Notes From The Editor

Stock trading is much more rewarding when you view it as a means of self-improvement rather than just a way to earn money. It makes sense when you think about it. Money is a result of learning to trade well, and the process of learning to trade well requires us to improve on a number of important levels.

This means we have to change the way we think and act.

Most traders would agree that making the changes necessary to be a successful stock trader is desirable. However, just because something is "desirable" doesn't mean we're willing to make the effort necessary to change the way we feel about it.

For instance, the majority of people are of the opinion that a Bull market is the only market where profits can be made. Bull equals good, and bear equals bad ... right?

Wrong. While the rest of the world may view the markets this way, you already know it isn't true for traders who have learned how to take advantage of both up and down trends. And though there are plenty of reasons why the majority of investors prefer bull markets, many of these "reasons" are simply one-dimensional beliefs that limit opportunity.

The process of moving beyond our trading limitations involves becoming aware of the false assumptions and bias we each have. Once we become conscious of the mental and emotional limits that exist inside of us, we can go about the business of upgrading our perspectives.

Learning how to view market action as neither good nor bad begins with paying attention to your feelings. Notice and accept how you feel when the market goes up, and when it goes down. Then remind yourself that you can choose to perceive market movement any way you want to.

When the market goes down, focus on the fact that a down market presents just as much opportunity as an up market. Be persistent. It can take months to replace limiting beliefs with new and more effective ones. Realize that although all of us have been taught that "down" is our enemy, "down" is actually is just as much our ally as "up."

The trend really is your friend ... even when the trend is down. It takes practice to accept all price movement as opportunity, yet this is a necessary step toward bringing about the changes in thinking that produce consistent success.

Trade well,

- Thomas Sutton, Editor

Quick List

    
Stock     02/13     02/13      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

CLW       27.09      0.03     27.61     25.86        1.75/0.88      2.48
TWOU      24.98      0.27     25.37     23.47        1.90/0.95      2.48
AVRO      23.00     -3.91     24.32     21.78        2.54/1.27      3.48
COLL      24.01     -0.15     24.88     22.71        2.17/1.08      2.06

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 US stock markets closed lower on Thursday after China announced another 15,000 new cases of the coronavirus. In economic news, consumer inflation compared to last year was higher than predicted and unemployment claims were below forecasts. In equities news, Tesla (TSLA $810) announced a common stock offering valued at $2-billion, while Applied Materials (AMAT $69) beat quarterly earnings expectations and Cisco Systems (CSCO $47) shares declined after the Dow member announced mixed results. Gold, the USD/dollar and oil prices all moved higher, treasury yields were lower.

                        Feb 12, 2020           Feb 13, 2020   
                  --------------------   --------------------
Dow                    29,551  +275.08        29,423  -128.11
Nasdaq               9,725.96   +87.02      9,711.97   -13.99
S&P 500                 3,379   +21.70         3,374    -5.51

NYSE Volume                      4.00B                  3.56B
NYSE Advancers                    1766                   1440
NYSE Decliners                    1158                   1484

Nasdaq Volume                    2.38B                  2.28B
Nasdaq Advancers                  1991                   1597
Nasdaq Decliners                  1206                   1610

                                 New Highs/Lows

                   02/06  02/07  02/10  02/11  02/12  02/13
                 --------------------------------------------
NYSE New Highs       261    241    248    345    270    220
NYSE New Lows         32     64     86     45     35     46
Nasdaq New Highs     184    109    167    256    256    222
Nasdaq New Lows       47     80     92     57     50     49
   

TRADER'S TIP: "Before You Enter"

Before entering a trade, carefully plan "what you will do" and "when you will do it" once you have entered the position. Actually, this aspect of trading is much more important than finding the "perfect" entry. Always include an exit plan for three possible scenarios: the trade moves favorably, unfavorably, or doesn't move at all. Pay attention to details, and be sure to include the specific exit price when planning stop-losses. When using the trailing stop method to lock in gains, make certain that you decide in advance at what point the trailing stop will be adjusted.

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 - 3373.94 February 13, 2020

52-Week High: 3385.09
52-Week Low: 2722.27
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3528.37
Resistance 2: 3416.07
Resistance 1: 3371.89
Pivot: 3303.77
Support 1: 3259.59
Support 2: 3191.47
Support 3: 3079.17


NASDAQ Composite - 9711.97 February 13, 2020

52-Week High: 9748.32
52-Week Low: 7292.22
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 10202.46
Resistance 2: 9815.35
Resistance 1: 9667.93
Pivot: 9428.24
Support 1: 9280.82
Support 2: 9041.12
Support 3: 8654.01
        
Dow Industrials - 29423.31 February 13, 2020

52-Week High: 29568.57
52-Week Low: 24680.57
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 31120.20
Resistance 2: 30031.80
Resistance 1: 29567.15
Pivot: 28943.40
Support 1: 28478.75
Support 2: 27855.00
Support 3: 26766.60
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, February 10, 2020:
10-Feb          None scheduled

Tuesday, February 11, 2020:
11-Feb   6 am   NFIB small-business index
11-Feb  10 am   Job openings
11-Feb  11 am   Household debt

Wednesday, February 12, 2020:
12-Feb   2 pm   Federal budget

Thursday, February 13, 2020:
13-Feb  8:30 am   Weekly jobless claims
13-Feb  8:30 am   Consumer price index
13-Feb  8:30 am   Core CPI

Friday, February 14, 2020:
14-Feb  8:30 am   Retail sales
14-Feb  8:30 am   Retail sales ex-autos
14-Feb  8:30 am   Import price index
14-Feb  9:15 am   Industrial production
14-Feb  9:15 am   Capacity utilization
14-Feb  10 am   Consumer sentiment index
14-Feb  10 am   Business inventories



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

TRADER'S TIP: "Three Possibilities"

As traders and investors we've learned not to spend too much time speculating on market direction, but to focus on careful planning and trade management. It's far better to prepare and have a specific plan ready for any possible price action than to become so devoted to our expectations that we fail to plan for the opposite of what we expect to happen.

The market, and our chosen stocks can really only do three simple things that affect price; (1) move up, (2) move down, or (3) stay the same. Unless our trading plan includes specific instructions on what we will do in the event any one of these three scenarios occur, the plan is incomplete.

Stocks Covered in This Issue

BASIC MATERIALS SECTOR

Clearwater Paper Corporation (CLW: Basic Materials/Paper & Paper Products) - SQUEEZE PLAY. CLW traders on both sides of the fence are now locked in a head-to-head shootout. Thursday'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 27.61 and a SELL short trigger at 25.86. When one of the orders is filled, cancel the remaining order and enter a 1.75 trailing stop. When you've reached a 2.48 paper profit, tighten the stop to 0.88. CLW closed at 27.09 on Thursday. Earnings Report Date: Feb 25, 2020. Beta: 2.22. Market-Cap: 431.856M. Optionable.

CONSUMER DEFENSIVE SECTOR

2U, Inc. (TWOU: Consumer Defensive/Education & Training Services) - 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. TWOU 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 25.37 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 1.90 which can be tightened to 0.95 on a 2.48 gain. TWOU closed Thursday at 24.98. Earnings Report Date: N/A. Beta: 0.56. Market-Cap: 1.559B. Optionable.

HEALTHCARE SECTOR

AVROBIO, Inc. (AVRO: Healthcare/Biotechnology) - SQUEEZE PLAY. Trader indecision has put AVRO 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 24.32 and a SELL short entry at 21.78. Now it's up to AVRO to show us which entry will be filled. Once the trade is underway place a 2.54 trailing stop, which can be tightened to 1.27 after you achieve a 3.48 profit. AVRO closed on Thursday at 23.00. Earnings Report Date: Mar 22, 2020. Beta: N/A. Market-Cap: 756.15M. Optionable.

Collegium Pharmaceutical, Inc. (COLL: Healthcare/Drug Manufacturers-Specialty & Generic) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in COLL'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 24.88 and a SELL order at 22.71. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.17 trailing stop. Tighten the stop to 1.08 once you have a 2.06 gain. COLL closed Thursday at 24.01. Earnings Report Date: N/A. Beta: 0.81. Market-Cap: 899.559M. 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  
---------------- -------     --------    -------     ------  -------   

Currently there are no upcoming stock splits on the major US exchanges.
    

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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