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December 4, 2021 - The RightLine Report
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NOTES FROM THE EDITOR
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The Battle of the Exit Strategies: Scaling Out vs. All or None
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"QUICK LIST"
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Stock 12/03 12/03 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
JWN 20.19 -0.37 20.96 19.11 1.85/0.93 2.72
CHGG 28.56 -0.39 29.27 26.94 2.33/1.17 1.86
EHTH 23.82 -0.65 24.95 22.72 2.23/1.12 5.14
IFS 24.28 -0.35 25.15 23.27 1.88/0.94 2.12
NUVL 19.97 -0.93 21.21 18.71 2.5/1.25 5.62
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 lower on Friday, capping off a volatile week as the markets digested a mixed payroll report that showed job growth was considerably short of the mark, yet the jobless rate dropped and the labor force participation rate rose to the strongest level since March 2020. In other news, factory orders were well above expectations, and services sector growth in November set an all-time record high. In equities, shares of Marvell Technology (MRVL $84) were solidly higher after the semiconductor company beat earnings forecasts and delivered a positive outlook, while e-signature company DocuSign (DOCU $135) fell hard after coming up short on revenues and issuing weak guidance. Oil prices were lower, the USD/dollar closed near even, gold and treasuries advanced higher. Friday On The Week
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Dow 34,580.08 -59.71 -319.26 -0.91%
Nasdaq 15,085.47 -295.85 -406.19 -2.62%
S&P 500 4,538.43 -38.67 -56.19 -1.22%
NYSE Volume 5.34B
NYSE Advancers 915
NYSE Decliners 2,439
Nasdaq Volume 5.95B
Nasdaq Advancers 1,052
Nasdaq Decliners 3,612
New Highs/Lows
11/26 11/29 11/30 12/01 12/02 12/03
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NYSE New Highs 20 35 26 35 17 28
NYSE New Lows 202 125 280 237 188 208
Nasdaq New Highs 34 57 46 63 31 27
Nasdaq New Lows 347 346 628 571 619 732
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TRADER'S TIP:
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TRADER'S TIP: "Hi-Tech Trading Platforms" A direct access trading platform will help a good trader make more money, but it does nothing for those who are still trying to grasp the basics of the stock market. Success in this business is more dependent on accurate chart interpretation than buying the newest hi-tech software or hardware. Huge profits are made each month by long-time professional traders who still use the phone to place their orders and manage open positions. As your execution and trade management abilities improve, it becomes obvious that what you know is far more important to your bottom line than any state-of-the-art trading platform. **************************
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 - 4538.43 December 3, 2021 52-Week High: 4743.83 52-Week Low: 3633.40 Daily Trend: DOWN Weekly trend: UP Weekly Pivot Levels Resistance 3: 4924.49 Resistance 2: 4746.66 Resistance 1: 4642.54 Pivot: 4568.83 Support 1: 4464.71 Support 2: 4391.00 Support 3: 4213.17 https://www.prorightline.com/rlch/120321SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, December 06, 2021: 06-Dec None scheduled Tuesday, December 07, 2021: 07-Dec 8:30 am Trade deficit 07-Dec 8:30 am Productivity revision (SAAR) 07-Dec 8:30 am Unit labor costs revision (SAAR) 07-Dec 3 pm Consumer credit (change) Wednesday, December 08, 2021: 08-Dec 10 am Job openings 08-Dec 10 am Job quits Thursday, December 09, 2021: 09-Dec 8:30 am Initial jobless claims (regular state program) 09-Dec 8:30 am Continuing jobless claims (regular state program) 09-Dec 10 am Wholesale inventories (revision) 09-Dec 12 noon Real household wealth 09-Dec 12 noon Real domestic nonfinancial debt Friday, December 10, 2021: 10-Dec 8:30 am Consumer price index 10-Dec 8:30 am Core inflation 10-Dec 8:30 am CPI (year-over-year change) 10-Dec 10 am UMich consumer sentiment index (preliminary) 10-Dec 10 am Expected inflation, five-years (preliminary) 10-Dec 2 pm Federal budget 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: "Check the Charts, Not the Chatters" When it comes to market reversals, traders usually listen to the wrong sources. They often follow the news media when they would be much better off viewing the technical picture. Avoid the mind numbing chatter of self-appointed experts. These guys and gals are normally there to make money for themselves - not for you. ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR Nordstrom, Inc. (JWN: Consumer Cyclical/Department Stores) - SQUEEZE PLAY. Friday's trading session left JWN 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 20.96 and your SELL short trigger at 19.11. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.85 trailing stop. Once you have a 2.72 profit, reduce the stop to 0.93. Earnings Report Date: Feb 28, 2022. Beta: 2.39. Market-Cap: 3.216B. Optionable. CONSUMER DEFENSIVE SECTOR Chegg, Inc. (CHGG: Consumer Defensive/Education & Training Services) - SQUEEZE PLAY. Friday's narrow price range has created a potentially profitable setup in CHGG, 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 29.27 and a SELL short entry at 26.94. Let CHGG's price action determine your long or short entry. Once the order is filled, place a 2.33 trailing stop, and tighten it to 1.17 upon getting a 1.86 gain. CHGG closed Friday at 28.56. Earnings Report Date: Feb 07, 2022. Beta: 0.80. Market-Cap: 4.14B. Optionable. FINANCIAL SERVICES SECTOR eHealth, Inc. (EHTH: Financial Services/Insurance Brokers) - SQUEEZE PLAY. EHTH 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 24.95 and a SELL short entry at 22.72. Once your trade is filled, enter a 2.23 trailing stop. Tighten it to 1.12 after a 5.14 gain. EHTH closed on Friday at 23.82. Earnings Report Date: Feb 16, 2022. Beta: -0.21. Market-Cap: 628.565M. Optionable. Intercorp Financial Services Inc. (IFS: Financial Services/Banks-Regional) - SQUEEZE PLAY. Traders are feeling the pressure as IFS's intra-day price range on Friday 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 25.15 and a SELL short entry at 23.27. IFS's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.88 trailing stop. Tighten it to 0.94 after you get a 2.12 gain. IFS closed Friday at 24.28. Earnings Report Date: N/A. Beta: 0.89. Market-Cap: 3.015B. Not Optionable. HEALTHCARE SECTOR Nuvalent, Inc. (NUVL: Healthcare/Biotechnology) - SQUEEZE PLAY. The ticker for Friday's session shows NUVL 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 21.21 and a SELL short trigger at 18.71. When NUVL 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 2.5 trailing stop. Upon reaching a 5.62 profit, resize the stop to 1.25. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 869.654M. Not 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/ ***********************************
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 ---------------- ------- -------- ------- ------ ------- PAM Transport PTSI 07/15/2021 08/17/2021 2-for-1 No First Savings FSFG 08/16/2021 09/16/2021 3-for-1 No Raymond James RJF 08/25/2021 09/21/2021 3-for-2 Yes Inmode Ltd INMD 09/17/2021 10/01/2021 2-for-1 Yes Ntuitive Surgical ISRG 08/05/2021 10/05/2021 3-for-1 Yes Microchip Tech MCHP 08/26/2021 10/13/2021 2-for-1 Yes Arista Networks ANET 11/1/2021 11/18/2021 4-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/ **********************************
TRADER'S CORNER
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"How To Draft A Trading Plan" "Plan Your Trade and Trade Your Plan" is a mantra that we repeat on a regular basis. Why? Because we have found that traders who carefully plan each trade have a much better chance of winning in the stock market than those who don't. In fact, properly planning a trade can literally be the difference between making money and losing money. A successful Trading Plan doesn't have to be complicated. Many traders draft their trading plans in a notebook or on index cards, while others use word processors and spreadsheets. Regardless of the method you choose, every trading plan must contain certain components to be effective. But before we get into the "essentials," let's take a quick look at a few dynamics behind "Planning Your Trade." Before drafting a plan of action, traders will want to decide what style of trading they prefer. A broad generalization of "buy and sell stocks" doesn't work - the criteria needs to be specific. Successful traders make money in different ways, but each has a well-defined method. On the other hand, a losing trader's plan is always vague and ambiguous. In trading, it pays to be precise, so decide what you like to do and build your plan around that style. Don't worry about getting locked in to a certain approach; you can always change it later as you gain experience. You can even draft more than one plan if you enjoy different types of trading. The best plans include a set of solid rules that never get broken, and a few elastic rules that allow for real-time decisions to be made when managing live trades. Our judgment improves as we gain experience, so it's good to allow some flexibility in less critical areas of your plan. At the same time, maintain unyielding rules in the more sensitive parts - such as Risk Control. Okay, now let's layout the essential ingredients to include in your personal trading plan. ~ Determine Your Time Frame The type of trading you prefer usually defines the time frame. Short term traders who enjoy a fast paced style won't find much action in weekly or monthly time frames, while less active traders generally find that the extremely short time horizons require too much time at the computer. Decide which style best suits your personality, and then select the corresponding time frame. It's usually a good idea to start by spending a few minutes each day. Begin by managing the trades using daily charts, then see if you want to shorten or lengthen the time frame. The RightLine Report offers a variety of stocks in different time frames. Due to the way these stocks are selected and the type of exit strategy used, most of the picks will work for traders who plan to hold positions anywhere from a few hours to a few weeks. ~ Locate The Best Stocks to Trade Choose a method to determine which stocks to trade. If you are experienced in the markets you probably already have a number of ideas and sources. To make it easier for our subscribers, the Right Line Report presents a wide variety of good stock choices in every issue. They are based on an assortment of trading strategies and tactics that take advantage of predictable market behaviors. You may also want to develop your own new methods for locating stocks. The educational section on our website at www.rightline.net presents numerous market concepts to help traders understand the nature of price movement, identify trends in every time frame, and choose the tools needed to capture profits. ~ Determine Entry Points This can be a challenge, for there are almost as many different ways to determine entries, as there are stocks. Again, in an effort to make it easier for our subscribers, the Right Line Report presents specific entry points for every stock in each issue. The exact level to buy or sell short is based on a wide range of technical factors used by our analysts to reduce risk and optimize the potential gain. If you choose to select your own entry points, we provide a large assortment of articles to assist you in developing your own personal methods. ~ Use An Intelligent Method to Select the Number of Shares to Trade Very few traders and investors realize the importance of balanced "Position Sizing." Most make the mistake of ignoring the size of their trading account when taking on new positions. As a result, many unknowingly join the ranks of high-risk over-traders, and soon find themselves in big trouble. Don't worry, it's easy to avoid when you have the RightLine Risk Manager to help! This simple tool is free to subscribers, but if you prefer to do the math yourself, here are the basics: "Never risk more than 2% of your trading capital in a single trade or more than 6% of your capital at a time. For example, if you have $100,000 in your trading account, the most you should be willing to risk is $2,000. Before buying a stock, review the chart to locate the best place to put a stop loss order. If you determine that the stock requires 5-points to keep you in the trade while it is trending up, the maximum number of shares that you can afford is 400. ($2,000 maximum risk divided by 5-points = 400 shares.)" You can see that although doing the calculation isn't terribly hard, the Risk Manager makes the job a whole lot easier! ~ Manage Risk With Stops You may already know, but a "stop" is an order to buy at a price above or sell at a price below the current market price. Stops, or stop orders, are used to protect our capital and lock in profits. Placing stops is easy, but locating the best place to put them can be quite challenging. To assist traders with stop placement, every stock entry in the RightLine Report includes a suggested stop level. And of course, we offer plenty of help on our website for anyone who wants to learn more about managing risk with stops. ~ Determine Your Exit Strategy After you've entered a position in a stock and it starts moving, then what? Traders have a lot of different choices when it comes to exiting trades, and the method used can make a world of difference. Some traders routinely use "trailing" stops as their exit strategy of choice, while others choose to exit when the stock hits a certain price, or breaks through a support level, or approaches a resistance level. Other traders will choose to exit based on intra-day swings or expected news releases. Some traders sell half when their target is met and let the other half ride with a trailing stop. Others sell to recover all invested capital, and only keep the stock earned with profits - essentially called free stock. This one is a wealth builder, but results in a lot of positions to manage. When making a trading plan, remember to plan not only for the upside, but the downside too. The exit strategy is one of the most important parts of any trading plan, and it is fundamental for traders to select an exit plan before entering a trade. Trade Planning is one of the most important skills that a trader can learn. Make it your strength and you will be well on your way to trading successfully. ======================================================================
Best of luck and have a Great Week!
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DISCLAIMER
The RightLine Report is an information service for investors and traders. It is not a solicitation nor a recommendation or offer to buy or sell securities. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. The publishers of The RightLine Report are not brokers or financial advisors, and are not acting in any way to influence the purchase or sale of any security. Stock picks, entry points and exit points should be considered an information resource to assist the trader in developing a trading plan and it is the sole responsibility of the reader to conduct his or her own due diligence before executing a trade. Trading securities should be considered speculative with a high degree of volatility and risk. The publishers of The RightLine Report recommend that anyone trading securities should do so with caution, exercise prudent trading discipline and have a personal risk management strategy in place before doing so. It is possible at this or some subsequent date, the publishers and staff of The Pro Right Line Corp. may own, buy or sell securities presented. The Pro Right Line Corp. is not a financial advisory service. Its publishers, owners or investors, are not liable for any losses or damages, monetary or otherwise, that result from the content of The RightLine Report. Past RightLine Report performance may not be indicative of future performance. All subscriptions and/or use of the RightLine.net website are subject to RightLine's "Terms of Use" and "Subscriber Terms & Conditions" which are posted at www.rightline.net. Any REDISTRIBUTION of the above information, without The RightLine's written consent, is STRICTLY PROHIBITED. Copyright / The Pro Right Line Corporation - All Rights Reserved To Unsubscribe, send an email to cs@prorightline.com or call 800-737-4518. |