Notes From The Editor

Stock trading opportunities come in all flavors. Fortunately, the very best share at least one important characteristic - price movement. In any market it is essential to find stocks that are moving. Buyers prefer stocks that are trending higher, and short sellers favor stocks that are trending down. While the definition of a "moving" stock is somewhat subjective, there are several things to consider when looking for good stocks to trade.

The first place to look is at stocks that are making new highs and new lows. Stocks that have just set new highs make ideal buy-side candidates. The ability to rise to new heights reflects investor interest, and indicates the demand for shares is in excess of available supply.

On the flip side, stocks making new lows are exhibiting extreme weakness. This usually results in even more weakness as wave after wave of investors get tired of losing money and give up. The list of New Lows often contains stocks that are begging to be shorted.

As a rule, new-highs lead to more strength, while new-lows point to more trouble ahead. To get into trends early, look for stocks that have just made new four-week highs or lows. Also check the slope of the 22-day moving average. If it's leaning decidedly in one direction or the other, you can assume that the trend is relatively stable.

Keep in mind that although the purpose of trading is to be profitable, we don't have to catch 100% of every move. Find stocks that are active within your chosen time frame, and take a reasonable amount out of the anticipated movement. As for timing entries, start with the basic reversal strategies like the Bullish Bounce and Bearish U-Turn.

Trade well.

~ Thomas Sutton, Editor

Note: Click on the following link for more information about the Bullish Bounce and Bearish U-Turn trading strategies: http://www.rightline.net/education/bullbear.html

Quick List

    
Stock     02/04     02/04      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

UFI       21.65     -0.17     22.59     20.96        1.63/0.81      1.38
MRNA      20.87      0.49     21.15                  2.00/1.00      1.82
VIR       21.24     -1.57     22.37     19.89        2.48/1.24      1.78
DNLI      22.71     -0.02     23.57     21.72        1.85/0.93      2.84

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

Stocks closed solidly higher on Tuesday as traders shrugged off contravirus worries and bought shares in anticipation of a rebound from the economic impact. Much of the bullish sentiment came from the recent deluge of of upbeat global manufacturing data. In equities, Ralph Lauren (RL $124) and Clorox (CLX $164) outperformed analysts' predictions, while Google and Youtube parent Alphabet (GOOGL $1,445) disappointed shareholders with lower than expected revenues. The USD/dollar and treasury yields were higher, gold and oil prices declined.

                        Feb 3, 2020            Feb 4, 2020    
                  --------------------   --------------------
Dow                    28,400  +143.78     28,807.63  +407.82
Nasdaq               9,273.40  +122.47      9,467.97  +194.57
S&P 500                 3,249   +23.40      3,297.59   +48.67

NYSE Volume                      3.84B                  3.99B
NYSE Advancers                    1906                   2105
NYSE Decliners                    1025                    833

Nasdaq Volume                    2.46B                  2.46B
Nasdaq Advancers                  2044                   2253
Nasdaq Decliners                  1172                    966

                                 New Highs/Lows

                   01/28  01/29  01/30  01/31  02/03  02/04
                 --------------------------------------------
NYSE New Highs       144    202    179    159    141    239
NYSE New Lows         57     59    111    114     85     46
Nasdaq New Highs      85    108    104    101     78    150
Nasdaq New Lows       42     60    100    126     86     53
   

TRADER'S TIP: "When Your Indicators Contradict The Trend"

Due to their overly sensitive nature, some technical indicators will turn in one direction while the price trend remains in the other. A rule of thumb - whenever a price trend and indicators are in conflict, always go with price until the trend is broken.

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 - 3297.59 February 4, 2020

52-Week High: 3337.77
52-Week Low: 2681.83
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3402.13
Resistance 2: 3323.34
Resistance 1: 3274.43
Pivot: 3244.55
Support 1: 3195.64
Support 2: 3165.76
Support 3: 3086.97


NASDAQ Composite - 9467.97 February 4, 2020

52-Week High: 9485.38
52-Week Low: 7225.14
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 9671.50
Resistance 2: 9430.43
Resistance 1: 9290.68
Pivot: 9189.36
Support 1: 9049.61
Support 2: 8948.29
Support 3: 8707.22
        
Dow Industrials - 28807.63 February 4, 2020

52-Week High: 29373.62
52-Week Low: 24680.57
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 30006.02
Resistance 2: 29231.31
Resistance 1: 28743.67
Pivot: 28456.60
Support 1: 27968.96
Support 2: 27681.89
Support 3: 26907.17
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, February 03, 2020:
03-Feb  9:45 am   Markit manufacturing PMI
03-Feb  10 am   ISM manufacturing index
03-Feb  10 am   Construction spending
03-Feb  Varies   Motor vehicle sales

Tuesday, February 04, 2020:
04-Feb  10 am   Factory orders

Wednesday, February 05, 2020:
05-Feb  8;15 am   ADP employment report
05-Feb  8:30 am   Trade deficit
05-Feb  10 am   ISM nonmanufacturing index

Thursday, February 06, 2020:
06-Feb  8:30 am   Weekly jobless claims
06-Feb  8:30 am   Productivity
06-Feb  8:30 am   Unit labor costs

Friday, February 07, 2020:
07-Feb  8:30 am   Nonfarm payrolls
07-Feb  8:30 am   Unemployment rate
07-Feb  8:30 am   Average hourly earnings
07-Feb  10 am   Wholesale inventories
07-Feb   3 pm   Consumer credit



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

TRADER'S TIP: "Trendlines & Volume"

When expanding volume accompanies price action in the direction of a trendline, it confirms the trend. The same is true when volume dries up as prices retreat back to the trendline. However, if volume increases as prices pull back to a trendline, or if volume drops when prices pull away from a trendline, consider it a warning that the trendline may be in trouble.

Stocks Covered in This Issue

CONSUMER CYCLICAL SECTOR

Unifi, Inc. (UFI: Consumer Cyclical/Textile Manufacturing) - SQUEEZE PLAY. The ticker for Tuesday's session shows UFI 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 22.59 and a SELL short trigger at 20.96. When UFI 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 1.63 trailing stop. Upon reaching a 1.38 profit, resize the stop to 0.81. Earnings Report Date: N/A. Beta: 0.68. Market-Cap: 400.436M. Optionable.

HEALTHCARE SECTOR

Moderna, Inc. (MRNA: Healthcare/Biotechnology) - BULLISH BOUNCE. If you are looking for another bouncer with profits in mind, MRNA fits the bill. Shares have been in retreat-mode lately, but now this stock is in the process of bouncing from support. Currently priced at 20.87, plan to buy shares at 21.15 and use a 2.00 trailing stop. Tighten the stop to 1.00 on a 1.82 gain. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 6.955B. Optionable.

Vir Biotechnology, Inc. (VIR: Healthcare/Biotechnology) - SQUEEZE PLAY. VIR 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. VIR closed Tuesday at 21.24. The plan is to enter in the right direction by placing a BUY trigger at 22.37 and a SELL short trigger at 19.89. Once VIR establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 2.48. After you've collected a 1.78 profit, tighten the stop to 1.24. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 2.33B. Not Optionable.

Denali Therapeutics Inc. (DNLI: Healthcare/Biotechnology) - SQUEEZE PLAY. Tuesday's trading session left DNLI 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 23.57 and your SELL short trigger at 21.72. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.85 trailing stop. Once you have a 2.84 profit, reduce the stop to 0.93. Earnings Report Date: N/A. Beta: 2.11. Market-Cap: 2.222B. 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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