December 7, 2021 - The RightLine Report
Notes From The Editor
Volatile price movement is a common aspect of trading. Although traditional investors don't care for roller-coaster market action, it creates plenty of opportunity for traders.
Price movement is a trader's best friend, even though it doesn't always occur in our preferred direction or at our desired pace. Without it there would be no losers, no winners, and no profits. Luckily, every sell-off eventually bounces, and every rally eventually reverses into a decline.
Trading these slopes requires training and experience. State of the art tools and fast broadband connections make the job much easier than just a few years ago. Of course, having the tools and knowing how to use them successfully are two different things. It takes patience and discipline to gain the necessary education and skills. However, with the right attitude and persistence, just about anyone can improve their personal earnings.
Playing the Trading Game
A trader's first objective should be to STAY in the game long enough to learn how to PLAY the game. The RightLine Risk Control system let's traders accomplish this by providing a safe trading environment regardless of the market conditions.
Another important objective is to eliminate any distracting focus on money. You can overcome the tendency to keep your eyes glued to the cash on the table by seriously reducing the number of shares held in each position.
At some point along the way you realize that money is simply a byproduct of learning to play the game well. To play the game well is to consistently score new points while protecting accumulated points.
Traders who learn the needed skills and maintain the mindset always welcome volatile price movement because it allows points to be scored faster.
Trade well,
~ Thomas Sutton, Editor
Note: 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. The RightLine Risk Calculator is available in the RightLine Member's Area.
Also use Gap Adjusted Entries to reset the Entry Price for stocks that gap beyond recommended entry levels.
Stocks Covered Today Stock Splits
Quick List
Stock 12/07 12/07 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
SMID 35.70 1.86 36.93 4.44/2.22 4.04
PERI 24.32 1.34 25.17 23.26 1.91/0.96 3.94
XPOF 23.09 1.44 23.8 21.69 2.11/1.06 3.46
ENOB 11.03 0.80 11.55 1.5/0.75 1.4
RANI 23.50 1.70 24.26 21.14 3.12/1.56 8.3
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
US stocks rallied on Tuesday following news that the trade deficit shrunk for the first time since July. In other economic news, the final results of third quarter nonfarm productivity revealed that productivity slowed more than expected and consumer borrowing was below predictions. In equities, shares of AutoZone (AZO $2,024) moved upward after the automotive retailer topped earnings estimates and reported same store sales were up by 13.6%. Oil prices and gold traded to the upside, treasuries were lower, lifting yields, and the USD/dollar closed near even.
Dec 6, 2021 Dec 7, 2021
-------------------- --------------------
Dow 35,227.03 646.95 35,719.43 492.40
Nasdaq 15,225.15 139.68 15,686.92 461.76
S&P 500 4,591.67 53.24 4,686.75 95.08
NYSE Volume 4.87B 4.54B
NYSE Advancers 2,523 2,682
NYSE Decliners 860 713
Nasdaq Volume 5.15B 5.1B
Nasdaq Advancers 2,999 3,624
Nasdaq Decliners 1,748 1,077
New Highs/Lows
11/30 12/01 12/02 12/03 12/06 12/07
--------------------------------------------
NYSE New Highs 26 35 17 28 53 90
NYSE New Lows 280 237 188 208 137 23
Nasdaq New Highs 46 63 31 27 42 72
Nasdaq New Lows 628 571 619 732 657 66
Stocks Covered Today Stock Splits
TRADER'S TIP: "Bases Loaded?"
Success rarely comes from over-leveraging your account and putting everything on one or two rolls of the dice. Yes, high-octane homeruns are nice, but steady base hits are less risky and add up over time. Be patient - you'll get your share of points as a result of trading smart.
Take a different route than the crowd by locating low-risk trade setups and applying Risk Control to every position. Disciplined consistency may not be as dramatic as shooting wildly from the hip, but you're much more likely to hit your profit target.
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 - 4686.75 December 7, 2021
52-Week High: 4743.83
52-Week Low: 3633.40
Daily Trend: UP
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
NASDAQ Composite - 15686.92 December 7, 2021
52-Week High: 16212.23
52-Week Low: 12214.74
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 17087.31
Resistance 2: 16185.26
Resistance 1: 15635.36
Pivot: 15283.21
Support 1: 14733.31
Support 2: 14381.16
Support 3: 13479.11
Dow Industrials - 35719.43 December 7, 2021
52-Week High: 36565.73
52-Week Low: 29755.53
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 37186.85
Resistance 2: 35905.92
Resistance 1: 35243.00
Pivot: 34624.99
Support 1: 33962.07
Support 2: 33344.06
Support 3: 32063.13
Stocks Covered Today Stock Splits
Market Calendar
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
Stocks Covered Today Stock Splits
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
BASIC MATERIALS SECTOR
Smith-Midland Corporation (SMID: Basic Materials/Building Materials) - BULLISH BOUNCE. Everyone familiar with price charts knows that a stock tends to bounce its way higher rather than move in a straight line. The lower levels of these short-term rebounds offer a safe and often early entry into stocks that are in the process of establishing longer-term uptrends. SMID's reaction to support on Tuesday created a Bullish Bounce setup with a BUY entry trigger at 36.93. Use a 4.44 trailing stop, which should work well with SMID's typical daily range. Tighten it to 2.22 on a 4.04 profit. SMID closed at 35.70 on Tuesday. Earnings Report Date: N/A. Beta: 0.80. Market-Cap: 186.032M. Not Optionable.
COMMUNICATION SERVICES SECTOR
Perion Network Ltd. (PERI: Communication Services/Internet Content & Information) - SQUEEZE PLAY. When a stock's daily price range contracts to an unusually low point, you can safely assume that in most cases a breakout from that range will result in a nice price move. To capture a portion of this potential movement we have set both a long and a short entry into PERI. A move to the upside will trigger our BUY entry at 25.17, while a drop to 23.26 will trigger our SELL short entry. Follow your position with a 1.91 trailing stop. Tighten the stop to 0.96 once you have a 3.94 gain. PERI closed Tuesday at 24.32. Earnings Report Date: Feb 07, 2022. Beta: 1.37. Market-Cap: 850.011M. Optionable.
CONSUMER CYCLICAL SECTOR
Xponential Fitness, Inc. (XPOF: Consumer Cyclical/Leisure) - SQUEEZE PLAY. Tuesday's trading action forced XPOF'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 XPOF 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 23.8 if XPOF moves higher, and place your order to SELL short at 21.69 if price declines to that level. As usual follow your entry with a trailing stop, 2.11 should be sufficient. Reduce your stop to 1.06 on a 3.46 gain. XPOF closed Tuesday at 23.09. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 551.805M. Optionable.
HEALTHCARE SECTOR
Enochian Biosciences, Inc. (ENOB: Healthcare/Biotechnology) - BULLISH BOUNCE. Some people hear of a stock that's performing nicely and then buy it without any regard for timing the entry. This approach usually leaves money on the table, money that could just as well be added to profits. The Bullish Bounce setup provides a well timed entry and reduces exposure to risk by placing both the entry trigger and exit stop near the bottom of the bounce. We have an opportunity to use this approach with ENOB which met our setup criteria on Tuesday. The BUY trigger for this trade is at 11.55, and the trailing stop is sized at 1.5. Resize the stop to 0.75 upon collecting a 1.4 point gain. ENOB closed Tuesday at 11.03. Earnings Report Date: N/A. Beta: 0.53. Market-Cap: 575.983M. Optionable.
Rani Therapeutics Holdings, Inc. (RANI: Healthcare/Biotechnology) - SQUEEZE PLAY. RANI is caught in a dilemma. The stock's compressed price range on Tuesday 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. RANI is now at 23.50. We can capture price action either way by placing a BUY trigger at 24.26 and a SELL short trigger at 21.14. Once RANI 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 3.12. When you acquire a 8.3 profit, tighten the stop to 1.56. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 463.23M. Not 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
---------------- ------- -------- ------- ------ -------
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
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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