December 16, 2021 - The RightLine Report
Notes From The Editor
A Trader's Perspective
Here are few thoughts about drama, emotions and trading that have been rolling around in my head lately. I hope you find them helpful as you trade in the current market environment!
1) Most folks seem to be addicted to some form of drama. In the stock market, drama usually determines what most investors do and when they do it.
2) Money and fear -- often expressed as anger -- are usually involved in the ever-evolving drama.
3) On a global scale, the current major dramas that affect us involve the world economy, politics, the climate-change debate and fear of disease.
4) Emotions will continue to rise and fall in correlation with the drama.
5) The majority of investors and traders base their buy-and-sell decisions on emotions. Because of this, they tend to get in and out of the market at the wrong time.
6) There is usually very little we can do individually to change any of the above. However, we can use this information to make intelligent trading decisions and take advantage of the roller-coaster price movement that is caused by the drama.
Trade well!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 12/16 12/16 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
AMR 50.73 1.45 52.8 48.27 4.53/2.27 6.44
NNOX 17.45 -0.18 16.61 1.53/0.77 3.2
MRUS 30.33 -0.16 31.14 28.68 2.46/1.23 3.28
AXSM 33.51 0.73 34.25 31.52 2.73/1.37 5.02
NFE 22.61 0.25 23.19 21.54 1.65/0.83 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" 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 lower on Thursday as investors considered a bundle of economic news that showed decelerating growth in the manufacturing and services sector, stronger than expected housing construction activity, and unemployment claims modestly above multi-decade lows. On the equities front, shares of Adobe (ADBE $558) and Lennar Corporation (LEN $108) dipped following their earnings announcements, while Accenture (ACN $401) advanced higher after releasing upbeat earnings results and guidance. Gold and oil prices moved upward, the USD/dollar was lower, and treasuries were mixed.
Dec 15, 2021 Dec 16, 2021
-------------------- --------------------
Dow 35,927.43 383.25 35,897.64 -29.79
Nasdaq 15,565.58 327.94 15,180.43 -385.15
S&P 500 4,709.85 75.76 4,668.67 -41.18
NYSE Volume 4.85B 4.8B
NYSE Advancers 2,203 1,553
NYSE Decliners 1,151 1,813
Nasdaq Volume 5.32B 4.89B
Nasdaq Advancers 2,960 1,597
Nasdaq Decliners 1,717 3,074
New Highs/Lows
12/09 12/10 12/13 12/14 12/15 12/16
--------------------------------------------
NYSE New Highs 49 56 89 36 69 110
NYSE New Lows 53 73 120 176 230 97
Nasdaq New Highs 59 50 65 34 56 83
Nasdaq New Lows 89 172 332 478 641 218
Stocks Covered Today Stock Splits
TRADER'S TIP: "Behavioral Economics"
Dr. Daniel Kahneman - a professor at Princeton University - won the Nobel Prize for Economics in 2002. His studies in the field of behavioral economics reveal that investors are generally irrational, but predictably so. This is due to the fact they usually make the same mistakes again and again. One of the most repeated quirks is a common inability to take a loss. In fact, Dr. Kahneman's work shows that taking a loss is so painful to most people that they simply avoid it.
Rule One: Take losses while they're small, it's much easier that way.
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 - 4668.67 December 16, 2021
52-Week High: 4743.83
52-Week Low: 3636.48
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 5001.48
Resistance 2: 4828.42
Resistance 1: 4770.22
Pivot: 4655.36
Support 1: 4597.16
Support 2: 4482.30
Support 3: 4309.24
NASDAQ Composite - 15180.43 December 16, 2021
52-Week High: 16212.23
52-Week Low: 12397.05
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 17181.63
Resistance 2: 16317.19
Resistance 1: 15973.89
Pivot: 15452.75
Support 1: 15109.45
Support 2: 14588.31
Support 3: 13723.87
Dow Industrials - 35897.64 December 16, 2021
52-Week High: 36565.73
52-Week Low: 29755.53
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 38227.55
Resistance 2: 36878.29
Resistance 1: 36424.64
Pivot: 35529.03
Support 1: 35075.38
Support 2: 34179.77
Support 3: 32830.51
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Thursday, December 16, 2021: 16-Dec 8:30 am Initial jobless claims (regular state program) 16-Dec 8:30 am Continuing jobless claims (regular state program) 16-Dec 8:30 am Building permits (SAAR) 16-Dec 8:30 am Housing starts (SAAR) 16-Dec 8:30 am Philadelphia Fed manufacturing index 16-Dec 9:15 am Industrial production index 16-Dec 9:15 am Capacity utilization Friday, December 17, 2021: 17-Dec None scheduled 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: "Slippage"
"Price slippage" is the difference in the price of the stock that appears on the ticker at the time you place a trade, and the price at which your order is actually filled. "Transaction slippage" is the difference between estimated and actual transaction costs. To control slippage, always trade liquid stocks, avoid low volume issues, and use limit orders whenever possible.
Stocks Covered in This Issue
BASIC MATERIALS SECTOR
Alpha Metallurgical Resources, Inc. (AMR: Basic Materials/Coking Coal) - SQUEEZE PLAY. Thursday's narrow price range has created a potentially profitable setup in AMR, 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 52.8 and a SELL short entry at 48.27. Let AMR's price action determine your long or short entry. Once the order is filled, place a 4.53 trailing stop, and tighten it to 2.27 upon getting a 6.44 gain. AMR closed Thursday at 50.73. Earnings Report Date: N/A. Beta: 1.55. Market-Cap: 933.452M. Optionable.
HEALTHCARE SECTOR
Nano-X Imaging Ltd. (NNOX: Healthcare/Medical Devices) - BEARISH U-TURN. The weight of NNOX's declining weekly trend was lightened recently when shares began to move upward. However, like a swimmer against the tide NNOX encountered strong resistance on Thursday. Price action indicates a likely return to the previous downtrend, so plan to short NNOX upon reaching our SELL trigger at 16.61. Set a 1.53 trailing stop which can be tightened to 0.77 after you have a 3.2 gain. NNOX ended the latest session at 17.45. Earnings Report Date: Feb 28, 2022. Beta: N/A. Market-Cap: 835.466M. Optionable.
Merus N.V. (MRUS: Healthcare/Biotechnology) - SQUEEZE PLAY. MRUS 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 31.14 and a SELL short entry at 28.68. Once your trade is filled, enter a 2.46 trailing stop. Tighten it to 1.23 after a 3.28 gain. MRUS closed on Thursday at 30.33. Earnings Report Date: Mar 14, 2022. Beta: 0.95. Market-Cap: 1.294B. Optionable.
Axsome Therapeutics, Inc. (AXSM: Healthcare/Biotechnology) - SQUEEZE PLAY. Traders are feeling the pressure as AXSM'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 34.25 and a SELL short entry at 31.52. AXSM's price movement will decide which entry is filled. As soon as you're in the trade, enter a 2.73 trailing stop. Tighten it to 1.37 after you get a 5.02 gain. AXSM closed Thursday at 33.51. Earnings Report Date: Feb 28, 2022. Beta: 2.22. Market-Cap: 1.263B. Optionable.
UTILITIES SECTOR
New Fortress Energy Inc. (NFE: Utilities/Utilities-Regulated Gas) - SQUEEZE PLAY. Thursday's trading session left NFE 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 23.19 and your SELL short trigger at 21.54. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.65 trailing stop. Once you have a 2.52 profit, reduce the stop to 0.83. Earnings Report Date: Mar 14, 2022. Beta: 1.63. Market-Cap: 4.677B. 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
---------------- ------- -------- ------- ------ -------
Arista Networks ANET 11/1/2021 11/18/2021 4-for-1 Yes
ePlus PLUS 11/9/2021 12/14/2021 2-for-1 Yes
NAPCO Security NSSC 12/8/2021 1/5/2022 2-for-1 Yes
Merchants Bancorp MBIN 11/17/2021 1/18/2022 2-for-1 No
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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