February 6, 2020 - The RightLine Report 

 
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                      NOTES FROM THE EDITOR
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Myopia - A vision condition, commonly known as "nearsightedness," that causes distant objects to be blurred while closer objects are clearly seen.

Is your trading myopic? If so, you're not alone. Most active traders suffer from this problem from time to time. While our investor brethren are satisfied with a long-term, "buy-and-hold" stance, we use a more engaged approach. What happens in the here and now has a much greater bearing on us than it does on investors.

The result is that we often find ourselves approaching the short-term with an intense focus that clouds what's in the distance. What trends are emerging that could impact the market? What's likely to change down the road? Unless we step back to look at the big picture once in awhile, these questions might go unanswered.

Weekly charts are a good way to keep myopia at bay. Even painful multi-day downtrends take on a different characteristic on the weekly interval. What seems like a precipitous freefall might actually be a great buying opportunity if long-term trends or support levels come into play. Weekly technical indicators also give fewer buy or sell signals - but when they do, they tend to be reliable.

There's a psychological component too. Myopic trading is hard to avoid when there's major news driving the market up or down. Rallies make traders feel invincible, while sell-offs make it seem as though the sky is falling. Obviously both require a bit of perspective.

Forward-thinking helps us plan ahead and be ready for whatever the market throws at us. If Bears are correct, what sectors will lead the way lower? What will outperform? And if the current geo-political and economic worries subside, which equities will outperform? Think about the different scenarios that might play out, and how to take advantage of them. By keeping an eye on the future, we can be prepared and ready to profit.

Cheers,

Kent Barton
Senior Analyst 

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                           "QUICK LIST"
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Stock     02/06     02/06      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

MORF      20.15      0.31     20.59     19.08        1.51/0.76      2.46
LVGO      25.56      0.09     26.34     24.36        1.98/0.99      2.94
PGNY      29.90     -0.15     31.29     28.85        2.44/1.22      5.34
VVNT      14.23      0.12     15.09                  1.85/0.93      0.68
ES        90.87      0.38     92.53                  4.68/2.34      2.14


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 www.rightline.net/education/using-quicklist.html. In addition,always use the RightLine Risk Calculator before entering any position. For access to the Risk Calculator, go to www.RightLine.net and login to the Member's area.

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                           MARKET SUMMARY
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US stocks closed higher on Thursday, racking up four consecutive bullish sessions and more new record highs. Positive trade developments lifted sentiment, as Chinese government officials announced they will cut tariffs in half on approximately $75 billion of USA imports. Mixed earnings news included MetLife (MET $52) and Qualcomm (QCOM $91) both topping estimates, while Twitter missed forecasts, but revenues reached $1 billion for the first time ever and daily active user additions solidly exceeded predictions. The USD/dollar, gold and oil prices closed higher, treasury yields were lower. 


                       Feb 5, 2020            Feb 6, 2020    
                  --------------------   --------------------
Dow                    29,291  +483.22        29,380   +88.92
Nasdaq               9,508.68   +40.71      9,572.15   +63.47
S&P 500                 3,335   +37.10         3,346   +11.09

NYSE Volume                      4.19B                  3.97B
NYSE Advancers                    2228                   1404
NYSE Decliners                     695                   1508

Nasdaq Volume                    2.50B                  2.34B
Nasdaq Advancers                  2266                   1496
Nasdaq Decliners                   939                   1678

                                 New Highs/Lows

                   01/30  01/31  02/03  02/04  02/05  02/06
                 --------------------------------------------
NYSE New Highs       179    159    141    239    250    261
NYSE New Lows        111    114     85     46     16     32
Nasdaq New Highs     104    101     78    150    181    184
Nasdaq New Lows      100    126     86     53     34     47


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                              TRADER'S TIP:  
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TRADER'S TIP: "Pros At The Close"

Wall Street regulars have a saying that "amateurs control the open, but pros control the close." The "amateurs" they are talking about represent the "retail" orders that brokerage firms place on behalf of Joe Q. Public the first thing every morning. While these early orders reflect what the average investor thinks about the prospects of the market, professionals will usually determine the market direction by day's end.

What happens on the close is very important, because it often gives a clue of what to expect the next session. The odds are strong that whatever happens at the close will continue into the following day. Bulls like to see the close occur at or near the high of the session, while Bears would rather see a slide into the final bell. Either way, it's always a good idea to check price action into the close. 
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                         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: www.rightline.net/education/how_to_use_rlr_technical_analyst.html. 
S&P 500 - 3345.78 February 6, 2020

52-Week High: 3347.96
52-Week Low: 2703.79
Daily Trend: UP
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

http://www.rightline.net/rlch/020620SPX.jpg

NASDAQ Composite - 9572.15 February 6, 2020

52-Week High: 9575.66
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 - 29379.77 February 6, 2020

52-Week High: 29408.05
52-Week Low: 24680.57
Daily Trend: UP
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

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                             MARKET CALENDAR
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--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" at this link: http://www.rightline.net/education/economic.html 
 
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                              TRADER'S TIP: 
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TRADER'S TIP: "Trade With The TICK"

Intraday traders should always trade in harmony with the TICK, not against it. You can even draw trendlines or channels on the TICK chart to insure that your position is always aligned with the money flow. This helps you to anticipate where the next big move will occur and allows the current to work for you. 

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                      STOCKS COVERED IN THIS ISSUE    
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HEALTHCARE SECTOR

Morphic Holding, Inc. (MORF: Healthcare/Biotechnology) - SQUEEZE PLAY. MORF 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 20.59 and a SELL short entry at 19.08. Once your trade is filled, enter a 1.51 trailing stop. Tighten it to 0.76 after a 2.46 gain. MORF closed on Thursday at 20.15. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 614.242M. Not Optionable.

Livongo Health, Inc. (LVGO: Healthcare/Medical Devices) - SQUEEZE PLAY. Traders are feeling the pressure as LVGO's intra-day price range on Thursday 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 26.34 and a SELL short entry at 24.36. LVGO's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.98 trailing stop. Tighten it to 0.99 after you get a 2.94 gain. LVGO closed Thursday at 25.56. Earnings Report Date: Mar 01, 2020. Beta: N/A. Market-Cap: 2.415B. Optionable.

Progyny, Inc. (PGNY: Healthcare/Health Information Services) - SQUEEZE PLAY. Thursday's narrow price range has created a potentially profitable setup in PGNY, 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 31.29 and a SELL short entry at 28.85. Let PGNY's price action determine your long or short entry. Once the order is filled, place a 2.44 trailing stop, and tighten it to 1.22 upon getting a 5.34 gain. PGNY closed Thursday at 29.90. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 2.513B. Optionable.

INDUSTRIALS SECTOR

Vivint Smart Home, Inc. (VVNT: Industrials/Security & Protection Services) - BULLISH BOUNCE. VVNT has charted an upward weekly trend until recently when sellers showed up to push prices lower. On Thursday the selling ran into solid support. A potential bounce up from this level should attract buyers and likely return VVNT to the previously established uptrend. The Bullish Bounce set-up is the basis for our BUY entry, so be ready to go long on a rise to our trigger at 15.09. Set a trailing stop of 1.85, tightening to 0.93 on a 0.68 profit. VVNT closed at 14.23 on Thursday. Earnings Report Date: N/A. Beta: N/A. Market-Cap: N/A. Not Optionable.

UTILITIES SECTOR

Eversource Energy (ES: Utilities/Utilities-Regulated Electric) - 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. ES's current price action near moving average support signals a potential BUY entry at 92.53, followed by a 4.68 trailing stop which can be tightened to 2.34 upon earning 2.14. ES closed Thursday at 90.87. Earnings Report Date: Feb 18, 2020. Beta: 0.26. Market-Cap: 29.42B. 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: http://www.rightline.net/education/riskcontrol.html

Use "Gap Adjusted Entries" to reset the Entry Price for stocks that gap beyond recommended entry levels.
Link: http://www.rightline.net/education/gap-adjusted.html 

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                           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  
---------------- -------     --------    -------     ------  -------   

Currently there are no upcoming stock splits on the major US exchanges.

For a closer look at the different stages of a Stock Split go to: http://www.rightline.net/splits/index.html/#split-stages 
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