Notes From The Editor

Success-minded people are adaptable. This is especially shown to be true during tough times. For example, many former only-buy-and-hold investors are now learning how to interactively trade stocks. Fortunately the required skills aren't extremely difficult to learn. In fact they are typcially mined from experiences along the learning curve that every trader travels.

The journey isn't an overnight trip; it takes patience. Despite the obvious benefits of a good trading education, many people say that they don't have the time to learn. Others think they already know everything they need to know, then inevitably decide to give up after a few painful losses due to lack of knowledge and experience.

That's too bad. There's no profit in giving up, and there are many important lessons to be learned from losses. All veteran traders are battle toughened and persistent. Each will readily admit they have gained more from their losers than their winners. All trades -- no matter the outcome -- teach us how to become better traders.

In fact it's best to view ALL of our experiences as valuable assets. While many folks would just as soon forget about their "mistakes," those memories viewed with understanding are great resources to be tapped whenever needed.

How we choose to look back at our experiences is extremely important. From the things we did as kids, to the adult situations we all deal with, each scenario contributes to the sum of how we regard ourselves. This view of "us" dramatically affects the way we trade.

It's difficult to admit that we sometimes do dumb things. That's because immediately after we realize our mistakes, we typically feel the emotions of disappointment, embarrassment and shame.

It's at that very moment we arrive at another fork in the road to our future. Fortunately we have a choice. We can either accept what we've done and then follow up by doing something reasonably smart. Or we can try to cover it up and shift the blame to someone or something else.

Over the years most of us have tried both routes. Frankly there is only one way to go to be successful. Learning to take responsibility for the things we do puts us light years ahead of the crowd. We'll also save ourselves a huge amount of emotional anguish.

Trade well,

Thomas Sutton, Editor

Quick List

    
Stock     04/03     04/03      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

MDC       20.25      0.21     20.70     18.49        2.21/1.10      6.42
ATH       21.50     -0.78     22.74     20.37        2.37/1.19      6.02
GDOT      21.77     -0.19     22.39     19.89        2.50/1.25      7.94
NXRT      21.69     -0.37     22.99     20.53        2.46/1.23      9.54

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 access to the Risk Calculator, go to http://www.rightline.net and login to the Member's area.

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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Market Summary

Stocks closed lower on Friday as uncertainty surrounding the extent of the COVID-19's health and economic impact continued to restrain market sentiment. Economic reports for March generally paint a dreary image, with larger-than-predicted unemployment claims headlining the current news cycle. Gold, the USD/dollar and oil prices all moved higher, whil treasury yields declined.

                      Friday                 On The Week      
                  --------------------   --------------------
Dow                    21,053  -360.91         -584     -2.7%
Nasdaq               7,373.08  -114.23       -129.3    -1.72%
S&P 500                 2,489   -38.25          -52    -2.05%

NYSE Volume                      6.19B                       
NYSE Advancers                     632                       
NYSE Decliners                    2340                       

Nasdaq Volume                    3.31B                       
Nasdaq Advancers                   867                       
Nasdaq Decliners                  2370                       

                                 New Highs/Lows

                   03/27  03/30  03/31  04/01  04/02  04/03
                 --------------------------------------------
NYSE New Highs         3      5      5      3      2      2
NYSE New Lows         43     59     29    116    117    180
Nasdaq New Highs      12     15     18     14      4      5
Nasdaq New Lows       46     41     46     83    138    193
   

TRADER'S TIP: "Positive Returns"

In one sense risk can be defined as the events or conditions that discourage traders - so much that they sometimes abandon strategies that have the potential to produce high returns. This is the main reason to use Risk Control. With a planned risk management strategy, situations and events that discourage others have little or no negative effect on you. This means while others are giving up, you remain focused on learning and earning, while protecting your capital. Over time, you become skillful at trading the markets and enjoy the positive returns others have abandoned.

The Technical Analyst

For help with this chart, be sure to read "Understanding The Importance Of Support And Resistance"
and "Boost Your Profits With Moving Averages".

S&P 500 - 2488.65 April 3, 2020

52-Week High: 3393.52
52-Week Low: 2191.86
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 2913.64
Resistance 2: 2719.74
Resistance 1: 2604.19
Pivot: 2525.84
Support 1: 2410.29
Support 2: 2331.94
Support 3: 2138.04


NASDAQ Composite - 7373.08 April 3, 2020

52-Week High: 9838.37
52-Week Low: 6631.42
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 8698.23
Resistance 2: 8106.03
Resistance 1: 7739.55
Pivot: 7513.83
Support 1: 7147.35
Support 2: 6921.63
Support 3: 6329.43
        
Dow Industrials - 21052.53 April 3, 2020

52-Week High: 29568.57
52-Week Low: 18213.65
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 24913.33
Resistance 2: 23167.99
Resistance 1: 22110.26
Pivot: 21422.64
Support 1: 20364.91
Support 2: 19677.29
Support 3: 17931.94
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, April 06, 2020:
06-Apr          None scheduled

Tuesday, April 07, 2020:
07-Apr  10 am   Job openings
07-Apr   3 pm   Consumer credit

Wednesday, April 08, 2020:
08-Apr   2 pm   FOMC minutes

Thursday, April 09, 2020:
09-Apr  8:30 am   Weekly jobless claims
09-Apr  8:30 am   Producer price index
09-Apr  10 am   Consumer sentiment index
09-Apr  10 am   Wholesale inventories

Friday, April 10, 2020:
10-Apr  8:30 am   Consumer price index
10-Apr  8:30 am   Core CPI

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

TRADER'S TIP: "Where's the Beta?"

Sometimes we list a stock's Beta as "N/A" or Non Applicable. Beta is a measure of a stock's volatility measured against the average S&P stock over the last 5 years when available, and not less than 2.5 years. If a company has not existed for 2.5 years, it has not yet earned "the right" to have a Beta. If two companies with 100-year histories merge, the new company will not receive a Beta until the combined entity has existed for 2.5 years.

Stocks Covered in This Issue

CONSUMER CYCLICAL SECTOR

M.D.C. Holdings, Inc. (MDC: Consumer Cyclical/Residential Construction) - SQUEEZE PLAY. A look at MDC'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 20.70 and a SELL short trigger at 18.49. Once MDC shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 2.21 and tighten to 1.10 on a 6.42 gain. MDC closed Friday at 20.25. Earnings Report Date: May 04, 2020. Beta: 0.96. Market-Cap: 1.277B. Optionable.

FINANCIAL SERVICES SECTOR

Athene Holding Ltd. (ATH: Financial Services/Insurance-Diversified) - SQUEEZE PLAY. Friday's trading action forced ATH's daily price range into an abnormally narrow state. This translates into opportunity; for the cyclical nature of price volatility is to shrink extensively, then swell rapidly as shares move in one direction or another. Instead of trying to predict the direction ATH will take when price volatility begins to increase, we'll set both a BUY (long) and a SELL (short) trigger to get us into the right trade. Be ready to BUY shares at 22.74 if ATH moves higher, and place your order to SELL short at 20.37 if price declines to that level. As usual follow your entry with a trailing stop, 2.37 should be sufficient. Reduce your stop to 1.19 on a 6.02 gain. ATH closed Friday at 21.50. Earnings Report Date: May 04, 2020. Beta: 0.97. Market-Cap: 3.081B. Optionable.

Green Dot Corporation (GDOT: Financial Services/Credit Services) - SQUEEZE PLAY. When a stock's daily price range contracts to an unusually low point, you can safely assume that in most cases a breakout from that range will result in a nice price move. To capture a portion of this potential movement we have set both a long and a short entry into GDOT. A move to the upside will trigger our BUY entry at 22.39, while a drop to 19.89 will trigger our SELL short entry. Follow your position with a 2.50 trailing stop. Tighten the stop to 1.25 once you have a 7.94 gain. GDOT closed Friday at 21.77. Earnings Report Date: May 05, 2020. Beta: 0.65. Market-Cap: 1.149B. Optionable.

REAL ESTATE SECTOR

NexPoint Residential Trust, Inc. (NXRT: Real Estate/REIT-Residential) - SQUEEZE PLAY. NXRT is caught in a dilemma. The stock's compressed price range on Friday has resulted in a condition comparable to a wound up rubber band. We anticipate that this undecided equity will take off soon, but with the direction still in question we'll let upcoming market action tell us whether to buy shares or sell short. NXRT is now at 21.69. We can capture price action either way by placing a BUY trigger at 22.99 and a SELL short trigger at 20.53. Once NXRT reveals its direction, enter your triggered order and disregard the other one. As soon as your position is in place, follow up with a trailing stop of 2.46. When you acquire a 9.54 profit, tighten the stop to 1.23. Earnings Report Date: N/A. Beta: 0.44. Market-Cap: 548.688M. 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  
---------------- -------     --------    -------     ------  -------   

Currently there are no upcoming stock splits on the major US exchanges.
    

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

TIME by Alan Farley

Sophisticated technical indicators evolve from simple data inputs of price and time. While most traders understand how price patterns reveal hidden opportunity, many fail to comprehend how time impacts both tactics and results. Lacking a skilled understanding of opportunity cost, they misinterpret signals and waste valuable resources. Or, trapped in common trend relativity errors, they prepare trades in one time frame but execute them in another.

Opportunity cost defines how the trader manipulates working capital. For example, this important concept reveals why cutting losses efficiently is so important for long term survival. By its nature, taking any stock position dictates that those funds will not be available for another trade. This becomes a critical issue on account draw downs when individual trades can dictate success or failure for the aspirant.

All trends in the markets are time frame specific. For example, the existence of an uptrend in a daily chart says nothing about the trend in the monthly or intra-day chart. This highlights the importance of correct time input in preparing technical indicators or reading chart patterns. When improperly time-tuned, technical analysis loses its effectiveness. Alternatively, resonant time readings will evoke startling accuracy with otherwise mediocre data input.

Time Summation of indicators falls into three general categories:

- Moving averages of elements such as price or volume

- Relationships between the open, close, high and/or low of individual bars

- Repeating cycles of price or volume behavior

Time Period of indicators falls into three general categories:

- Short Term

- Intermediate Term

- Long Term

Individual units of time are best viewed as relative periods, as opposed to daily, weekly or monthly lengths. Since no two technicians trade in exactly the same time frame, patterns and indicators must serve a broad range of uses. Fortunately, technical analysis studies a fractal market. Valid predictions may be made with indicators developed from 5-minute bars or monthly ones in exactly the same manner. But don't be fooled: prediction can only be made in the same time frame as the tools being used to study it.



Trends are dependent on the time frame in which you are viewing them. While IBM shows a promising reversal taking place on the intra-day, the daily and weekly show a major correction in progress. Notice how the weekly reveals an excellent buy point at the top of the multi-year price channel, a support level completely missed on the daily chart.

A simple yet powerful tool, the Risk Control Calculator helps you manage risk by recommending a maximum number of shares to purchase. Available to all RightLine subscribers. For access, go to http://www.rightline.net and login to the Member's area.

Disclaimer

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