Notes From The Editor

Thankfully you don't have to be a rocket scientist to be a successful trader. In fact, folks of average intelligence tend to do better trading stocks than the genius types.

All good trading strategies share the same foundation - Risk Control. You probably already know this. Now ask yourself this question ... Do you always use a risk calculator to determine your position size before you enter a trade?

And how about trade execution? Have you ever ordered the wrong number of shares? Or bought the wrong stock? Have you ever gone short when you meant to go long?

Believe me, you're not alone. After working with hundreds of traders I've come to the conclusion that brains and self-control are not the same thing.

In the real world, a high percentage of "smart" people are extremely undisciplined. Many have a hard time following a simple routine, and will do anything to avoid tasks they consider to be monotonous or tedious.

That's too bad, for trading stocks requires a disciplined touch. Just like sports, the trading game is repetitive. Successful traders do the same things over and over. We're not talking about actions that are extremely hard to do, like a hundred pushups every thirty minutes. Trading is made up of relatively simple tasks, yet the ability to consistently implement each aspect of an effective method makes all the difference in the world.

For example, trade execution is a lot like filling out a personal information form online. Have you ever had to retype simple data - like a credit card or social security card number more than twice to get it right? Reaching the point where you can get it right the first time takes the kind of disciplined practice that makes for a good trader.

This type of self-discipline isn't hard and it certainly isn't complicated. However, I'm not sure if anyone can really teach another person how to do it. Granted, it does help if someone reminds us to "pay attention" from time to time. I suppose that's what I'm doing right now - though I have to admit that it's as good for me to hear it as it is for you.

Trade well,

Thomas Sutton, Editor

Quick List

    
Stock     02/24     02/24      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

HUN       39.20     -0.71     39.71                  3.07/1.54      2.04
EPC       34.91     -0.50      35.5     33.44        2.06/1.03      3.42
VLRS      20.05     -0.51     20.32                  2.24/1.12      1.58
USAK      23.84      0.15     24.34                  3.11/1.56      2.68
KRC       68.79      0.27     69.82                  5.63/2.82      4.18

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

Questions? Send us an email using our Contact Form.

Market Summary

Stocks closed higher on Thursday after rebounding from early session lows resulting from the news that Russia has attacked Ukraine. Economic headlines included jobless claims moderating slightly more than expected and an upward revision to fourth quarter GDP - Gross Domestic Product. In the earnings department, Booking Holdings (BKNG $2,295) and eBay (EBAY $55) both beat profit forecasts but presented disappointing guidance. Shares of BKNG were lower, EBAY moved higher. The USD/dollar advanced upward, gold and oil prices finished lower, treasuries were mixed.

                        Feb 23, 2022           Feb 24, 2022   
                  --------------------   --------------------
Dow                 33,131.76  -464.85     33,223.83    92.07
Nasdaq              13,037.49  -344.03     13,473.59   436.10
S&P 500              4,225.50   -79.26      4,288.70    63.20

NYSE Volume                      4.84B                  6.78B
NYSE Advancers                     878                  1,941
NYSE Decliners                   2,479                  1,482

Nasdaq Volume                    4.64B                  6.19B
Nasdaq Advancers                 1,131                  2,945
Nasdaq Decliners                 3,561                  1,947

                                 New Highs/Lows

                   02/17  02/18  02/21  02/22  02/23  02/24
                 --------------------------------------------
NYSE New Highs        21     23      0     30     23     22
NYSE New Lows        156    178      0    337    394    792
Nasdaq New Highs      36     30      0     32     28     29
Nasdaq New Lows      334    454      0    661    728  1,344
   

TRADER'S TIP: "Free Advice From TV Talking Heads"

When it comes to financial advice, always remember that the brokerage firms who pay the advisors make most of their money from commissions on stock sales. It may only be a few bucks for each transaction, but it adds up to hundreds of billions of dollars. Though many analysts are well intended, a major purpose of their stock picks is to attract customers and generate order flow. Whether the recommendations are profitable or not really isn't that important - the companies make money whenever someone buys or sells shares.

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 - 4288.70 February 24, 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 - 13473.59 February 24, 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 - 33223.83 February 24, 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
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

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

TRADER'S TIP: "Make Strength Your Ally"

Only a few traders have the financial strength to move individual low- volume stock prices in the direction they prefer, and no one is capable of consistently moving the entire market. Since this is the case, the best thing we can do is learn to identify and align our positions with the dominant side. Regardless of whether we trade 5-minute bars or weekly charts, whenever the balance shifts within our chosen time frame, we should always realign with the side of strength.

Stocks Covered in This Issue

BASIC MATERIALS SECTOR

Huntsman Corporation (HUN: Basic Materials/Chemicals) - NEW HIGH DIP. HUN's upward price momentum produced a brand new 52-week high just a few sessions ago. Shares have been sliding downhill since reaching that point, but the bounce that took place during Thursday's trading could be telling us the short-term decline is over. We need to confirm that sellers are exiting, so we'll wait for HUN to move a bit higher before buying this stock. Set your BUY trigger at 39.71, and then enter a trailing stop of 3.07. Tighten the stop to 1.54 when you accumulate a 2.04-point gain. HUN finished the Thursday session at 39.20. Earnings Report Date: Apr 28, 2022. Beta: 1.24. Market-Cap: 8.409B. Optionable.

CONSUMER DEFENSIVE SECTOR

Edgewell Personal Care Company (EPC: Consumer Defensive/Household & Personal Products) - SQUEEZE PLAY. Thursday's trading session left EPC 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 35.5 and your SELL short trigger at 33.44. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 2.06 trailing stop. Once you have a 3.42 profit, reduce the stop to 1.03. Earnings Report Date: May 04, 2022. Beta: 0.92. Market-Cap: 1.888B. Optionable.

INDUSTRIALS SECTOR

Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (VLRS: Industrials/Airlines) - BULLISH BOUNCE. This trader-friendly setup turns repetitive stock behavior into real profits. Based on the tendency for up-trending stocks to drop briefly and then resume the up-trend, the Bullish Bounce places traders into excellent stocks when conditions are primed for more skyward movement. VLRS's current price action near moving average support signals a potential BUY entry at 20.32, followed by a 2.24 trailing stop which can be tightened to 1.12 upon earning 1.58. VLRS closed Thursday at 20.05. Earnings Report Date: N/A. Beta: 1.72. Market-Cap: 2.316B. Optionable.

USA Truck, Inc. (USAK: Industrials/Trucking) - BULLISH BOUNCE. Among other strengths, the Bullish Bounce protects traders from buying a stock "at the top" of its current cycle. The entry into this setup always takes place in upward-moving stocks that have retreated a bit under normal conditions. Now sitting at 23.84, USAK is on our radar for a BUY entry at 24.34. If you purchase shares of USAK, be sure to also place a trailing stop of 3.11. Snug it up to 1.56 on a 2.68 gain. Earnings Report Date: Apr 27, 2022. Beta: 2.06. Market-Cap: 212.071M. Optionable.

REAL ESTATE SECTOR

Kilroy Realty Corporation (KRC: Real Estate/REIT-Office) - NEW HIGH DIP. After setting a recent new 52-week high, KRC shares have since fallen from that peak as traders put some profits in the bank. Thursday's intra-day bounce may very signal that the recent decline is over. Prepare for a continuation of this turnaround and "buy-the-dip" if KRC reaches our BUY trigger set at 69.82. Follow your entry with a trailing stop of 5.63, and tighten to 2.82 on a 4.18 gain. KRC closed Thursday at 68.79. Earnings Report Date: Apr 26, 2022. Beta: 0.80. Market-Cap: 8.107B. 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  
---------------- -------     --------    -------     ------  -------   
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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