Notes From The Editor

It's been said that for every expert there's an opinion, and for every opinion there's an expert. The perfect example of this observation arrives annually during the weeks surrounding the New Year. Without fail a never-ending lineup of TV talking heads will present a steady stream of authoritative market predictions. Not surprisingly, many of these experts offer opposing viewpoints and expectations for the next twelve months.

While all of the commotion creates a whirl of buy and sell activity for brokerage firms, it provides little if any real value for traders and investors. The biggest quandary is that most experts recommend their favorite stocks or funds - all different of course - and give no specific buy and sell details, time frame or exit plan. Each one makes a good case for their particular selection, but then so does the next "expert" in the lineup.

The general theme of all this advice is for viewers to hold onto their purchases for the "long term." Unfortunately, not only do the experts fail to tell us if that means months, years, or decades, next year these same experts may propose an entirely different stock or fund because their previous year's forecast crashed and burned.

Usually the only specifics offered are what to buy. Rarely are investors told how long they should anticipate holding the position, and they never get a specific exit price to use if the stock or fund implodes.

I guess our friendly experts want us to buy and hold their recommendations for the "long term" ... whatever that may be. Then if the stock or fund tanks during that period of time we just hang on and hope it will bounce back. Apparently no other trade management skills are required.

Whew. With friends like that, who needs enemies?

Happy New Year!

- Thomas Sutton, Editor

Quick List

    
Stock     12/31     12/31      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

FRG       23.20      0.45     23.52     21.86        1.66/0.83      3.70
REGI      26.95      0.20     27.51     25.70        1.81/0.91      1.98
AVRO      20.13      0.08     20.86     19.25        1.61/0.81      2.76
TWST      21.00     -0.07     21.43     20.13        1.30/0.65      2.74

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

The major US stock market averages closed modestly higher on Tuesday, marking a positive end to a robust year that enjoyed quite a number of record highs. In equity news, shares of Core Laboratories NV (CLB $38) plummeted more than 20% after the oil industry services company cut its quarterly guidance and dividend plans, while Uber Technologies (UBER $30) announced it is suing the state of California over a new labor law. Trade volume was relatively low heading into the New Year's holiday break on Wednesday. Oil prices and the USD/dollar finished lower, gold and treasury yields were higher.

                        Dec 30, 2019           Dec 31, 2019   
                  --------------------   --------------------
Dow                    28,462  -183.12        28,538   +76.30
Nasdaq               8,945.99   -60.62         8,973   +26.61
S&P 500                 3,221   -18.73         3,231    +9.49

NYSE Volume                      3.08B                  3.03B
NYSE Advancers                    1263                   1892
NYSE Decliners                    1674                   1033

Nasdaq Volume                    2.07B                  2.27B
Nasdaq Advancers                  1260                   2009
Nasdaq Decliners                  1936                   1220

                                 New Highs/Lows

                   12/24  12/25  12/26  12/27  12/30  12/31
                 --------------------------------------------
NYSE New Highs       133      0    175    203     97    103
NYSE New Lows          5      0      7      4     15      9
Nasdaq New Highs     158      0    216    216    114    109
Nasdaq New Lows       33      0     27     29     37     29
   

TRADER'S TIP: "Making Decisions Builds Confidence"

Each time we enter or exit a trade we make a decision. Every decision we make causes us to grow - IF we give our experiences the value they deserve. However, if we short-change ourselves for not always making "perfect" choices and view our experiences as "mistakes" our confidence will go down instead of up.

Just remember that trading conditions are rarely optimum, and we're always making decisions under less than ideal circumstances. Give yourself a break, knowing that only YOU can set the proper value for each experience you have. Be sure you make the right choice. Build your confidence and never value any trade or other experience as worthless.

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 - 3230.78 December 31, 2019

52-Week High: 3247.93
52-Week Low: 2443.96
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3290.99
Resistance 2: 3263.57
Resistance 1: 3251.79
Pivot: 3236.15
Support 1: 3224.37
Support 2: 3208.73
Support 3: 3181.31


NASDAQ Composite - 8972.60 December 31, 2019

52-Week High: 9052.00
52-Week Low: 6457.13
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 9232.94
Resistance 2: 9115.30
Resistance 1: 9060.96
Pivot: 8997.66
Support 1: 8943.32
Support 2: 8880.02
Support 3: 8762.38
        
Dow Industrials - 28538.44 December 31, 2019

52-Week High: 28701.66
52-Week Low: 22638.41
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 29032.66
Resistance 2: 28822.78
Resistance 1: 28734.01
Pivot: 28612.90
Support 1: 28524.13
Support 2: 28403.01
Support 3: 28193.13
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, December 30, 2019:
30-Dec  8:30 am   Advance trade in goods
30-Dec  9:45 am   Chicago PMI
30-Dec  10 am   Pending home sales

Tuesday, December 31, 2019:
31-Dec   9 am   Case-Shllier home price index
31-Dec  10 am   Consumer confidence index

Wednesday, January 01, 2020:
None scheduled - Market Closed New Year's Day

Thursday, January 02, 2020:
02-Jan  8:30 am   Weekly jobless claims
02-Jan  9:45 am   Markit manufacturing PMI

Friday, January 03, 2020:
03-Jan  10 am   ISM manufacturing index
03-Jan  10 am   Construction spending
03-Jan  Varies   Motor vehicle sales
         



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

TRADER'S TIP: "Reverse Stock Splits"

Although rare, every now and then you will see or hear of a reverse stock splits. Investors generally view this negatively, as it is often a ploy to prop up the share price. Only on occasion is it done for a positive reason. In other words....avoid!

Stocks Covered in This Issue

CONSUMER CYCLICAL SECTOR

Franchise Group, Inc. (FRG: Consumer Cyclical/Personal Services) - SQUEEZE PLAY. The ticker for Tuesday's session shows FRG 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 23.52 and a SELL short trigger at 21.86. When FRG 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 1.66 trailing stop. Upon reaching a 3.70 profit, resize the stop to 0.83. Earnings Report Date: N/A. Beta: 0.47. Market-Cap: 519M. Not Optionable.

ENERGY SECTOR

Renewable Energy Group, Inc. (REGI: Energy/Oil & Gas Refining & Marketing) - SQUEEZE PLAY. Tuesday's trading session left REGI 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 27.51 and your SELL short trigger at 25.70. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.81 trailing stop. Once you have a 1.98 profit, reduce the stop to 0.91. Earnings Report Date: N/A. Beta: 1.23. Market-Cap: 1.1B. Optionable.

HEALTHCARE SECTOR

AVROBIO, Inc. (AVRO: Healthcare/Biotechnology) - SQUEEZE PLAY. Sometimes when Bulls and Bears face off in the market arena for a typical day-long battle, there is no clear winner. This is evident when the daily price range contracts to an unusually narrow state. AVRO found itself in this condition on Tuesday when neither buyers or sellers were able to push ahead. This setup provides traders a chance to hop on board the next breakout - whether it's to the upside or down - with little risk of loss. To do this place a BUY order at 20.86 and a SELL short trigger at 19.25. When AVRO moves outside of Tuesday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 1.61 trailing stop. After you've got a 2.76 profit, tighten the stop to 0.81. AVRO closed at 20.13 on Tuesday. Earnings Report Date: Mar 23, 2020. Beta: N/A. Market-Cap: 637M. Optionable.

Twist Bioscience Corporation (TWST: Healthcare/Diagnostics & Research) - SQUEEZE PLAY. TWST shareholders know what it feels like to be squeezed. Tuesday's slim price range reveals uncertainty on both sides of the table, a situation which often resolves itself by either Bears or Bulls quickly gaining a clear advantage. The question is "who will win?" Near-term market action tell us whether we should sell short or we should buy shares instead. TWST closed Tuesday at 21.00. The plan is to enter in the right direction by placing a BUY trigger at 21.43 and a SELL short trigger at 20.13. Once TWST establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.30. After you've collected a 2.74 profit, tighten the stop to 0.65. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 695M. 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  
---------------- -------     --------    -------     ------  -------   

Penns Woods Banc   PWOD    09/03/2019  10/01/2019   3-for-2   No
Equity Lifestyle   ELS     09/20/2019  10/16/2019   2-for-1   Yes
Middlefield Banc   MBCN    10/07/2019  11/12/2019   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 to all RightLine subscribers. For access, go to http://www.rightline.net and login to the Member's area.

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