December 23, 2021 - The RightLine Report
Notes From The Editor
The market keeps going up and up. The S&P 500 set a new record closing high on the last session of the shortened Christmas holiday week as traders become increasingly confident in the ongoing bullish uptrend. The market traditionally maintains a positive tone during the holiday season, and so far that familiar pattern shows no sign of ending.
Historically the final few trading sessions before the yuletide offer an excellent example of how emotions impact stock prices. The often mentioned "Christmas Rally" or "Santa Claus Rally" has become such a tradition over the years that investors and traders now routinely expect it. This is because the market is made up of "us" - individuals whose personal experiences determine our feelings.
We are the market, and our feelings have a strong effect on our choices, which in turn affect stock prices. To "buy or not to buy" is the question that all of us who actively trade and invest must face on a regular basis. And whether we realize it or not, our decisions are based on both individual and collective influences.
Although most of us think that our buy and sell decisions are purely our own, this usually isn't the case. Why? Because we are all affected by what goes on around us. When we all experience the same positive conditions at the same time, we are all more likely to be optimistic.
History records that the stock market usually goes up during the final sessions of the outgoing year, and the first sessions of the New Year. It's no coincidence that this period includes several enjoyable holidays. It isn't surprising when you think about it; people tend to feel better and have a more positive outlook after enjoyable events.
The time spent with family and friends is certainly our favorite part of the Holidays, and we genuinely hope that the wonderful feelings of this special season stay with you long after the gifts are unwrapped, the tree is taken down, and the ornaments are stored away.
In the meantime, may you find yourself a warm and comfortable place underneath the mistletoe!
Merry Christmas from everyone at RightLine!
- Thomas Sutton, Editor
Note: The market will be closed in observance of Christmas Day on Friday 12/24/2021. RightLine offices will also be closed on Friday, so the next RightLine Report will be emailed on Tuesday 12/28.
Stocks Covered Today Stock Splits
Quick List
Stock 12/23 12/23 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
XPOF 20.60 0.57 20.88 18.97 1.91/0.96 3.5
CCJ 22.22 0.02 22.84 21.47 1.37/0.69 2.2
JNJ 168.22 0.29 171.17 8.84/4.42 4.94
SBLK 21.05 0.25 21.48 20.11 1.37/0.69 2.44
NMM 24.52 0.07 25.25 23.47 1.78/0.89 2.68
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.
Stocks Covered Today Stock Splits
Market Summary
The 2021 Santa Claus Rally led the S&P 500 to a new closing high on Tuesday following the release of several upbeat economic reports. Unemployment claims are near pre-pandemic lows, consumer sentiment was revised higher, new home sales reached a seven-month high and durable goods orders were above estimates. Light equity news featured FDA emergency use authorization for Merck's (MRK $76) molnupiravir pill that treats mild to moderate Covid in adults, while Quidel Corp (QDEL $137) has agreed to pay $6 billion for Ortho Clinical Diagnostics (OCDX $21). Shares of OCDX traded higher, QDEL declined by roughly 17%. The USD/dollar and treasuries finished the session lower, gold and oil prices closed higher.
Dec 22, 2021 Dec 23, 2021
-------------------- --------------------
Dow 35,753.89 261.19 35,950.56 196.67
Nasdaq 15,521.89 180.81 15,653.37 131.48
S&P 500 4,696.56 47.33 4,725.79 29.23
NYSE Volume 3.35B 2.94B
NYSE Advancers 2,487 2,289
NYSE Decliners 871 1,071
Nasdaq Volume 4.07B 3.95B
Nasdaq Advancers 2,926 3,232
Nasdaq Decliners 1,752 1,448
New Highs/Lows
12/16 12/17 12/20 12/21 12/22 12/23
--------------------------------------------
NYSE New Highs 110 41 13 43 59 102
NYSE New Lows 97 162 241 61 56 28
Nasdaq New Highs 83 49 29 42 58 80
Nasdaq New Lows 218 438 423 168 137 122
Stocks Covered Today Stock Splits
TRADER'S TIP: "Under and Over"
While it's easy to under-estimate how long it takes to learn how to trade well, it's almost impossible to OVER-estimate the value of the lessons learned along the way. Remember that there's no such thing as a bad experience - so long as you learn from it and assign it a high value.
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 - 4725.79 December 23, 2021
52-Week High: 4743.83
52-Week Low: 3662.71
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4914.48
Resistance 2: 4782.71
Resistance 1: 4701.67
Pivot: 4650.95
Support 1: 4569.91
Support 2: 4519.18
Support 3: 4387.41
NASDAQ Composite - 15653.37 December 23, 2021
52-Week High: 16212.23
52-Week Low: 12397.05
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 16609.08
Resistance 2: 15932.39
Resistance 1: 15551.03
Pivot: 15255.70
Support 1: 14874.34
Support 2: 14579.01
Support 3: 13902.32
Dow Industrials - 35950.56 December 23, 2021
52-Week High: 36565.73
52-Week Low: 29856.30
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 37424.31
Resistance 2: 36518.74
Resistance 1: 35942.09
Pivot: 35613.17
Support 1: 35036.52
Support 2: 34707.60
Support 3: 33802.03
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Friday, December 24, 2021: 24-Dec Christmas holiday: None scheduled Monday, December 27, 2021: 20-Dec 10 am Leading economic indicators Tuesday, December 28, 2021: 21-Dec 8:30 am Current account deficit Wednesday, December 29, 2021: 22-Dec 8:30 am GDP revision (SAAR) 22-Dec 10 am Consumer confidence index 22-Dec 10 am Existing home sales (SAAR) Thursday, December 30, 2021: 23-Dec 8:30 am Initial jobless claims (regular state program) 23-Dec 8:30 am Continuing jobless claims (regular state program) 23-Dec 8:30 am Nominal personal income 23-Dec 8:30 am Nominal consumer spending 23-Dec 8:30 am Core inflation (monthly) 23-Dec 8:30 am Core inflation (year-over-year) 23-Dec 8:30 am Real disposable income 23-Dec 8:30 am Real consumer spending 23-Dec 8:30 am Durable goods orders 23-Dec 8:30 am Core capital goods orders 23-Dec 10 am New home sales (SAAR) 23-Dec 10 am UMich consumer sentiment index (final) 23-Dec 10 am Five-year inflation expectations (final) 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: "After Hours"
Participation by Market Makers in after hours trading is strictly voluntary, which as a result may offer less liquidity and inferior prices. Because of this limited liquidity, the prices you see provide little information as to how the stock will perform during the following session.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
Xponential Fitness, Inc. (XPOF: Consumer Cyclical/Leisure) - SQUEEZE PLAY. Trader indecision has put XPOF squarely in the center of a Bull versus Bear standoff. This tight spot should soon give way to a clear winner in the short-term, and we want to be in position for the move. To do that we've set a BUY entry at 20.88 and a SELL short entry at 18.97. Now it's up to XPOF to show us which entry will be filled. Once the trade is underway place a 1.91 trailing stop, which can be tightened to 0.96 after you achieve a 3.5 profit. XPOF closed on Thursday at 20.60. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 492.299M. Optionable.
ENERGY SECTOR
Cameco Corporation (CCJ: Energy/Uranium) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in CCJ's narrowest trading range of the past seven sessions. With neither group able to take complete control on Thursday, the stock's short term destiny is up for grabs. You can capitalize on this unusually tight condition by placing both a BUY order at 22.84 and a SELL order at 21.47. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.37 trailing stop. Tighten the stop to 0.69 once you have a 2.2 gain. CCJ closed Thursday at 22.22. Earnings Report Date: Feb 09, 2022. Beta: 0.79. Market-Cap: 8.843B. Optionable.
HEALTHCARE SECTOR
Johnson & Johnson (JNJ: Healthcare/Drug Manufacturers-General) - BULLISH BOUNCE. This trader-friendly setup turns repetitive stock behavior into real profits. Based on the tendency for up-trending stocks to drop briefly and then resume the up-trend, the Bullish Bounce places traders into excellent stocks when conditions are primed for more skyward movement. JNJ's current price action near moving average support signals a potential BUY entry at 171.17, followed by a 8.84 trailing stop which can be tightened to 4.42 upon earning 4.94. JNJ closed Thursday at 168.22. Earnings Report Date: Jan 25, 2022. Beta: 0.72. Market-Cap: 442.856B. Optionable.
INDUSTRIALS SECTOR
Star Bulk Carriers Corp. (SBLK: Industrials/Marine Shipping) - SQUEEZE PLAY. One interesting trait of price volatility is that it cycles back and forth through periods of expansion and contraction. Stocks that have recently seen their daily price range shift from an average or wide range to an extremely contracted state are ideal candidates for expansive price moves. In many cases the next move is relatively fast and covers a sizable amount of territory. To take advantage of these trades we use both a BUY and a SELL entry. This allows us to enter in whichever direction the breakout takes. In SBLK's case we will enter a BUY should it reach the 21.48 level, or a SELL short trade if it drops to 20.11. As usual a trailing stop is essential, 1.37 which should be tightened to 0.69 on a 2.44 gain. SBLK closed Thursday at 21.05. Earnings Report Date: Feb 15, 2022. Beta: 1.02. Market-Cap: 2.152B. Optionable.
Navios Maritime Partners L.P. (NMM: Industrials/Marine Shipping) - SQUEEZE PLAY. In certain stocks a tightly constricted price range is a sign that neither bulls nor bears are confident of winning in the near term. This often means that the side that gives up first causes a quick move in the opposite direction. In these fear dominated skirmishes, opposing traders always benefit from the retreat. In the Squeeze Play setup you can actually play both sides of the inevitable surge. NMM traders reached this state of stand-off on Thursday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 25.25 and a SELL short trigger at 23.47. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.78 which can be tightened to 0.89 on a 2.68 gain. NMM closed Thursday at 24.52. Earnings Report Date: Mar 22, 2022. Beta: 2.42. Market-Cap: 740.433M. 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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