April 26, 2022 - The RightLine Report
Notes From The Editor
While most new traders spend their time looking for the one "secret" to success in the stock market, there are actually several basic skills needed to flourish. Among these abilities are how to select stocks for trading, when to buy and sell your shares, and how to manage risk. Some people acquire the needed expertise through costly "learning experiences." Others pay an even higher price when they run out of money long before they understand how the market actually operates.
The best and most direct route to success is a well-rounded stock trading education. Despite the obvious benefits of this approach, the majority of folks don't do it. Most are in a big hurry and don't want to spend the time it takes to really become a skillful stock trader. Though some take a stab at learning, many just want someone to tell them when to buy and when to sell. This can be a high-risk way to approach the market. In truth, after a few inevitable losses the short-cutters usually lose trust in their advisor and give up.
Or they go on a perpetual hunt for a market guru that delivers nothing but winners. Unfortunately, no one wins all the time. Even if they did, there are tremendously important lessons to be learned from losses. Most veteran traders readily admit that they have gained more trading insight from their losers as their winners. The losers, break-evens, and winners all combine to teach us how to consistently profit from trading the stock market.
One a related note, it comes as a surprise to most folks that the "key" to success isn't a high rate of winners to losers. Instead, trying to maintain a very high win to loss ratio can have the opposite effect. Striving for exceptionally high win percentages typically causes traders to take profits too soon, to insure that the trade goes into the book as a winner.
Selling too early does not allow the little guys to develop into the full-grown winners that are needed to offset unavoidable losses and transaction costs. At the same time, their losing trades are held way too long in the hope that they will turn around and become winners. After all, a losing trade doesn't really qualify as a loser until it's sold ... right?
The real key is to be in the market for the big moves, and not lose much money in between these trends. The only way to profit from these moves is to have open positions. Many traders and investors pull out when the trend is flat or declining. They try to predict when the next big uptrend will occur. Unfortunately, this strategy often results in missing the best part of the move.
Instead of spending most of the time on the sidelines trying to forecast when the next major rally will occur, the best approach is to stay in the game. This gives valuable experience and teaches us how to trade properly from both sides of the market.
Through repetition we quickly learn winning skills. We discover how to control risk, and become adept at working in harmony with the trend. With experience we learn to manage each trade on its own merits. I suppose if you really want just one secret to trading stocks successfully, it has to be ... a good education!
Trade Well!
~ Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 04/26 04/26 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
TMST 20.52 -0.74 21.69 19.88 1.81/0.91 1.8
BILI 20.57 -0.68 21.48 19.61 1.87/0.94 5.84
DLTR 168.24 -1.61 172.38 9.62/4.81 6.72
TRNO 76.43 -0.58 78.43 4.7/2.35 3.38
SQSP 20.32 -1.06 21.67 19.54 2.13/1.07 0
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 major US stock indices were significantly lower on Tuesday as traders continued wrestling with several key concerns including inflation, anticipated Fed Bank tightening, and the ongoing Russian military actions against Ukraine. A robust economic calendar featured a slight dip in consumer confidence this month, a decline in new home sales as home prices were up more than 20% compared to the same month last year, plus manufacturing activity up slightly along with durable goods orders. In equities, 3M (MMM $144), PepsiCo (PEP $173) and GE (GE $81) released strong earnings and revenue numbers. Despite the good news, all three companies closed lower along with larger the market. Gold, oil prices and the USD/dollar were all higher, as were treasuries, which put downward pressure on yields.
Apr 25, 2022 Apr 26, 2022
-------------------- --------------------
Dow 34,049.46 238.06 33,240.18 -809.28
Nasdaq 13,004.85 165.56 12,490.74 -514.11
S&P 500 4,296.12 24.34 4,175.20 -120.92
NYSE Volume 5.21B 4.71B
NYSE Advancers 1,634 557
NYSE Decliners 1,710 2,759
Nasdaq Volume 4.8B 5.16B
Nasdaq Advancers 2,652 811
Nasdaq Decliners 2,135 3,929
New Highs/Lows
04/19 04/20 04/21 04/22 04/25 04/26
--------------------------------------------
NYSE New Highs 99 172 169 20 13 9
NYSE New Lows 285 97 251 412 440 392
Nasdaq New Highs 89 108 100 43 31 38
Nasdaq New Lows 306 206 485 635 626 781
Stocks Covered Today Stock Splits
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
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 - 4175.20 April 26, 2022
52-Week High: 4818.62
52-Week Low: 4056.88
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4841.41
Resistance 2: 4596.09
Resistance 1: 4433.93
Pivot: 4350.78
Support 1: 4188.62
Support 2: 4105.46
Support 3: 3860.14
NASDAQ Composite - 12490.74 April 26, 2022
52-Week High: 16212.23
52-Week Low: 12490.74
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 14891.36
Resistance 2: 14008.68
Resistance 1: 13423.98
Pivot: 13126.00
Support 1: 12541.30
Support 2: 12243.32
Support 3: 11360.64
Dow Industrials - 33240.18 April 26, 2022
52-Week High: 36952.65
52-Week Low: 32272.64
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 37796.66
Resistance 2: 36077.83
Resistance 1: 34944.61
Pivot: 34359.00
Support 1: 33225.78
Support 2: 32640.17
Support 3: 30921.34
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, May 02, 2022: 25-Apr None scheduled Tuesday, April 26, 2022: 26-Apr 8:30 am Durable goods orders 26-Apr 8:30 am Core capital equipment orders 26-Apr 9 am 26-Apr 9 am FHFA U.S. home price index (year-over-year) 26-Apr 10 am Consumer confidence index 26-Apr 10 am New home sales (SAAR) Wednesday, April 27, 2022: 27-Apr 8:30 am Advance report on international trade in goods 27-Apr 10 am Pending home sales index 27-Apr 10 am Home ownership rate (NSA) Thursday, April 28, 2022: 28-Apr 8:30 am Initial jobless claims 28-Apr 8:30 am Continuing jobless claims 28-Apr 8:30 am Real gross domestic product (SAAR) (first estimate) Friday, April 29, 2022: 29-Apr 8:30 am Employment cost index 29-Apr 8:30 am PCE price index 29-Apr 8:30 am Core PCE price index 29-Apr 8:30 am PCE price index (year-over-year) 29-Apr 8:30 am Core PCE price index (year-over-year) 29-Apr 8:30 am Nominal personal income 29-Apr 8:30 am Nominal consumer spending 29-Apr 8:30 am Real disposable incomes 29-Apr 8:30 am Real consumer spending 29-Apr 9:45 am Chicago PMI 29-Apr 10 am UMich consumer sentiment index (final) 29-Apr 10 am UMich 5-year inflation expectations 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: "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.
Stocks Covered in This Issue
BASIC MATERIALS SECTOR
TimkenSteel Corporation (TMST: Basic Materials/Steel) - SQUEEZE PLAY. TMST 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 21.69 and a SELL short entry at 19.88. Once your trade is filled, enter a 1.81 trailing stop. Tighten it to 0.91 after a 1.8 gain. TMST closed on Tuesday at 20.52. Earnings Report Date: May 04, 2022. Beta: 1.86. Market-Cap: 951.753M. Optionable.
COMMUNICATION SERVICES SECTOR
Bilibili Inc. (BILI: Communication Services/Electronic Gaming & Multimedia) - SQUEEZE PLAY. The ticker for Tuesday's session shows BILI is now stuck in a tight price band. With the cyclical contraction and expansion nature of volatility in force, we should see a new period of price expansion in the days ahead. To improve the odds of catching the next directional wave, place a BUY trigger at 21.48 and a SELL short trigger at 19.61. When BILI starts moving out of its narrow range, your order will be triggered. Once you're in the trade, cancel the opposing trigger and set a 1.87 trailing stop. Upon reaching a 5.84 profit, resize the stop to 0.94. Earnings Report Date: May 11, 2022. Beta: 1.29. Market-Cap: 7.877B. Optionable.
CONSUMER DEFENSIVE SECTOR
Dollar Tree, Inc. (DLTR: Consumer Defensive/Discount Stores) - BULLISH BOUNCE. Up-trending stocks like DLTR have a tendency to bounce their way skyward rather than travel higher in a straight line. After touching down to a moving average support level on Tuesday, DLTR is poised to lift off again. To take advantage of this setup, prepare to BUY shares at 172.38 if positive price action occurs. As always, follow your entry with a trailing stop. A 9.62 trailer should work well with DLTR. Tighten it to 4.81 on a 6.72 gainer. Earnings Report Date: May 25, 2022. Beta: 0.75. Market-Cap: 37.873B. Optionable.
REAL ESTATE SECTOR
Terreno Realty Corporation (TRNO: Real Estate/REIT-Industrial) - BULLISH BOUNCE. Here is another example of a stock in an established uptrend that has recently experienced a counter-trend drop. The sliding price action has now found support near a moving average zone, bouncing upward during Tuesday's session to close at 76.43. Anticipate the rebound to continue, and be ready to buy TRNO at 78.43. Follow your entry with a trailing stop of 4.7 which can be tightened to 2.35 on a 3.38 profit. Earnings Report Date: May 03, 2022. Beta: 0.73. Market-Cap: 5.773B. Optionable.
TECHNOLOGY SECTOR
Squarespace, Inc. (SQSP: Technology/Software-Infrastructure) - SQUEEZE PLAY. Tuesday's trading session left SQSP 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 21.67 and your SELL short trigger at 19.54. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 2.13 trailing stop. Once you have a 0 profit, reduce the stop to 1.07. Earnings Report Date: May 12, 2022. Beta: N/A. Market-Cap: 2.843B. 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
---------------- ------- -------- ------- ------ -------
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.
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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