February 3, 2022 - The RightLine Report
Notes From The Editor
Setting aside personal Bull or Bear bias is an acquired skill that takes practice to develop, yet it's the only way to be a successful trader. Although we realize that our positions have the potential to dramatically increase in price, there is no way to be "100 percent" sure. To hedge these "bets" we urge traders to plan their exits carefully - to protect their trading accounts in the event their stocks don't perform as expected.
Traders who have an exit plan hold a huge advantage over those who don't. Exit planning is superior to directional bias because it locks in profits as they accumulate, while bullish or bearish bias tends to blind traders to what is actually happening. Replacing bias with a plan means you don't have to watch a stock that's made you a lot of money slide all the way back down to where you first bought it, or even lower.
Bottom Line: Exits - not entries - determine whether we make a profit or a loss on each trade. They also control how big or small the profit or loss will be. Everyone knows that good stock picks with good entries are important. What most folks don't know is that good exits are even better!
Trade well,
~ Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 02/03 02/03 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
NCLH 20.49 -0.82 19.86 1.73/0.87 2.16
HZO 46.51 -1.33 44.77 4.35/2.18 4.68
CVI 20.45 -0.52 21.19 19.64 1.55/0.78 1.78
PHR 29.22 -1.67 28.00 3.2/1.6 4.88
SONO 24.50 -1.06 25.64 23.74 1.9/0.95 2.66
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
After a bullish four-day win streak, stocks were significantly lower on Thursday following several weak corporate earnings announcements. Facebook parent, Meta Platforms (FB $238), missed earnings forecasts and presented disappointing guidance that caused a 26% plunge, the biggest single-day price drop in FB's history. Honeywell (HON $192) and Merck & Co (MRK $79) also released soft guidance that caused shares for both companies to close lower. Thursday's economic calendar offered some positive news, as unemployment claims were below expectations, productivity for the fourth quarter was stronger than predicted and labor costs were lower than last quarter upsurge. Gold, treasuries and the USD/dollar declined, oil was higher.
Feb 2, 2022 Feb 3, 2022
-------------------- --------------------
Dow 35,629.33 224.09 35,111.16 -518.17
Nasdaq 14,417.55 71.54 13,878.82 -538.73
S&P 500 4,589.38 42.84 4,477.44 -111.94
NYSE Volume 4.51B 4.32B
NYSE Advancers 1,490 614
NYSE Decliners 1,871 2,713
Nasdaq Volume 4.67B 4.28B
Nasdaq Advancers 1,643 961
Nasdaq Decliners 3,025 3,640
New Highs/Lows
01/27 01/28 01/31 02/01 02/02 02/03
--------------------------------------------
NYSE New Highs 36 10 26 63 76 56
NYSE New Lows 429 542 118 48 55 150
Nasdaq New Highs 22 20 34 57 56 38
Nasdaq New Lows 846 1,152 212 123 114 237
Stocks Covered Today Stock Splits
TRADER'S TIP: "Market Direction & Economic Reports"
For a quick and easy table that shows what price movement to expect from just about any economic report, go to: http://www.rightline.net/education/economic.html.
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 - 4477.44 February 3, 2022
52-Week High: 4818.62
52-Week Low: 3723.34
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4830.45
Resistance 2: 4599.84
Resistance 1: 4515.84
Pivot: 4369.23
Support 1: 4285.23
Support 2: 4138.62
Support 3: 3908.01
NASDAQ Composite - 13878.82 February 3, 2022
52-Week High: 16212.23
52-Week Low: 12397.05
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 15438.62
Resistance 2: 14530.62
Resistance 1: 14150.59
Pivot: 13622.62
Support 1: 13242.59
Support 2: 12714.62
Support 3: 11806.62
Dow Industrials - 35111.16 February 3, 2022
52-Week High: 36952.65
52-Week Low: 30521.31
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 37561.16
Resistance 2: 35895.82
Resistance 1: 35310.64
Pivot: 34230.49
Support 1: 33645.31
Support 2: 32565.15
Support 3: 30899.81
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, January 31, 2022: 31-Jan 9:45 am Chicago PMI Tuesday, February 01, 2022: 01-Feb 9:45 am Markit manufacturing PMI (final) 01-Feb 10 am ISM manufacturing index 01-Feb 10 am Job openings 01-Feb 10 am Job quits 01-Feb 10 am Construction spending Wednesday, February 02, 2022: 02-Feb 8:15 am ADP employment report 02-Feb 10 am Home ownership rate Thursday, February 03, 2022: 03-Feb 8:30 am Initial jobless claims 03-Feb 8:30 am Continuing jobless claims 03-Feb 9:45 am Markit services PMI (final) 03-Feb 10 am ISM services index 03-Feb 10 am Factory orders 03-Feb 10 am Core capital equipment orders (revision) Friday, February 04, 2022: 04-Feb 8:30 am Nonfarm payrolls (month to month) 04-Feb 8:30 am Unemployment rate 04-Feb 8:30 am Average hourly earnings (month-to-month) 04-Feb 8:30 am Labor-force participation rate 25-54 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: "Learning To Fly"
Low-cost access to the markets via the Internet has without a doubt been the biggest single change to ever impact the stock market. In fact, it has literally revolutionized the entire industry. But cheap and fast trading tools don't produce successful traders and investors any more than cheap and fast planes produce good pilots. Just like learning to fly, learning to maneuver through the market profitably takes time, training, and sincere effort.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
Norwegian Cruise Line Holdings Ltd. (NCLH: Consumer Cyclical/Travel Services) - BEARISH U-TURN. Stocks stuck in a downtrend like NCLH tend to bounce downhill rather than slide lower in a straight line. After interacting with a moving average resistance level on Thursday, NCLH is poised to drop again. To take advantage of this setup, prepare to SELL shares short at 19.86. As usual, follow your entry with a trailing stop. A 1.73 stop will fit NCLH's current price range. Tighten it to 0.87 on a 2.16 gainer. Earnings Report Date: Feb 23, 2022. Beta: 2.69. Market-Cap: 8.542B. Optionable.
MarineMax, Inc. (HZO: Consumer Cyclical/Specialty Retail) - BEARISH U-TURN. During Thursday's trading action, HZO encountered solid resistance near its 50 EMA (Exponential Moving Average) and looks ready for a possible reversal. The resulting Bearish U-Turn set-up is the basis for a potential SHORT play, so get ready to enter a position in HZO on a further decline to our trigger at 44.77. Set a 4.35 trailing stop, tightening to 2.18 on a 4.68 gain. HZO ended the latest session at 46.51. Earnings Report Date: Apr 20, 2022. Beta: 1.71. Market-Cap: 1.022B. Optionable.
ENERGY SECTOR
CVR Energy, Inc. (CVI: Energy/Oil & Gas Refining & Marketing) - SQUEEZE PLAY. A look at CVI's daily chart shows what a price squeeze is all about. The constricted high-low daily trading range has produced a setup similar to a tightly coiled spring. Expect price to move sharply soon, with the direction yet to be determined. Let the upcoming market action resolve whether you will buy shares or sell short. To capture a move either way, place a BUY trigger at 21.19 and a SELL short trigger at 19.64. Once CVI shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.55 and tighten to 0.78 on a 1.78 gain. CVI closed Thursday at 20.45. Earnings Report Date: Feb 21, 2022. Beta: 1.81. Market-Cap: 2.056B. Optionable.
HEALTHCARE SECTOR
Phreesia, Inc. (PHR: Healthcare/Health Information Services) - BEARISH U-TURN. This short setup turns common stock behavior into profits. Grounded in the tendency for down-trending stocks to bounce briefly and then return to the familiar down-trend, the Bearish U-Turn points traders to weak stocks when conditions are calling for more downward price action. PHR's behavior on Thursday near moving average support signals a potential SELL short entry at 28, followed by a 3.2 trailing stop which can be tightened to 1.6 upon earning 4.88. PHR closed Thursday at 29.22. Earnings Report Date: Mar 28, 2022. Beta: 1.43. Market-Cap: 1.497B. Optionable.
TECHNOLOGY SECTOR
Sonos, Inc. (SONO: Technology/Consumer Electronics) - SQUEEZE PLAY. Thursday's trading action forced SONO's daily price range into an abnormally narrow state. This translates into opportunity; for the cyclical nature of price volatility is to shrink extensively, then swell rapidly as shares move in one direction or another. Instead of trying to predict the direction SONO will take when price volatility begins to increase, we'll set both a BUY (long) and a SELL (short) trigger to get us into the right trade. Be ready to BUY shares at 25.64 if SONO moves higher, and place your order to SELL short at 23.74 if price declines to that level. As usual follow your entry with a trailing stop, 1.9 should be sufficient. Reduce your stop to 0.95 on a 2.66 gain. SONO closed Thursday at 24.50. Earnings Report Date: Feb 09, 2022. Beta: 1.89. Market-Cap: 3.139B. 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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