August 18, 2022 - The RightLine Report 

 
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                      NOTES FROM THE EDITOR
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Tapping Into the Power of Relative Strength Analysis

The broader market's direction tends to have the largest impact on the movement of any given stock. However, it's difficult to design a trading strategy solely around this tendency. The reason is simple: individual equities don't usually march in lock-step with the overall market. They sometimes underperform or outperform, or "fade" the major indices by moving entirely in the opposite direction.

A common-sense tool called relative strength analysis can help us draw useful conclusions when stocks diverge from the broader market. The idea is simple: when you're looking at a stock, compare it to a chart of the S&P 500 (the best gauge of overall market performance). How does it look - especially over the past month or so? Has the stock roughly mirrored the S&P's price action? Has it moved in the same direction, but at a faster or slower pace? Or has it faded the index with a move in the opposite direction?

Just by eyeballing the two charts - the index and the stock - you can reach some interesting conclusions about the stock's strength (or lack thereof). If shares are outperforming the S&P 500 during a bullish period, that's a good sign that more buying might be in store over the near-term. Similarly, an underperforming uptrend in a rising market (also called relative weakness) would be a bearish sign.

But wait...you don't have to stop with just looking at the S&P 500. Relative strength analysis can also be used with sector indices. This is a good idea, as it accounts for sector-specific strength or weakness. For example, you could compare Intel (INTC) to not only the S&P 500, but also the semiconductor index (SOX). This would give you a deeper understanding of how INTC is performing versus the overall chip sector.

You can even perform this analysis with two stocks. This comes in handy when you're torn between two similar trade set-ups in the same sector. To take the INTC example one step further, you might compare it to, say, Advanced Micro Devices (AMD) to see which one has been stronger. The one showing relative strength would probably be a better candidate for a long trade.

Some charting programs offer a simple way of charting relative strength; a rising line shows that the stock in question is outperforming, while a falling line shows relative weakness. But oftentimes, the best tool is your eyeballs! Compare, contrast, and drill down to find your best trade.

Here's to profits,

Kent Barton
Senior Analys 

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                           "QUICK LIST"
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Stock     08/18     08/18      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

TDW       21.52      1.14     21.83      20.1        1.73/0.87      2.22
ARGO      20.46      0.31      21.2     19.29        1.91/0.96       1.7
TPIC      20.07      0.77     20.89                  2.12/1.06      2.72
AI        21.73     -0.19     22.19                  1.48/0.74      2.26
APPS      23.97      0.32     24.45      22.6        1.85/0.93      2.52


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 were higher on Thursday as economic reports for unemployment claims and manufacturing output in the Philadelphia region were better than expected. In other related news, existing home sales declined for the sixth month in a row. Equities featured upbeat earnings results from BJ Wholesale Club (BJ $74) and Cisco Systems (CSCO $49), while Kohl's (KSS $31) fell short of estimates and lowered its guidance. Oil, the USD/dollar and treasuries finished the session higher, gold traded lower. 


                       Aug 17, 2022           Aug 18, 2022   
                  --------------------   --------------------
Dow                 33,980.32  -171.69     33,999.04    18.72
Nasdaq              12,938.12  -164.43     12,965.34    27.22
S&P 500              4,274.04   -31.16      4,283.74     9.70

NYSE Volume                      3.93B                  3.37B
NYSE Advancers                     649                  1,818
NYSE Decliners                   2,572                  1,314

Nasdaq Volume                    5.18B                  4.66B
Nasdaq Advancers                 1,140                  2,444
Nasdaq Decliners                 3,445                  2,076

                                 New Highs/Lows

                   08/11  08/12  08/15  08/16  08/17  08/18
                 --------------------------------------------
NYSE New Highs        57     56     61     64     35     55
NYSE New Lows         28     24     19     21     34     30
Nasdaq New Highs      84     96     90     91     50     79
Nasdaq New Lows       47     61     52     61     76     73

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                              TRADER'S TIP:  
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TRADER'S TIP: "That Extra Something . . ."

The ability to relax emotionally and mentally when trading is usually associated with bull markets. And while we all love bullish market conditions, it's best to connect our positive emotions about trading to something more reliable than just upward market movement. Knowing that we can engage the stock market profitably in any environment provides that "something."

Belief, confidence, or whatever you want call it, the conviction that comes from experience and preparation is far more powerful than any bull. Why? Because bull markets don't last forever. What they give, the bear usually takes back - both in dollars and peace of mind. However, bears can't take away your money OR your confidence when it is based on sound trading principles and a realistic belief in your ability to be successful. This is true regardless of the current market trend. 
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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 - 4283.74 August 18, 2022

52-Week High: 4818.62
52-Week Low: 3636.85
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4560.99
Resistance 2: 4392.61
Resistance 1: 4336.38
Pivot: 4224.23
Support 1: 4168.00
Support 2: 4055.85
Support 3: 3887.47
https://www.prorightline.com/rlch/081822SPX.jpg

NASDAQ Composite - 12965.34 August 18, 2022

52-Week High: 16212.23
52-Week Low: 10565.14
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 14061.07
Resistance 2: 13452.74
Resistance 1: 13249.96
Pivot: 12844.41
Support 1: 12641.63
Support 2: 12236.08
Support 3: 11627.75


Dow Industrials - 33999.04 August 18, 2022

52-Week High: 36952.65
52-Week Low: 29653.27
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 35539.12
Resistance 2: 34474.69
Resistance 1: 34117.87
Pivot: 33410.26
Support 1: 33053.44
Support 2: 32345.83
Support 3: 31281.40


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                             MARKET CALENDAR
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--ECONOMIC REPORTS AND EVENTS (all times are Eastern): 
Friday, August 19, 2022:
19-Aug  10 am   Advance report on 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: "Focus: Money or Education?"

There is a tremendous difference between focusing on money and focusing on using your trading as an exercise to identify what you need to learn. The first will cause you to focus on what the markets are giving you or are taking away from you. The second perspective causes you to focus your attention on your ability to give yourself money. With the first perspective, you are placing some of the responsibility onto the markets to do something for you. With the second perspective, you assume all the responsibility. 

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                      STOCKS COVERED IN THIS ISSUE    
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ENERGY SECTOR

Tidewater Inc. (TDW: Energy/Oil & Gas Equipment & Services) - SQUEEZE PLAY. Thursday's trading action forced TDW'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 TDW 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 21.83 if TDW moves higher, and place your order to SELL short at 20.1 if price declines to that level. As usual follow your entry with a trailing stop, 1.73 should be sufficient. Reduce your stop to 0.87 on a 2.22 gain. TDW closed Thursday at 21.52. Earnings Report Date: Nov 07, 2022. Beta: 1.43. Market-Cap: 983.679M. Optionable.

FINANCIAL SERVICES SECTOR

Argo Group International Holdings, Ltd. (ARGO: Financial Services/Insurance-Property & Casualty) - SQUEEZE PLAY. A look at ARGO'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 21.2 and a SELL short trigger at 19.29. Once ARGO shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.91 and tighten to 0.96 on a 1.7 gain. ARGO closed Thursday at 20.46. Earnings Report Date: Oct 31, 2022. Beta: 0.80. Market-Cap: 716.513M. Not Optionable.

INDUSTRIALS SECTOR

TPI Composites, Inc. (TPIC: Industrials/Specialty Industrial Machinery) - BULLISH BOUNCE. TPIC's positive weekly uptrend is still intact despite recent selling that has driven share prices lower. Price action on Thursday 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 TPIC back in step with the bullish weekly trend, so our BUY entry trigger is set at 20.89. Once you hold a position, trail a stop of 2.12. Tighten it to 1.06 on a 2.72 gain. TPIC closed at 20.07 on Thursday. Earnings Report Date: Nov 07, 2022. Beta: 1.64. Market-Cap: 748.35M. Optionable.

TECHNOLOGY SECTOR

C3.ai, Inc. (AI: Technology/Information Technology Services) - BULLISH BOUNCE. The charts for AI show that despite the downward pressure from sellers recently, the weekly uptrend is still going strong. Buyers showed up again on Thursday, 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 22.19, and follow your entry with a trailing stop of 1.48. Tighten it to 0.74 when a 2.26 profit is reached. AI ended the latest session at 21.73. Earnings Report Date: Aug 31, 2022. Beta: N/A. Market-Cap: 2.328B. Optionable.

Digital Turbine, Inc. (APPS: Technology/Software-Application) - SQUEEZE PLAY. APPS is caught in a dilemma. The stock's compressed price range on Thursday 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. APPS is now at 23.97. We can capture price action either way by placing a BUY trigger at 24.45 and a SELL short trigger at 22.6. Once APPS 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 1.85. When you acquire a 2.52 profit, tighten the stop to 0.93. Earnings Report Date: Oct 31, 2022. Beta: 2.39. Market-Cap: 2.369B. 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  
---------------- -------     --------    -------     ------  -------   
Gamestop          GME        7/7/2022   7/22/2022    4-for-1   Yes
Alphabet          GOOG       2/1/2022   7/18/2022   20-for-1   Yes
Nasdaq Inc        NDAQ       7/20/2022  8/29/2022    3-for-1   Yes

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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