Notes From The Editor

I've noticed that the Weather Channel and other cable media present a lot of programming about tornados. Many who have experienced one of these ferocious swirling storms say the noise is deafening. The best description I've heard is that it sounds like you're standing next to the railroad tracks while a freight train roars by.

On a much smaller scale that's similar to the type of noise traders typically hear when the stock market is swirling wildly in a downward spiral like it did today. The local and national media keep viewers informed of the latest price gyrations with a sense of worry and uneasiness. After all, this is money they're talking about.

Trading in these conditions presents unique challenges. We all breathe in the emotional air around us, so a negative atmosphere can potentially have an impact on our performance.

I was at a birthday party once when a guest I'd just met began pouring out his worries to me about the economy and the stock market. He eyes bulged and I could feel the intensity of his convictions. He seemed almost hypnotized by his own rhetoric as he spoke fearfully, then abruptly said "Don't you feel the same way?"

I politely told him that professional traders often experience some of their best financial results during the worst economic periods. He appeared surprised by my response, but instead of pursuing my positive input to the conversation and asking questions, he chose to ignore it. Within a few moments he stepped away and began spreading his pessimism to others who were nearby.

Here are a few things we can do to insure that our trading and financial "immune systems" are functioning at an optimum level:

First, turn down the noise and turn off the tube. Everyone has an opinion, yet an opinion won't even buy you a cup of coffee.

Second, use your response ability. Respond to any negative comments in a way that enhances instead of lowers your awareness and mental state. People usually don't mean to be negative; they just do it out of habit. Unfortunately even those with good intentions often do a lot of harm.

Third, remind yourself that a trend is your friend regardless of whether it's up or down. Everyone knows what a Bull Market is, but less than 2% of the population knows what shorting is. Be grateful that you are part of the minority who understand these powerful concepts. After all, the US stock market has been around for over 200 years, yet the most investors still don't know how to make money unless the Bull is raging.

Bottom Line: Put your knowledge to work. Guard your mind from the accumulative effect of non-stop "news". Be proactive, and you will be surprised to find inspiration in your own actions.

Trade well,

~ Thomas Sutton, Editor

Quick List

    
Stock     02/25     02/25      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

ALEC      27.39      0.04     28.64     26.23        2.41/1.21      4.84
APRE      35.00     -1.38     37.19     33.06        4.13/2.06      5.20
CNST      37.08     -0.27     38.30     35.73        2.57/1.28      3.96
COHU      21.63      0.04     22.40     20.85        1.55/0.78      2.04

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

US and global stocks closed solidly lower on Tuesday as concern about the health and economic impact of the coronavirus prompted traders to sell positions. Economic news didn't help matters, as regional manufacturing activity dropped into contraction territory and Consumer Confidence fell short of predictions. In equities, Intuit (INTU $284) and Home Depot (HD $237) announced upbeat earnings results, while Moderna (MRNA $24) shares shot up more than 25% after the company shipped the first batch of its coronavirus vaccine to US government researchers for human clinical trials. Gold, oil, treasuries and the USD/dollar all finished lower.

                        Feb 24, 2020           Feb 25, 2020   
                  --------------------   --------------------
Dow                    27,961   -1,032        27,081  -879.44
Nasdaq               9,221.28  -355.31      8,965.61  -255.67
S&P 500                 3,226  -111.86         3,128   -97.68

NYSE Volume                      4.93B                  5.68B
NYSE Advancers                     295                    285
NYSE Decliners                    2700                   2714

Nasdaq Volume                    3.21B                  3.62B
Nasdaq Advancers                   470                    456
Nasdaq Decliners                  2824                   2826

                                 New Highs/Lows

                   02/18  02/19  02/20  02/21  02/24  02/25
                 --------------------------------------------
NYSE New Highs       241    252    236    176     86     52
NYSE New Lows         75     59     61     87    245    367
Nasdaq New Highs     200    279    216    129     74     64
Nasdaq New Lows       63     59     53     67    185    244
   

TRADER'S TIP: "Invest In Learning"

Someone once said that "Good judgment comes from experience, and experience comes from bad judgment." Humorous, yes, and often true. Just be aware that there is more than one way to benefit from "experience." All of us have learned some things the hard way. This is the most common method of learning - make a mistake, and pay for it. Thankfully, there is a better way - gaining good judgment from the experiences of OTHERS! Learning from the mistakes and successes of other traders is far superior to unintentionally investing in over-priced lessons of our own.

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 - 3128.21 February 25, 2020

52-Week High: 3393.52
52-Week Low: 2722.27
Daily Trend: DOWN
Weekly trend: UP


NASDAQ Composite - 8965.61 February 25, 2020

52-Week High: 9838.37
52-Week Low: 7292.22
Daily Trend: DOWN
Weekly trend: UP
        
Dow Industrials - 27081.36 February 25, 2020

52-Week High: 29568.57
52-Week Low: 24680.57
Daily Trend: DOWN
Weekly trend: UP
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, February 24, 2020:
24-Feb  8;30 am   Chicago Fed national activity index

Tuesday, February 25, 2020:
25-Feb   9 am   Case-Shiller home price index
25-Feb   9 am   FHFA home price index
25-Feb  10 am   Consumer confidence index

Wednesday, February 26, 2020:
26-Feb  10 am   New home sales

Thursday, February 27, 2020:
27-Feb  8:30 am   Weekly jobless claims
27-Feb  8:30 am   GDP
27-Feb  8:30 am   Durable goods orders
27-Feb  8:30 am   Core capital goods orders

Friday, February 28, 2020:
28-Feb  8:30 am   Advance trade in goods
28-Feb  8:30 am   Personal income
28-Feb  8:30 am   Consumer spending
28-Feb  8:30 am   Core inflation
28-Feb  9:45 am   Chicago PMI
28-Feb  10 am   Consumer sentiment index



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

TRADER'S TIP: "Right or Wrong"

Traders who follow trading plans that include risk management are never actually "wrong." If price moves against a position, we just execute the planned stop and move on. Experienced traders don't look at this as being "right" or "wrong" - it's just part of the job of trading.

Stocks Covered in This Issue

HEALTHCARE SECTOR

Alector, Inc. (ALEC: Healthcare/Biotechnology) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in ALEC's narrowest trading range of the past seven sessions. With neither group able to take complete control on Tuesday, 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 28.64 and a SELL order at 26.23. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.41 trailing stop. Tighten the stop to 1.21 once you have a 4.84 gain. ALEC closed Tuesday at 27.39. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 2.154B. Optionable.

Aprea Therapeutics, Inc. (APRE: Healthcare/Biotechnology) - 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. APRE traders reached this state of stand-off on Tuesday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 37.19 and a SELL short trigger at 33.06. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 4.13 which can be tightened to 2.06 on a 5.20 gain. APRE closed Tuesday at 35.00. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 734.668M. Not Optionable.

Constellation Pharmaceuticals, Inc. (CNST: Healthcare/Biotechnology) - SQUEEZE PLAY. CNST traders on both sides of the fence are now locked in a head-to-head shootout. Tuesday'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 38.30 and a SELL short trigger at 35.73. When one of the orders is filled, cancel the remaining order and enter a 2.57 trailing stop. When you've reached a 3.96 paper profit, tighten the stop to 1.28. CNST closed at 37.08 on Tuesday. Earnings Report Date: Mar 11, 2020. Beta: N/A. Market-Cap: 1.521B. Optionable.

TECHNOLOGY SECTOR

Cohu, Inc. (COHU: Technology/Semiconductor Equipment & Materials) - SQUEEZE PLAY. Trader indecision has put COHU 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 22.40 and a SELL short entry at 20.85. Now it's up to COHU to show us which entry will be filled. Once the trade is underway place a 1.55 trailing stop, which can be tightened to 0.78 after you achieve a 2.04 profit. COHU closed on Tuesday at 21.63. Earnings Report Date: May 03, 2020. Beta: 1.56. Market-Cap: 892.592M. 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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