February 22, 2022 - The RightLine Report
Notes From The Editor
One measure of a trader's strength is the ability to adapt quickly - both mentally and emotionally. This often means preparing for potential price reversals that other market participants are completely unaware of.
Much of the daily price movement in the market results from shorter-term traders who base their buy and sell decisions on a completely different set of guidelines than the average investor. While investors spend most of their time watching the action from the sidelines, traders move in and out of stocks at a faster pace.
This group of traders anticipate potential reversals, knowing that once a chosen market or stock stops moving in one direction, the crowd is forced to make a decision. They can get in, get out, stay in, or stay out. No matter what the majority chooses to do, those choices will begin to move the market in one direction or the other. More traders will then jump into the short-term trend, adding to momentum and creating a snowball effect.
When stocks fall hard and fast, price movement quickly reaches a point where traders decide to take profits. Since many use support and resistance levels to determine where to enter and exit short-term positions, it isn't unusual to see stocks that had been headed in one direction suddenly stop and reverse at these junctions.
This is one reason traders should take a look at the Technical Analyst section of the RL Report when planning and managing positions. Speaking from experience, a bit of homework certainly helps traders who trade bounces prepare for the ride.
Good trading!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 02/22 02/22 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
PERI 21.40 -0.36 22.19 20.53 1.66/0.83 2.68
MAR 173.12 -1.80 178.13 13.47/6.74 11.26
VSAT 42.53 -1.42 41.07 3.44/1.72 5.04
AMPL 20.67 0.01 21.63 18.63 3/1.5 6.68
RUN 20.90 -0.66 21.82 19.81 2.01/1.01 5.26
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
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Stocks Covered Today Stock Splits
Market Summary
Stocks were lower on Tuesday following Monday's closed-market for the President's Day holiday. The primary catalysts for the bullish session included trader concerns about Fed Bank monetary policy tightening in the face of higher inflation, and rising global tensions over the ongoing Russia/Ukraine scenario. Mixed economic news included a dip in consumer confidence, a larger increase in home prices than anticipated, a surprise decrease in the Richmond Manufacturing Index, and better than expected preliminary reads on manufacturing and services sector activity. In the earnings department, retailers Macy's (M $24) and Home Depot (HD $316) both announced excellent profit numbers. Gold and oil prices finished higher, treasuries were mixed, and the USD/dollar remained even.
Feb 21, 2022 Feb 22, 2022
-------------------- --------------------
Dow Closed 0 33,596.61 -482.57
Nasdaq Closed 0 13,381.52 -166.55
S&P 500 Closed 0 4,304.76 -44.11
NYSE Volume 0 5.18B
NYSE Advancers 0 749
NYSE Decliners 0 2,595
Nasdaq Volume 0 4.86B
Nasdaq Advancers 0 1,206
Nasdaq Decliners 0 3,531
New Highs/Lows
02/15 02/16 02/17 02/18 02/21 02/22
--------------------------------------------
NYSE New Highs 34 63 21 23 0 30
NYSE New Lows 181 157 156 178 0 337
Nasdaq New Highs 52 48 36 30 0 32
Nasdaq New Lows 193 243 334 454 0 661
Stocks Covered Today Stock Splits
TRADER'S TIP: "Positive Returns"
In one sense risk can be defined as the events or conditions that discourage traders - so much that they sometimes abandon strategies that have the potential to produce high returns. This is the main reason to use Risk Control. With a planned risk management strategy, situations and events that discourage others have little or no negative effect on you. This means while others are giving up, you remain focused on learning and earning, while protecting your capital. Over time, you become skillful at trading the markets and enjoy the positive returns others have abandoned.
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 - 4304.76 February 22, 2022
52-Week High: 4818.62
52-Week Low: 3723.34
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4713.20
Resistance 2: 4550.87
Resistance 1: 4449.87
Pivot: 4388.54
Support 1: 4287.54
Support 2: 4226.21
Support 3: 4063.88
NASDAQ Composite - 13381.52 February 22, 2022
52-Week High: 16212.23
52-Week Low: 12397.05
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 15122.12
Resistance 2: 14423.95
Resistance 1: 13986.01
Pivot: 13725.78
Support 1: 13287.84
Support 2: 13027.61
Support 3: 12329.44
Dow Industrials - 33596.61 February 22, 2022
52-Week High: 36952.65
52-Week Low: 30547.53
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 36510.93
Resistance 2: 35439.32
Resistance 1: 34759.25
Pivot: 34367.71
Support 1: 33687.64
Support 2: 33296.10
Support 3: 32224.49
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, February 21, 2022: 21-Feb STOCK MARKET CLOSED Presidents Day holiday - None scheduled Tuesday, February 22, 2022: 22-Feb 9 am 22-Feb 9 am FHFA home price index (year-over-year change) 22-Feb 9:45 am Markit manufacturing PMI (flash) 22-Feb 9:45 am Markit services PMI (flash) 22-Feb 10 am Consumer confidence index Wednesday, February 23, 2022: 23-Feb None scheduled Thursday, February 24, 2022: 24-Feb 8:30 am Initial jobless claims 24-Feb 8:30 am Continuing jobless claims 24-Feb 8:30 am Gross domestic product revision (SAAR) 24-Feb 8:30 am Gross domestic income (SAAR) 24-Feb 10 am New home sales Friday, February 25, 2022: 25-Feb 8:30 am Nominal personal income 25-Feb 8:30 am Nominal consumer spending 25-Feb 8:30 am PCE inflation (monthly) 25-Feb 8:30 am Core inflation (monthly) 25-Feb 8:30 am PCE inflation (year-over-year) 25-Feb 8:30 am Real disposable income 25-Feb 8:30 am Real consumer spending 25-Feb 10 am UMich consumer sentiment (final) 25-Feb 10 am 5-year inflation expectations (final) 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: "Where's the Beta?"
Sometimes we list a stock's Beta as "N/A" or Non Applicable. Beta is a measure of a stock's volatility measured against the average S&P stock over the last 5 years when available, and not less than 2.5 years. If a company has not existed for 2.5 years, it has not yet earned "the right" to have a Beta. If two companies with 100-year histories merge, the new company will not receive a Beta until the combined entity has existed for 2.5 years.
Stocks Covered in This Issue
COMMUNICATION SERVICES SECTOR
Perion Network Ltd. (PERI: Communication Services/Internet Content & Information) - SQUEEZE PLAY. The ticker for Tuesday's session shows PERI 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 22.19 and a SELL short trigger at 20.53. When PERI 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 1.66 trailing stop. Upon reaching a 2.68 profit, resize the stop to 0.83. Earnings Report Date: May 02, 2022. Beta: 1.38. Market-Cap: 958.684M. Optionable.
CONSUMER CYCLICAL SECTOR
Marriott International, Inc. (MAR: Consumer Cyclical/Lodging) - NEW HIGH DIP. New highs always reflect stocks that are doing exceptionally well. This is the case with MAR, which has pulled back a bit after setting a new 52-week high just a few days ago. Tuesday's bounce from Moving Average support tells us this stock may be ready to move back up to blue sky territory. MAR now rests at 173.12, and we're anticipating a move up to our BUY trigger at 178.13. Be ready to buy shares at that point and follow your entry with a 13.47 trailing stop. Decrease the stop to 6.74 on a 11.26 gain. Earnings Report Date: May 09, 2022. Beta: 1.72. Market-Cap: 56.491B. Optionable.
TECHNOLOGY SECTOR
Viasat, Inc. (VSAT: Technology/Communication Equipment) - BEARISH U-TURN. The weight of VSAT's declining weekly trend was lightened recently when shares began to move upward. However, like a swimmer against the tide VSAT encountered strong resistance on Tuesday. Price action indicates a likely return to the previous downtrend, so plan to short VSAT upon reaching our SELL trigger at 41.07. Set a 3.44 trailing stop which can be tightened to 1.72 after you have a 5.04 gain. VSAT ended the latest session at 42.53. Earnings Report Date: N/A. Beta: 1.12. Market-Cap: 3.164B. Optionable.
Amplitude, Inc. (AMPL: Technology/Software-Application) - SQUEEZE PLAY. Sometimes when Bulls and Bears face off in the market arena for a typical day-long battle, there is no clear winner. This is evident when the daily price range contracts to an unusually narrow state. AMPL found itself in this condition on Tuesday when neither buyers or sellers were able to push ahead. This setup provides traders a chance to hop on board the next breakout - whether it's to the upside or down - with little risk of loss. To do this place a BUY order at 21.63 and a SELL short trigger at 18.63. When AMPL moves outside of Tuesday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 3 trailing stop. After you've got a 6.68 profit, tighten the stop to 1.5. AMPL closed at 20.67 on Tuesday. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 2.275B. Optionable.
Sunrun Inc. (RUN: Technology/Solar) - SQUEEZE PLAY. RUN 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. RUN closed Tuesday at 20.90. The plan is to enter in the right direction by placing a BUY trigger at 21.82 and a SELL short trigger at 19.81. Once RUN establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 2.01. After you've collected a 5.26 profit, tighten the stop to 1.01. Earnings Report Date: May 03, 2022. Beta: 2.14. Market-Cap: 4.356B. 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
---------------- ------- -------- ------- ------ -------
ePlus PLUS 11/9/2021 12/14/2021 2-for-1 Yes
NAPCO Security NSSC 12/8/2021 1/5/2022 2-for-1 Yes
AeroCentury Corp ACY 12/17/2021 1/10/2022 5-for-1 No
Merchants Bancorp MBIN 11/17/2021 1/18/2022 2-for-1 No
SMART Global Hold SGH 1/4/2022 2/2/2022 2-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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