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February 15, 2020 - The RightLine Report
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NOTES FROM THE EDITOR
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Getting to Break-Even
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"QUICK LIST"
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Stock 02/14 02/14 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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PINS 23.22 -0.32 24.10 1.82/0.91 1.96
STNG 22.82 -0.40 21.96 1.72/0.86 3.28
DK 28.39 -0.38 27.32 1.87/0.94 2.00
TROW 137.39 0.97 139.30 7.32/3.66 5.34
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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The major US stock indices were mixed on Friday as investors continue to carefully monitor developments and the economic effect of the spreading coronavirus. Economic headlines included a near two-year high in consumer sentiment, sluggishness in industrial production and weaker Core Retail Sales than expected. Core Retail Sales refers to total retail sales of all goods in the United States minus automobiles and gasoline, which are not included due to their volatility. In earnings, Expedia Group (EXPE $123) beat quarterly profit expectations. Gold, the USD/dollar, oil prices and treasury yields all closed higher. Friday On The Week
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Dow 29,398 -25.23 +295 1.01%
Nasdaq 9,731.18 +19.21 +210.67 2.21%
S&P 500 3,380 +6.22 +52 1.56%
NYSE Volume 3.46B
NYSE Advancers 1506
NYSE Decliners 1408
Nasdaq Volume 2.24B
Nasdaq Advancers 1421
Nasdaq Decliners 1763
New Highs/Lows
02/07 02/10 02/11 02/12 02/13 02/14
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NYSE New Highs 241 248 345 270 220 264
NYSE New Lows 64 86 45 35 46 57
Nasdaq New Highs 109 167 256 256 222 205
Nasdaq New Lows 80 92 57 50 49 64
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TRADER'S TIP:
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TRADER'S TIP: "Prevent Overtrading - Be Selective" Traders will sometimes say to themselves - "Here I am with money in my trading account, so I'm going to trade SOMETHING today!" Unfortunately what they do next usually qualifies as "over trading." Remember that patience is a major key to success in this business, so always be selective about the trades you take. **************************
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 - 3380.16 February 14, 2020
52-Week High: 3385.09
52-Week Low: 2722.27
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3495.64
Resistance 2: 3428.32
Resistance 1: 3404.24
Pivot: 3361.00
Support 1: 3336.92
Support 2: 3293.68
Support 3: 3226.36
http://www.rightline.net/rlch/021420SPX.jpg
NASDAQ Composite - 9731.18 February 14, 2020
52-Week High: 9748.32
52-Week Low: 7292.22
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 10167.09
Resistance 2: 9912.40
Resistance 1: 9821.78
Pivot: 9657.70
Support 1: 9567.09
Support 2: 9403.01
Support 3: 9148.32
Dow Industrials - 29398.08 February 14, 2020
52-Week High: 29568.57
52-Week Low: 24680.57
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 30466.59
Resistance 2: 29893.68
Resistance 1: 29645.88
Pivot: 29320.77
Support 1: 29072.97
Support 2: 28747.86
Support 3: 28174.95
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MARKET CALENDAR
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--ECONOMIC REPORTS AND EVENTS (all times are Eastern):
Monday, February 17, 2020: 17-Feb None scheduled Presidents Day holiday Tuesday, February 18, 2020: 18-Feb 8:30 am Empire state manufacturing index 18-Feb 10 am NAHB home builders' index Wednesday, February 19, 2020: 19-Feb 8:30 am Producer price index 19-Feb 8:30 am Housing starts 19-Feb 8:30 am Building permits 19-Feb 2 pm FOMC minutes Thursday, February 20, 2020: 20-Feb 8:30 am Weekly jobless claims 20-Feb 8:30 am Philly Fed manufacturing index 20-Feb 10 am Leading economic indicators Friday, February 21, 2020: 21-Feb 9:45 am Markit manufacturing PMI (flash) 21-Feb 9:45 am Markit services PMI (flash) 21-Feb 10 am Existing home sales 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: "One Good Move Deserves Another" In most cases the further and faster the market moves in one direction, the faster and more intense the reversal will be when the market has used up its energy. ***********************************
STOCKS COVERED IN THIS ISSUE
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COMMUNICATION SERVICES SECTOR Pinterest, Inc. (PINS: Communication Services/Internet Content & Information) - BULLISH BOUNCE. Another bullish bouncer, PINS appears ready to resume trading in an uptrend after recent selling forced the stock lower for several days. Friday's positive price action near Moving Average support says it's time to BUY shares if PINS reaches our entry trigger set at 24.10. Also place a 1.82 trailing stop which can be narrowed to 0.91 when you reach a 1.96 profit. PINS closed Friday at 23.22. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 14.493B. Optionable. ENERGY SECTOR Scorpio Tankers Inc. (STNG: Energy/Oil & Gas Midstream) - BEARISH U-TURN. Stocks stuck in a downtrend like STNG tend to bounce downhill rather than slide lower in a straight line. After interacting with a moving average resistance level on Friday, STNG is poised to drop again. To take advantage of this setup, prepare to SELL shares short at 21.96. As usual, follow your entry with a trailing stop. A 1.72 stop will fit STNG's current price range. Tighten it to 0.86 on a 3.28 gainer. Earnings Report Date: Feb 18, 2020. Beta: 1.11. Market-Cap: 1.235B. Optionable. Delek US Holdings, Inc. (DK: Energy/Oil & Gas Refining & Marketing) - BEARISH U-TURN. DK's reaction after running into moving average resistance on Friday sets up this stock for a Bearish U-Turn trade. Having spent the past few days of moving higher, DK is now likely to revert back to its dominant weekly downtrend. Get ready to SELL short shares if DK drops to our entry at 27.32. Once in the trade, place a 1.87 trailing stop, which should be tightened to 0.94 after a 2.00 profit. DK closed Friday at 28.39. Earnings Report Date: Feb 24, 2020. Beta: 1.65. Market-Cap: 2.116B. Optionable. FINANCIAL SERVICES SECTOR T. Rowe Price Group, Inc. (TROW: Financial Services/Asset Management) - BULLISH BOUNCE. Positive price behavior near moving average support on Friday qualifies TROW for a Bullish Bounce setup. After several sessions of declining prices, TROW should soon begin trading in step with its established weekly uptrend. Tell your broker to BUY shares if TROW moves up to our entry trigger set at 139.30. You can also enter a 7.32 trailing stop, to be replaced with a 3.66 trailing stop when you obtain a 5.34 profit. TROW closed Friday at 137.39. Earnings Report Date: Apr 21, 2020. Beta: 1.02. Market-Cap: 32.105B. 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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"The History, Science & Art of Technical Analysis" The very first chartists in the United States appeared at the turn of the century. They included Charles Dow, the author of the famous stock market theory, and William Hamilton who succeeded Dow as the editor of the Wall Street Journal. After the famous stock market "crash" of 1929, Hamilton advocated the use of charting in an editorial entitled "The Turn of The Tide" and then proceeded to lay out the principles of Dow's stock market theory in a book titled The Stock Market Barometer. The decade of the 1930's was the Golden Age of charting. Many innovative researchers published their work during that period including Richard D. Wyckoff, a trader who started in 1888 as a 15- year-old stock runner, W.D. Gann who began his career as a stockbroker in 1906, and R.N.Elliott, widely known for the "Elliott Wave Theory." Their work went into two distinct directions. Researchers such as Wyckoff saw charts as a graphic record of market supply and demand, while others including Gann and Elliott searched for a perfect order in the markets. In 1948, Edwards and McGee published a book called Technical Analysis of Stock Trends. They popularized the use of chart formations such as triangles, rectangles, head and shoulders, as well as support, resistance and trend lines. Things have changed a great deal since then. In the 40s, daily volume of an active stock on the NYSE was only several hundred shares. Today it's not uncommon to see an active stock trade tens of millions of shares each day. Bears were firmly in control of the stock market in the "good old days", but as years passed, the balance of power shifted to favor bulls. However, with bears back in the cockpit the past couple of years, some of the market tendencies that were evident back then are reappearing on the charts. Early technical analysts noted that stock market tops were sharp and fast, while bottoms took a long time to develop. That was true in the de-flationary era of the 30s and 40s, but from the 50s until mid 2000 bottoms tended to form quickly while tops took longer. The beginnings of technical analysis go back much further than the early nineteen hundreds. Japanese rice traders began using candlestick charts some two centuries before the first chartists appeared in America. Before you envision lots of dripping wax and flaming wicks, the term candlestick was adopted because of the similar appearance between candles and the symbols used to represent price that were drawn on each chart. The Japanese focus is on the relationship between opening and closing prices and on patterns that include several candles. They consider highs and lows relatively unimportant. Unfortunately, most candlestick chartist's fail to use many tools of Western analysts. They ignore volume and have no trend lines. This now appears to be changing as modern analysts combine Western technical indictors with classical candlestick patterns. A classic case of east meets west. OK, that's enough history for now. Let's take a quick look at two subjects, which help determine the success or failure of technical analysis in action. Is it Science or Art? "It would be possible to describe everything scientifically, but it would make no sense; it would be without meaning, as if you described a Beethoven symphony as a variation of wave pressure." ~Albert Einstein It may come as a surprise to find that technical analysis combines the dual categories of science and art. Although the subjects appear to be at opposite ends of the spectrum, joining them together creates a dual perspective that provides remarkable market insight. The resulting combination can be compared to night-vision goggles that let you see what others can't - like trend lines. This advantage gives you an edge and helps shift the odds into your favor. Science 101 The scientific aspect of technical analysis presents itself in many forms. There are literally dozens of separate indicators and unlimited ways of applying them. A lot of research went into developing these components, and even more to determine effectiveness and reliability. Studies have shown that the wide array of technical indicators and methods exhibit different degrees of success depending on how, when and under what condition they are applied. Art - So what is it, a Picasso or Rembrandt? The artistic qualities of technical analysis become obvious the instant you look at a visual display on a computer screen. Colorful charts graphically reveal elements of technical analysis as different indicators are painted in patterns and lines. Talk about abstract art! One look and you feel like it should be hanging in a metropolitan art museum. Less obvious than the graphic display but just as important is the impact of artistic interpretation. OK, so how should we interpret this painting? Although the price bars are determined by actual stock prices, the placement of each line, the number of bars included in each moving average and whether any technical indicators are used depends on the preference of the individual. It may look good, but no matter how pretty the picture, it is far more important that the final choice of technical tools and patterns can be used by the trader to produce profits. - Summary It turns out that technical analysis is a hybrid of art and science that has evolved over the centuries. Due to the complex choices that have to be made, many newcomers will never recognize the tremendous value of TA, and will remain unaware of the powerful forces at work behind the scenes. For those who desire a long-term relationship with the markets, the time and energy spent to learn how to use this powerful technology will be well rewarded! ======================================================================
Best of luck and have a Great Week!
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