Notes From The Editor

Once in a while life seems to smack you in the face with a reminder that time really does fly. It might be a high school reunion, a birthday, or some other milestone. I had one of those moments not long ago when I caught up with an old roommate from college. Thinking back on those days, it seemed like a just a few years had gone by. It's funny how the brain perceives different memories - some are distant and faint, some are always vivid and fresh.

These types of moments tend to put me in a contemplative mood and make me analyze life from a longer-term perspective. Living on a day-to-day basis, it's always good to occasionally kick back, smell the roses, and look at the bigger picture.

One of the turning points in my trading career was learning to "step outside" the day-to-day events and focus on my longer-term results. When you're trading on a daily basis, each session can be chalked up as a victory or defeat - depending on whether money was won or lost. But putting too much emphasis on what happens every day can overshadow the ultimate, more important goal: consistently making money.

Setting weekly, monthly, and yearly goals is a great way to focus on the long-term. Think of each day as a stepping-stone on the path to the weekly objective. This is especially important for daytraders who enter and exit several positions during every session; keeping the weekly goal in mind helps to keep emotions in check during winning or losing streaks.

For traders without several years of experience, it can be difficult to know whether a yearly objective is reasonable. Consider starting with monthly goals, which are easier to gauge. They also provide more immediate feedback, since you only have to go through four weeks of trading to see whether the goal was met or exceeded.

These targets represent a destination to work toward on the day-to-day journey. It's a satisfying feeling to meet or exceed a goal. A shortfall, on the other hand, can be very instructive - it's a signal to step back and analyze what's working and what isn't.

From personal experience, habits that eat away at profitability - failing to use risk management, over-sizing positions, and so on - are among the biggest reasons for shortfalls. Once those habits are identified and corrected, you'll be on a much smoother road to consistent profits.

Here's to profits,

Kent Barton
Senior Analyst

Quick List

    
Stock     02/18     02/18      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

RICK      25.06     -0.14     26.08     24.21        1.87/0.94      1.26
CRNX      22.31     -0.09     22.96     21.35        1.61/0.81      2.32
COLL      23.11     -0.02     23.71     21.84        1.87/0.94      2.06
FREQ      24.04     -0.11     24.81     23.23        1.58/0.79      4.62

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" 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 major US stock averages closed mixed on Tuesday as the Nasdaq moved higher while the Dow and S&P 500 both declined. Economic news was upbeat, including a strong homebuilder sentiment report and a better than expected outcome on regional manufacturing. In equities, Apple (AAPL $317) released disappointing guidance and warned that supply chain disruption due to the coronavirus outbreak is limiting the supply of iPhones. Walmart (WMT $119) reported quarterly results that beat forecasts for earnings but missed on revenues. Oil prices and treasury yields finished lower, the USD/dollar and gold were higher.

                        Feb 17, 2020           Feb 18, 2020   
                  --------------------   --------------------
Dow                    CLOSED        0        29,232  -165.89
Nasdaq                 CLOSED        0      9,732.74    +1.57
S&P 500                CLOSED        0         3,370    -9.87

NYSE Volume                          0                  3.77B
NYSE Advancers                       0                   1215
NYSE Decliners                       0                   1694

Nasdaq Volume                        0                  2.28B
Nasdaq Advancers                     0                   1455
Nasdaq Decliners                     0                   1758

                                 New Highs/Lows

                   02/11  02/12  02/13  02/14  02/17  02/18
                 --------------------------------------------
NYSE New Highs       345    270    220    264      0    241
NYSE New Lows         45     35     46     57      0     75
Nasdaq New Highs     256    256    222    205      0    200
Nasdaq New Lows       57     50     49     64      0     63
   

TRADER'S TIP: "Earnings: Holding Through or Getting Back In"

It's no secret that we believe in avoiding undue risk. Because earnings reports often end up surprising traders, we often suggest closing out positions before the company announces earnings. However, if a stock is moving in a solid trend (long or short) and earnings estimates support that trend, experienced traders will often elect to drastically reduce the number of shares in their position and hold them through the earnings announcement.

In some cases traders jump back into the trade after the company reports better than expected earnings. This can be profitable at times, but don't chase the stock. If it has jumped more than 5% beyond your exit point, you're probably better off waiting for price to pull back to a moving average support level.

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 - 3370.29 February 18, 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


NASDAQ Composite - 9732.74 February 18, 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 - 29232.19 February 18, 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
 

Market Calendar

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

TRADER'S TIP: "Learn As You Earn"

Short term trading is a great teaching vehicle. Through repetition we quickly learn how to select the correct number of shares for each position, and how to control risk using stops. We also rapidly learn how to trade in harmony with the trend, and become adept at managing each trade on its own merits.

Stocks Covered in This Issue

CONSUMER CYCLICAL SECTOR

RCI Hospitality Holdings, Inc. (RICK: Consumer Cyclical/Restaurants) - SQUEEZE PLAY. RICK 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 26.08 and a SELL short entry at 24.21. Once your trade is filled, enter a 1.87 trailing stop. Tighten it to 0.94 after a 1.26 gain. RICK closed on Tuesday at 25.06. Earnings Report Date: N/A. Beta: 1.14. Market-Cap: 232.005M. Optionable.

HEALTHCARE SECTOR

Crinetics Pharmaceuticals, Inc. (CRNX: Healthcare/Biotechnology) - SQUEEZE PLAY. CRNX shareholders know what it feels like to be squeezed. Tuesday's slim price range reveals uncertainty on both sides of the table, a situation which often resolves itself by either Bears or Bulls quickly gaining a clear advantage. The question is "who will win?" Near-term market action tell us whether we should sell short or we should buy shares instead. CRNX closed Tuesday at 22.31. The plan is to enter in the right direction by placing a BUY trigger at 22.96 and a SELL short trigger at 21.35. Once CRNX establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.61. After you've collected a 2.32 profit, tighten the stop to 0.81. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 540.399M. Not Optionable.

Collegium Pharmaceutical, Inc. (COLL: Healthcare/Drug Manufacturers-Specialty & Generic) - SQUEEZE PLAY. The ticker for Tuesday's session shows COLL 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 23.71 and a SELL short trigger at 21.84. When COLL 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 1.87 trailing stop. Upon reaching a 2.06 profit, resize the stop to 0.94. Earnings Report Date: Feb 26, 2020. Beta: 0.81. Market-Cap: 774.811M. Optionable.

Frequency Therapeutics, Inc. (FREQ: Healthcare/Biotechnology) - SQUEEZE PLAY. Tuesday's trading session left FREQ 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 24.81 and your SELL short trigger at 23.23. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.58 trailing stop. Once you have a 4.62 profit, reduce the stop to 0.79. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 740.069M. 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.

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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