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February 26, 2022 - The RightLine Report
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NOTES FROM THE EDITOR
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One of my favorite aspects of trading - something that took me several years to fully realize - is how much it can teach you about life. I'm not talking about some pseudo-philosophical mumbo jumbo here, but real life lessons and skills that come in handy every day.
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"QUICK LIST"
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Stock 02/25 02/25 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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AR 22.65 0.11 22.96 21.25 1.71/0.86 2.40
FLNG 23.59 0.86 23.96 22.08 1.88/0.94 2.14
BCML 22.25 0.32 22.54 1.59/0.80 1.40
RYI 24.01 1.40 24.49 2.19/1.10 2.64
ESMT 21.41 0.28 21.84 19.69 2.15/1.08 3.34
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 https://prorightline.com/index.php/rightline-report-quick-list/. In addition,always use the RightLine Risk Calculator before entering any position. For access to the Risk Calculator, go to https://prorightline.com/index.php/risk-calculator/. To learn more about controlling risk go to the RightLine Risk Control System at https://prorightline.com/index.php/rightline-risk-control-system/ For a glossary of terms unique to The RightLine Report go to: https://prorightline.com/index.php/glossary/ Questions? Send us an email using our contact form at: https://prorightline.com/index.php/contact-us/
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MARKET SUMMARY
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Stocks were higher on Friday despite uncertainty surrounding global effects of Russia's invasion of Ukraine. The geopolitical turbulence obscured the release of economic news that showed durable goods orders, consumer sentiment, personal income and spending all exceeded analysts' forecasts, while pending home sales surprisingly declined. In equities headlines, the share price of Dell Technologies (DELL $51) and Foot Locker (FL $29) dropped after the companies released earnings reports that included disappointing guidance. Gold, oil prices and the USD/dollar closed lower, treasuries were mixed. Friday On The Week
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Dow 34,058.75 834.92 -20.43 -0.06%
Nasdaq 13,694.62 221.04 +146.55 1.08%
S&P 500 4,384.65 95.95 +35.78 0.82%
NYSE Volume 5.22B
NYSE Advancers 2,760
NYSE Decliners 590
Nasdaq Volume 4.64B
Nasdaq Advancers 3,409
Nasdaq Decliners 1,293
New Highs/Lows
02/18 02/21 02/22 02/23 02/24 02/25
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NYSE New Highs 23 0 30 23 22 44
NYSE New Lows 178 0 337 394 792 73
Nasdaq New Highs 30 0 32 28 29 47
Nasdaq New Lows 454 0 661 728 1,344 135
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TRADER'S TIP:
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TRADER'S TIP: "Nay-Sayers and Hay-Makers" It seems that practically every market turn comes draped in commentary and analysis from all angles of pundits and prophets. For every pullback there's the requisite reasoning for a "golden buying opportunity," which comes equally weighted with the seemingly sound logic of numerous warning signs signaling impending doom. Enough already! Once in a while try turning down the volume and simply observing the charts and figures that come across without the rhetoric. It can be so much more informative. **************************
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: https://prorightline.com/index.php/technical-analyst-section-rightline-report/ S&P 500 - 4384.65 February 25, 2022 52-Week High: 4818.62 52-Week Low: 3723.34 Daily Trend: DOWN Weekly trend: DOWN Weekly Pivot Levels Resistance 3: 4858.00 Resistance 2: 4577.99 Resistance 1: 4481.32 Pivot: 4297.98 Support 1: 4201.31 Support 2: 4017.97 Support 3: 3737.96 https://www.prorightline.com/rlch/022522SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, February 28, 2022: 28-Feb 8:30 am Trade in goods, advance report 28-Feb 9:45 am Chicago PMI Tuesday, March 01, 2022: 01-Mar 9:45 am Markit manufacturing PMI (final) 01-Mar 10 am ISM manufacturing index 01-Mar 10 am Construction spending Wednesday, March 02, 2022: 02-Mar 8:15 am ADP employment report 02-Mar 2 pm Beige Book Thursday, March 03, 2022: 03-Mar 8:30 am Initial jobless claims 03-Mar 8:30 am Continuing jobless claims 03-Mar 8:30 am Productivity revision (SAAR) 03-Mar 8:30 am Unit labor costs revision (SAAR) 03-Mar 9:45 am Markit services PMI (final) 03-Mar 10 am ISM services index 03-Mar 10 am Factory orders 03-Mar 10 am Core capital equipment orders (revision) Friday, March 04, 2022: 04-Mar 8:30 am Nonfarm payrolls 04-Mar 8:30 am Unemployment rate 04-Mar 8:30 am Average hourly earnings 04-Mar 8:30 am Labor force participation rate, prime working age For a chart of typical Up or Down market reactions to specific major US economic reports, go to "Economic Indicator Effects" at this link: https://prorightline.com/index.php/economic-indicator-effects/
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TRADER'S TIP:
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TRADER'S TIP: "A Trader's Mind: Beliefs" "You experience what you believe, unless you believe you won't, in which case you don't, which means you did." - Harry Palmer ***********************************
STOCKS COVERED IN THIS ISSUE
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ENERGY SECTOR Antero Resources Corporation (AR: Energy/Oil & Gas E&P) - SQUEEZE PLAY. Traders are feeling the pressure as AR's intra-day price range on Friday shrunk to the narrowest spread in over a week. The tension between buyers and sellers should provide enough pent-up engergy for a breakout move in the days ahead, so get ready to trade with the new trend. To achieve that, place a BUY entry at 22.96 and a SELL short entry at 21.25. AR's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.71 trailing stop. Tighten it to 0.86 after you get a 2.4 gain. AR closed Friday at 22.65. Earnings Report Date: Apr 26, 2022. Beta: 4.17. Market-Cap: 7.128B. Optionable. FLEX LNG Ltd. (FLNG: Energy/Oil & Gas Midstream) - SQUEEZE PLAY. Friday's narrow price range has created a potentially profitable setup in FLNG, as sellers and buyers find themselves in a near tie for control of price direction. The next short-term trend could go either way, so prepare for a move out of the draw within the next day or so. Set a BUY entry at 23.96 and a SELL short entry at 22.08. Let FLNG's price action determine your long or short entry. Once the order is filled, place a 1.88 trailing stop, and tighten it to 0.94 upon getting a 2.14 gain. FLNG closed Friday at 23.59. Earnings Report Date: N/A. Beta: 0.42. Market-Cap: 1.253B. Optionable. FINANCIAL SERVICES SECTOR BayCom Corp (BCML: Financial Services/Banks-Regional) - BULLISH BOUNCE. Everyone familiar with price charts knows that a stock tends to bounce its way higher rather than move in a straight line. The lower levels of these short-term rebounds offer a safe and often early entry into stocks that are in the process of establishing longer-term uptrends. BCML's reaction to support on Friday created a Bullish Bounce setup with a BUY entry trigger at 22.54. Use a 1.59 trailing stop, which should work well with BCML's typical daily range. Tighten it to 0.8 on a 1.4 profit. BCML closed at 22.25 on Friday. Earnings Report Date: Apr 20, 2022. Beta: N/A. Market-Cap: 305.114M. Not Optionable. INDUSTRIALS SECTOR Ryerson Holding Corporation (RYI: Industrials/Metal Fabrication) - BULLISH BOUNCE. Entering a position in the early stages of a bounce is great way to get on board an up-trending stock. The "Bullish Bounce" setup identifies probable candidates by evaluating the trading action that takes place near support levels. RYI's behavior on Friday could very well be a sign that a new bounce is underway. Place a BUY trigger at 24.49. In the event your trigger is met, also place a 2.19 trailing stop which can be trimmed down to 1.1 when you have a 2.64 profit. RYI closed Friday at 24.01. Earnings Report Date: May 03, 2022. Beta: N/A. Market-Cap: 921.845M. Optionable. TECHNOLOGY SECTOR EngageSmart, LLC (ESMT: Technology/Software-Application) - SQUEEZE PLAY. ESMT 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 21.84 and a SELL short entry at 19.69. Once your trade is filled, enter a 2.15 trailing stop. Tighten it to 1.08 after a 3.34 gain. ESMT closed on Friday at 21.41. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 3.465B. 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: https://prorightline.com/index.php/rightline-risk-control-system/ Use "Gap Adjusted Entries" to reset the Entry Price for stocks that gap beyond recommended entry levels. Link: https://prorightline.com/index.php/gap-adjusted-entries-increase-profits/ ***********************************
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 ---------------- ------- -------- ------- ------ ------- 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 For a closer look at the different stages of a Stock Split go to: https://prorightline.com/index.php/trading-stock-splits-stages/ **********************************
TRADER'S CORNER
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"Rockin' With The Rhythm Of The Market" The stock market is in constant motion, continuously cycling back and forth between buying and selling. Literally millions of traders and investors enter and exit positions at different times of the day, week, or month. As a result, the market ebbs and flows in cycles - some are very short, lasting only an hour or so, while others will continue for several days, or even weeks. Each of these up and down cycles has two reversal points - one at the bottom of the cycle and one at the top. The price movement between these reversals creates momentum, and it's within this momentum that short-term traders find excellent opportunity for profit. Trading with the rhythm of the market simply means aligning what WE do with what THE MARKET is doing. Trading short time frames is all about awareness, flexibility and responding to market action as it occurs. One of the most important skills that a trader or investor can acquire is the ability to recognize reversal signals that are generated by price movement. Becoming familiar with a few simple chart patterns can have a huge positive impact on our trading, for they enable us to stay in sync with the market's ever changing moods. There are several momentum patterns that consistently reveal themselves on price charts. One of the most reliable is the bullish "V Bottom" - a very simple yet powerful pattern that is printed when a significant intraday reversal occurs. A good example is when the S&P 500 has seriously declined for most of the session, and then turned around to make a dramatic comeback to close either near the previous session close or, better yet, to close higher for the day. Late session reversals are usually the most important, and can be traded without hesitation - IF the S&P has been in a downtrend for a few days. "V Bottoms" that follow an uptrend aren't near as meaningful. A pattern closely related to the "V Bottom" is the "Late Session Spike." Studies have shown that the market tends to operate on a different clock than the opening and closing bell would indicate. In fact, price action tends to follow a mid-session to mid-session cycle instead of an open to close cycle. As traders, we can take advantage of this tendency by watching for late day price movement to signal a reversal that is likely to carry over into the following session. These late-session price spikes usually take place during the last two hours of trading during choppy or trend-less days. The odds are strong that whatever happens at the close will continue into the following day. Obviously, Bulls like to see a strong move higher to end the session, while Bears prefer prices to slide into the final bell. Either way, it's always a good idea to check price action into the close. To qualify, a "Late Session Spike" should lift the S&P 500 or Dow to close at least 1/2 percent (0.5%) above the previous day's close. And just like a "V Bottom," the "Late Session Spike" is the most reliable when it follows a downtrend. Another reliable way to locate turnarounds is the "1% Reversal Day." In this case we simply take note when any trend underway has lasted for at least 4 or 5 days, and preferably 7 to 10. We then watch for a "1 % Reversal Day" - a day when all of the major averages (S&P 500, Dow, Nasdaq, Russell 2000) close in the opposite direction of the trend by 1% or more. These reversal days usually indicate a severe breakdown in the previous trend - a signal that considerable price movement in the direction of the reversal is just ahead. Keep in mind that the 1% isn't set in stone. If three out of the four indices have reversed by more than 1%, but the other one has only reversed 0.85% percent, this would still qualify as a "1 % Reversal Day." However, if any one of the indices reverses LESS than 0.75%, it disqualifies the reversal. The three patterns we've just discussed are not highly sophisticated, but they are very effective and easy to trade. Always remember that price action is the stock market's way of telling us what it intends to do. Staying in harmony with the larger market direction is extremely important when trading individual stocks. The appearance of a reversal pattern in the major indices indicates high odds of a turnaround, and gives traders enough time to safely enter low risk positions in their favorite stocks. However, the larger market or specific stocks don't always follow through on reversals, so it's important to have a disciplined risk control strategy in place. ************************************************* Note: For details of the RightLine Risk Control System, go to the following link: https://prorightline.com/education/riskcontrol.html ======================================================================
Best of luck and have a Great Week!
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The RightLine Report is an information service for investors and traders. It is not a solicitation nor a recommendation or offer to buy or sell securities. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. The publishers of The RightLine Report are not brokers or financial advisors, and are not acting in any way to influence the purchase or sale of any security. Stock picks, entry points and exit points should be considered an information resource to assist the trader in developing a trading plan and it is the sole responsibility of the reader to conduct his or her own due diligence before executing a trade. Trading securities should be considered speculative with a high degree of volatility and risk. The publishers of The RightLine Report recommend that anyone trading securities should do so with caution, exercise prudent trading discipline and have a personal risk management strategy in place before doing so. It is possible at this or some subsequent date, the publishers and staff of The Pro Right Line Corp. may own, buy or sell securities presented. The Pro Right Line Corp. is not a financial advisory service. Its publishers, owners or investors, are not liable for any losses or damages, monetary or otherwise, that result from the content of The RightLine Report. Past RightLine Report performance may not be indicative of future performance. All subscriptions and/or use of the RightLine.net website are subject to RightLine's "Terms of Use" and "Subscriber Terms & Conditions" which are posted at www.rightline.net. Any REDISTRIBUTION of the above information, without The RightLine's written consent, is STRICTLY PROHIBITED. Copyright / The Pro Right Line Corporation - All Rights Reserved To Unsubscribe, send an email to cs@prorightline.com or call 800-737-4518. |