.4/1.2      4.32
ROCK      40.44     -0.14               38.76        3.02/1.51      3.72

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.

Market Summary

Stocks were lower on Thursday following remarks from Fed Bank Chairman Jerome Powell hinting at aggressive rate hikes. Mixed economic data included a rebound in leading indicators, an upick in unemployment claims and decelerating manufacturing growth in the Philadelphia region. In equities, Tesla (TSLA $1,009) announced record quarterly earnings, while American Airlines (AAL $20) and United Airlines (UAL $51) presented upbeat guidance. Oil prices and the USD/dollar were both higher, gold and treasuries were lower, raising yields.

                      Thursday               On The Week      
                  --------------------   --------------------
Dow                 34,792.76  -368.03      +341.53     0.99%
Nasdaq              13,174.65  -278.41      -176.43    -1.32%
S&P 500              4,393.66   -65.79        +1.07     0.02%

NYSE Volume                      4.58B                       
NYSE Advancers                     656                       
NYSE Decliners                   2,659                       

Nasdaq Volume                    5.16B                       
Nasdaq Advancers                 1,068                       
Nasdaq Decliners                 3,668                       

                                 New Highs/Lows

                   04/14  04/15  04/18  04/19  04/20  04/21
                 --------------------------------------------
NYSE New Highs       142      0    157     99    172    169
NYSE New Lows        278      0    321    285     97    251
Nasdaq New Highs      96      0     93     89    108    100
Nasdaq New Lows      296      0    513    306    206    485
   

TRADER'S TIP: "Know WHY To Buy or Sell"

Studies show that most investors buy and sell on emotion instead of reasoning. For example most investors will sell their winning positions to make up for losers, then hold the losers way too long in hopes they will recover. This is the opposite of what should be done, for the winners tend to keep on winning, while losers usually keep losing.

The most common management strategy used by successful traders is pretty simple. Get rid of losers quickly, and keep winners profitable with an exit strategy that includes stop orders. It isn't that difficult to understand intellectually how this approach pays off, but sticking with it is too much of an emotional challenge for most people. The solution comes from the discipline gained through repetitive conditioning.

"Repetitive conditioning?" That's selling any and all losing positions immediately upon their reaching a predetermined level, and holding any and all winners until they meet the specific sell criteria of your exit strategy. Just another term for "good experience!"

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 - 4393.66 April 21, 2022

52-Week High: 4818.62
52-Week Low: 4056.88
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4594.27
Resistance 2: 4504.61
Resistance 1: 4448.56
Pivot: 4414.95
Support 1: 4358.90
Support 2: 4325.29
Support 3: 4235.63

NASDAQ Composite - 13174.65 April 21, 2022

52-Week High: 16212.23
52-Week Low: 12555.35
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 14188.01
Resistance 2: 13819.80
Resistance 1: 13585.44
Pivot: 13451.59
Support 1: 13217.23
Support 2: 13083.38
Support 3: 12715.17
        
Dow Industrials - 34792.76 April 21, 2022

52-Week High: 36952.65
52-Week Low: 32272.64
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 36053.67
Resistance 2: 35267.36
Resistance 1: 34859.28
Pivot: 34481.04
Support 1: 34072.97
Support 2: 33694.73
Support 3: 32908.42
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Wednesday, April 20, 2022:
20-Apr  10 am   Existing home sales (SAAR)
20-Apr   2 pm   Federal Reserve releases Beige Book

Thursday, April 21, 2022:
21-Apr  8:30 am   Initial jobless claims
21-Apr  8:30 am   Continuing jobless claims
21-Apr  10 am   Leading economic indicators

Friday, April 22, 2022:
22-Apr  9:45 am   S&P (Markit) manufacturing PMI 
22-Apr  9:45 am   S&P (Markit) services PMI


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

TRADER'S TIP: "What Can I Learn From This Trade?"

This is where the rubber meets the road! Although a trade may end when you exit the position that is often when the learning begins. One popular definition of insanity is continuing to act in the same way but expecting different results. A trading journal or diary will help answer the questions, "Now that I see the past with 20/20 vision, what would I have done differently? What did I do right? Did my emotional state of mind affect my success? Did I follow my trading plan? Did I set my stop at reasonable level?"

When you review your trades after the fact, it's amazing how easy it is to find a nugget of information that will help you with your next trades. We can't force stocks to do what we want them to, but we can learn to work with what a stock gives us. Moreover, the difference between progress and stagnation is our ability to learn from our experiences.

Stocks Covered in This Issue

BASIC MATERIALS SECTOR

Huntsman Corporation (HUN: Basic Materials/Chemicals) - BEARISH U-TURN. A quick look at the charts for HUN show that despite the upward pressure caused by recent buying, the weekly downtrend is still in place. Thursday's chart shows a potential return to that downtrend is in the works. This Bearish U-Turn set-up offers a potential entry point for a SHORT play. Set your trigger to SELL shares at 33.84, and follow your entry with a trailing stop of 2.47. Tighten the stop to 1.24 after reaching a 2.26 profit. HUN ended the latest session at 35.13. Earnings Report Date: Apr 28, 2022. Beta: 1.15. Market-Cap: 7.536B. Optionable.

FINANCIAL SERVICES SECTOR

Axos Financial, Inc. (AX: Financial Services/Banks-Regional) - BEARISH U-TURN. Sometimes traders hear about a stock that's in trouble and then short it without any thought to timing the entry. This method often results in less profits even when the trade moves in the desired direction. The Bearish U-Turn setup provides a smoother entry than just jumping in. It also reduces risk by placing both the entry trigger and exit stop near the top of the reversal. We'll use this approach with AX which met our setup requirements on Thursday. The SELL short trigger for this trade is set at 40.69, and the trailing stop is sized at 3.22. Reset the stop to 1.61 upon getting a 3.52 point gain. AX closed Thursday at 42.37. Earnings Report Date: Apr 28, 2022. Beta: 1.41. Market-Cap: 2.521B. Optionable.

HEALTHCARE SECTOR

Arcturus Therapeutics Holdings Inc. (ARCT: Healthcare/Biotechnology) - SQUEEZE PLAY. Traders are feeling the pressure as ARCT'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 23.7 and a SELL short entry at 21.3. ARCT's price movement will decide which entry is filled. As soon as you're in the trade, enter a 2.4 trailing stop. Tighten it to 1.2 after you get a 4.32 gain. ARCT closed Thursday at 22.59. Earnings Report Date: May 09, 2022. Beta: 2.74. Market-Cap: 595.811M. Optionable.

INDUSTRIALS SECTOR

Gibraltar Industries, Inc. (ROCK: Industrials/Building Products & Equipment) - BEARISH U-TURN. This short setup turns common stock behavior into profits. Grounded in the tendency for down-trending stocks to bounce briefly and then return to the familiar down-trend, the Bearish U-Turn points traders to weak stocks when conditions are calling for more downward price action. ROCK's behavior on Thursday near moving average support signals a potential SELL short entry at 38.76, followed by a 3.02 trailing stop which can be tightened to 1.51 upon earning 3.72. ROCK closed Thursday at 40.44. Earnings Report Date: May 04, 2022. Beta: 1.07. Market-Cap: 1.326B. 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.

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  
---------------- -------     --------    -------     ------  -------   
ACM Research      ACMR       3/4/2022   3/24/2022   3-for-1   Yes
PAM Transport     PTSI       3/9/2022   3/30/2022   2-for-1   Yes
Amazon            AMZN       3/9/2022   6/6/2022   20-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.

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:
https://www.holdrs.com/holdrs/main/index.asp?Action=Outstanding

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: https://prorightline.com/education/etfs.html

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.

Disclaimer

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