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February 1, 2020 - The RightLine Report
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NOTES FROM THE EDITOR
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One of my favorite aspects of trading - something that took me several years to fully realize - is how much it can teach you about life. I'm not talking about some pseudo-philosophical mumbo jumbo here, but real life lessons and skills that come in handy every day.
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"QUICK LIST"
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Stock 01/31 01/31 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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OOMA 13.13 0.05 13.37 0.84/0.42 0.76
EPZM 20.93 -0.39 21.62 19.78 1.84/0.92 3.30
MIST 22.05 0.05 22.49 20.61 1.88/0.94 2.64
AKRO 24.69 -0.21 25.59 23.51 2.08/1.04 4.70
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 www.rightline.net/education/using-quicklist.html. In addition,always use the RightLine Risk Calculator before entering any position. For access to the Risk Calculator, go to www.RightLine.net and login to the Member's area. To learn more about controlling risk go to the RightLine Risk Control System at http://www.rightline.net/education/riskcontrol.html For a glossary of terms unique to The RightLine Report go to: http://www.rightline.net/education/glossary.html Problems? If you have any difficulty viewing this report, the link below will take you to a page where you will find a list of items that may affect normal viewing within your email client. http://www.rightline.net/home/reportprob.html Questions? Send us an email using our contact form at: http://www.rightline.net/home/contact.html
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MARKET SUMMARY
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US and global stocks fell hard on Friday after a health emergency was declared by the World Health Organization due to the spread of the coronavirus. Confirmed cases have been reported from over a dozen countries, including China, Canada, the United Kingdom and the USA. The move from stocks to safer havens benefited US treasuries, while the USD/dollar, gold and oil all finished the session lower. Equities news featured strong earnings reports from Amazon (AMZN $2,009), Exxon Mobil (XOM $62 and Caterpillar (CAT $131). Economic headlines included positive moves in personal income, spending and consumer sentiment. Friday On The Week
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Dow 28,256 -603.41 -734 -2.53%
Nasdaq 9,150.94 -146.00 -164.06 -1.76%
S&P 500 3,226 -58.14 -69 -2.09%
NYSE Volume 4.72B
NYSE Advancers 611
NYSE Decliners 2330
Nasdaq Volume 2.75B
Nasdaq Advancers 742
Nasdaq Decliners 2487
New Highs/Lows
01/24 01/27 01/28 01/29 01/30 01/31
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NYSE New Highs 238 111 144 202 179 159
NYSE New Lows 63 102 57 59 111 114
Nasdaq New Highs 196 78 85 108 104 101
Nasdaq New Lows 60 96 42 60 100 126
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TRADER'S TIP:
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TRADER'S TIP: "Try a Few Diamonds and Spiders!" If you are new to shorting, a good place to start is with index "stocks" like QQQQ (NASDAQ 100 Trust), DIA (Dow Diamonds), or SPY (Spiders). While they aren't actually "stocks," these popular instruments are widely traded in virtually the same fashion. However, there is one distinct advantage. Unlike individual stocks, each index "stock" represents a broad list of securities. The DIA includes 30 stocks, the QQQQ contains 100, and the SPY consists of 500. As a result, trading this type of index security lowers the risk associated with holding positions in specific companies. TRADER'S TIP: "Up or Down?" It doesn't matter which way the market goes as long as long as we keep our opinions about direction from blinding us to the opportunity at hand. Traders can increase profitability in all market conditions by following a few time proven guidelines: 1) Locate the trend, and trade in harmony with it. This dramatically shifts the odds of winning into your favor. 2) Never risk more than 2% on any one trade. 3) Use stops to protect against unplanned losses. 4) Be confident, but keep your ego in check. Respect your emotions; yet don't let them prevent you from following your trading plan while you are in a trade. **************************
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: www.rightline.net/education/how_to_use_rlr_technical_analyst.html. S&P 500 - 3225.52 January 31, 2020
52-Week High: 3337.77
52-Week Low: 2681.83
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3402.13
Resistance 2: 3323.34
Resistance 1: 3274.43
Pivot: 3244.55
Support 1: 3195.64
Support 2: 3165.76
Support 3: 3086.97
http://www.rightline.net/rlch/013120SPX.jpg
NASDAQ Composite - 9150.94 January 31, 2020
52-Week High: 9451.43
52-Week Low: 7225.14
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 9671.50
Resistance 2: 9430.43
Resistance 1: 9290.68
Pivot: 9189.36
Support 1: 9049.61
Support 2: 8948.29
Support 3: 8707.22
Dow Industrials - 28256.03 January 31, 2020
52-Week High: 29373.62
52-Week Low: 24680.57
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 30006.02
Resistance 2: 29231.31
Resistance 1: 28743.67
Pivot: 28456.60
Support 1: 27968.96
Support 2: 27681.89
Support 3: 26907.17
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MARKET CALENDAR
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--ECONOMIC REPORTS AND EVENTS (all times are Eastern):
Monday, February 03, 2020: 03-Feb 9:45 am Markit manufacturing PMI 03-Feb 10 am ISM manufacturing index 03-Feb 10 am Construction spending 03-Feb Varies Motor vehicle sales Tuesday, February 04, 2020: 04-Feb 10 am Factory orders Wednesday, February 05, 2020: 05-Feb 8;15 am ADP employment report 05-Feb 8:30 am Trade deficit 05-Feb 10 am ISM nonmanufacturing index Thursday, February 06, 2020: 06-Feb 8:30 am Weekly jobless claims 06-Feb 8:30 am Productivity 06-Feb 8:30 am Unit labor costs Friday, February 07, 2020: 07-Feb 8:30 am Nonfarm payrolls 07-Feb 8:30 am Unemployment rate 07-Feb 8:30 am Average hourly earnings 07-Feb 10 am Wholesale inventories 07-Feb 3 pm Consumer credit For a chart of typical Up or Down market reactions to specific major US economic reports, go to "Economic Indicator Effects" at this link: http://www.rightline.net/education/economic.html
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TRADER'S TIP:
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TRADER'S TIP: "Concentrate on Execution" "The last thing you should have to worry about during market hours is where the market is going, and whether to be long or short. Your strategy will tell you all of this. You should not be concerned about the news, or even if you are making or losing money. You should not be concerned with analyzing the market, always reserve this for when the market is closed. The only thing you should be doing during market hours is concentrating on effectively executing your strategy. If you can't execute your strategy effectively, there really is no point in trading. There are two sides to trading, strategy development and trading execution. During market hours is when you should concentrate on execution and nothing else." ~ Charlie Wright, Veteran Trader and Hedge Fund Manager ***********************************
STOCKS COVERED IN THIS ISSUE
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COMMUNICATION SERVICES SECTOR Ooma, Inc. (OOMA: Communication Services/Telecom Services) - BULLISH BOUNCE. Up-trending stocks like OOMA have a tendency to bounce their way skyward rather than travel higher in a straight line. After touching down to a moving average support level on Friday, OOMA is poised to lift off again. To take advantage of this setup, prepare to BUY shares at 13.37 if positive price action occurs. As always, follow your entry with a trailing stop. A 0.84 trailer should work well with OOMA. Tighten it to 0.42 on a 0.76 gainer. Earnings Report Date: N/A. Beta: 0.94. Market-Cap: 284.884M. Optionable. HEALTHCARE SECTOR Epizyme, Inc. (EPZM: Healthcare/Biotechnology) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in EPZM's narrowest trading range of the past seven sessions. With neither group able to take complete control on Friday, 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 21.62 and a SELL order at 19.78. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.84 trailing stop. Tighten the stop to 0.92 once you have a 3.30 gain. EPZM closed Friday at 20.93. Earnings Report Date: Feb 23, 2020. Beta: 2.66. Market-Cap: 2.046B. Optionable. Milestone Pharmaceuticals Inc. (MIST: Healthcare/Biotechnology) - 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. MIST traders reached this state of stand-off on Friday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 22.49 and a SELL short trigger at 20.61. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.88 which can be tightened to 0.94 on a 2.64 gain. MIST closed Friday at 22.05. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 540.075M. Not Optionable. Akero Therapeutics, Inc. (AKRO: Healthcare/Biotechnology) - SQUEEZE PLAY. AKRO traders on both sides of the fence are now locked in a head-to-head shootout. Friday's price range was the narrowest in over a week, as neither Bears or Bulls have been able to clearly gain the upper hand. This gives us an opportunity to catch the next directional move with little risk of loss. To do this we'll place both a long and a short trigger with a BUY at 25.59 and a SELL short trigger at 23.51. When one of the orders is filled, cancel the remaining order and enter a 2.08 trailing stop. When you've reached a 4.70 paper profit, tighten the stop to 1.04. AKRO closed at 24.69 on Friday. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 705.114M. 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: http://www.rightline.net/education/riskcontrol.html Use "Gap Adjusted Entries" to reset the Entry Price for stocks that gap beyond recommended entry levels. Link: http://www.rightline.net/education/gap-adjusted.html ***********************************
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 ---------------- ------- -------- ------- ------ ------- Currently there are no upcoming stock splits on the major US exchanges. For a closer look at the different stages of a Stock Split go to: http://www.rightline.net/splits/index.html/#split-stages **********************************
TRADER'S CORNER
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Hammer Time! Technicians throughout the world have adopted the Japanese practice of candlestick charting. In fact, many have abandoned Western bars in favor of this visual tool that generates detailed information from short-term price movement. Of all candlestick patterns, single bar hammers and dojis provide the most versatile immediate feedback. Western technical analysis rarely offers such dependable single bar signals. These formations print when a significant battle between bulls and bears ends in a draw. Two characteristics generate their predictive power: 1. High to low range greater than average. 2. Closing tick equal to or near opening tick. Dojis represent perfect opening-closing balance as price finishes exactly where it started. Hammers need only close so that the central body of the candlestick is less than one-third the length of the bar's total range. But the body must sit near one end of the bar's action. Dojis and hammers predict immediate reversals within the time frames they are created. Their significance directly relates to their position within the overall chart pattern. When appearing on high volume near significant highs or lows, they may represent price extremes signifying an important change in trend. If printed within an ongoing congestion pattern, they often reflect market makers or specialists "cleaning out" stops in one direction so they can move the market in the opposite direction. Retracement science assists traders in predicting events subsequent to one of these important candles. Shifting down one time frame from the bar reveals the length of the short-term trend being reversed by the long finger. Very often, dojis and hammers represent first rise/first failure setups within the smaller time frame. This further predicts where the reversal momentum will fade for a test of the candle. Following a doji or hammer reversal, a test of the candle high or low often takes place within 3 to 5 bars. When the test fails, expect price to thrust sharply forward, especially when overbought/oversold indicators show no divergence. When the test succeeds, shift down one time frame again and trade the setup according to double bottom/double top strategy. Specifically look for price to surge on the breakout past the high/low of the initial reversal generated by the candle. See Chart - http://www.rightline.net/rlr/TCdell101103.gif Hundreds of stocks printed long-legged dojis and hammers during the dramatic October 1998 reversal day. DELL never returned to test its low following a death-defying leap into the abyss. Pay close attention to gap support or resistance created by the bar following the candle event. See Chart - http://www.rightline.net/rlr/TCaltr101103.gif Price returns to test ALTR's new high doji and reverses. Reviewing this chart on a 5-min intraday interval reveals a classic double top scenario. Aggressive traders often enter short sales at doji tops, recognizing their hidden power. *********************************************************** This guest article was written by Alan Farley, trader and author of "The Master Swing Trader." To order a copy of Alan's premier book, please go to http://www.invest-store.com/rightline/. ======================================================================
Best of luck and have a Great Week!
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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 us an email using the online contact form at: http://www.rightline.net/home/contact.html or call 800-737-4518. |