January 13, 2022 - The RightLine Report
Notes From The Editor
Active traders interact with Wall Street on a regular basis and become accustomed to the ever-changing personality of the stock market. As challenging as online stock trading may be sometimes, we're fortunate to experience the "real" Street - that gritty pavement zone where the rubber meets the road.
This view is in contrast to the average investor who usually has a rather naive impression of how things work. Investors typically only have contact with the stock market once or twice a year. Though they may not know it, relying on casual or occasional oversight of one's stock holdings is not the best route to take.
In fact, as a rule the only person who really cares about your finances is you. There may be some rare exceptions, but in the stock market it usually isn't a good idea for investors to delegate fiscal responsibility to someone else.
Proactive stock market trading causes a person to develop skills and learn quickly. Successful stock traders know that education is essential. Though many investors are in the dark about the consequences of their limited trading abilities, many others have developed skills to take advantage of an ever-changing stock market. This trend toward intelligent trading appeals to investors who want to be more capable and successful.
Though you never know for sure which aspects of the market's personality will show up at any given time, as long as prices move up and down you can make a profit.
Trade well!
~ Thomas
Stocks Covered Today Stock Splits
Quick List
Stock 01/13 01/13 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
HUDI 20.40 -0.40 21.39 19.44 1.95/0.98 8.48
PINS 32.97 -1.46 31.89 3.23/1.62 3.86
BRBR 25.46 0.62 26.02 23.87 2.15/1.08 1.84
CIO 20.05 0.20 20.5 1.28/0.64 0.9
LSPD 37.57 -1.80 36.35 4.32/2.16 4.72
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
Stocks were lower on Thursday as traders reviewed mixed economic reports showing US producer prices are more moderate than expected compared to last month, yet remain seriously elevated compared to 2021. Also, unemployment claims increased unexpectedly, though continuing claims continue to downtrend. In equities, fourth quarter earnings season is now underway, with shares of KB Home (KBH $49) and Delta Air Lines (DAL $41) rallying following the release of their numbers. Gold, the USD/dollar and oil prices slipped lower, while treasuries advanced higher to put downward pressure on yields.
Jan 12, 2022 Jan 13, 2022
-------------------- --------------------
Dow 36,290.32 38.30 36,113.62 -176.70
Nasdaq 15,188.39 34.94 14,806.81 -381.58
S&P 500 4,726.35 13.28 4,659.03 -67.32
NYSE Volume 4.07B 4.23B
NYSE Advancers 1,711 1,585
NYSE Decliners 1,624 1,781
Nasdaq Volume 4.34B 4.26B
Nasdaq Advancers 1,970 1,442
Nasdaq Decliners 2,697 3,230
New Highs/Lows
01/06 01/07 01/10 01/11 01/12 01/13
--------------------------------------------
NYSE New Highs 64 101 95 96 128 137
NYSE New Lows 185 105 205 57 64 103
Nasdaq New Highs 90 103 87 45 97 113
Nasdaq New Lows 612 338 740 172 169 431
Stocks Covered Today Stock Splits
TRADER'S TIP: "Earnings: Holding Through or Getting Back In"
It's no secret that we believe in avoiding undue risk. Because earnings reports often end up surprising traders, we often suggest closing out positions before the company announces earnings. However, if a stock is moving in a solid trend (long or short) and earnings estimates support that trend, experienced traders will often elect to drastically reduce the number of shares in their position and hold them through the earnings announcement.
In some cases traders jump back into the trade after the company reports better than expected earnings. This can be profitable at times, but don't chase the stock. If it has jumped more than 5% beyond your exit point, you're probably better off waiting for price to pull back to a moving average support level.
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 - 4659.03 January 13, 2022
52-Week High: 4818.62
52-Week Low: 3694.12
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 5031.22
Resistance 2: 4875.34
Resistance 1: 4776.18
Pivot: 4719.46
Support 1: 4620.30
Support 2: 4563.58
Support 3: 4407.70
NASDAQ Composite - 14806.81 January 13, 2022
52-Week High: 16212.23
52-Week Low: 12397.05
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 17170.91
Resistance 2: 16196.40
Resistance 1: 15566.15
Pivot: 15221.89
Support 1: 14591.64
Support 2: 14247.38
Support 3: 13272.87
Dow Industrials - 36113.62 January 13, 2022
52-Week High: 36952.65
52-Week Low: 29856.30
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 38114.18
Resistance 2: 37273.06
Resistance 1: 36752.36
Pivot: 36431.94
Support 1: 35911.24
Support 2: 35590.82
Support 3: 34749.70
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, January 10, 2022: 10-Jan 10 am Wholesale inventories (revision) Tuesday, January 11, 2022: 11-Jan 6 am NFIB small-business index Wednesday, January 12, 2022: 12-Jan 8:30 am Consumer price index 12-Jan 8:30 am Core CPI 12-Jan 2 pm Federal budget 12-Jan 2 pm Beige book Thursday, January 13, 2022: 13-Jan 8:30 am Initial jobless claims (regular state program) 13-Jan 8:30 am Continuing jobless claims (regular state program) 13-Jan 8:30 am Producer price index Friday, January 14, 2022: 14-Jan 8:30 am Retail sales 14-Jan 8:30 am Retail sales excluding autos 14-Jan 8:30 am Import price index 14-Jan 9:15 am Industrial production 14-Jan 9:15 am Capacity utilization 14-Jan 10 am UMich consumer sentiment index (preliminary) 14-Jan 10 am Business inventories 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: "One Good Move Deserves Another"
In most cases the further and faster the market moves in one direction, the faster and more intense the reversal will be when the market has used up its energy.
Stocks Covered in This Issue
BASIC MATERIALS SECTOR
Huadi International Group Co., Ltd. (HUDI: Basic Materials/Steel) - SQUEEZE PLAY. HUDI is caught in a dilemma. The stock's compressed price range on Thursday has resulted in a condition comparable to a wound up rubber band. We anticipate that this undecided equity will take off soon, but with the direction still in question we'll let upcoming market action tell us whether to buy shares or sell short. HUDI is now at 20.40. We can capture price action either way by placing a BUY trigger at 21.39 and a SELL short trigger at 19.44. Once HUDI reveals its direction, enter your triggered order and disregard the other one. As soon as your position is in place, follow up with a trailing stop of 1.95. When you acquire a 8.48 profit, tighten the stop to 0.98. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 267.75M. Not Optionable.
COMMUNICATION SERVICES SECTOR
Pinterest, Inc. (PINS: Communication Services/Internet Content & Information) - BEARISH U-TURN. PINS's reaction after running into moving average resistance on Thursday sets up this stock for a Bearish U-Turn trade. Having spent the past few days of moving higher, PINS is now likely to revert back to its dominant weekly downtrend. Get ready to SELL short shares if PINS drops to our entry at 31.89. Once in the trade, place a 3.23 trailing stop, which should be tightened to 1.62 after a 3.86 profit. PINS closed Thursday at 32.97. Earnings Report Date: Feb 02, 2022. Beta: 1.09. Market-Cap: 21.503B. Optionable.
CONSUMER DEFENSIVE SECTOR
BellRing Brands, Inc. (BRBR: Consumer Defensive/Packaged Foods) - SQUEEZE PLAY. When a stock's daily price range contracts to an unusually low point, you can safely assume that in most cases a breakout from that range will result in a nice price move. To capture a portion of this potential movement we have set both a long and a short entry into BRBR. A move to the upside will trigger our BUY entry at 26.02, while a drop to 23.87 will trigger our SELL short entry. Follow your position with a 2.15 trailing stop. Tighten the stop to 1.08 once you have a 1.84 gain. BRBR closed Thursday at 25.46. Earnings Report Date: Feb 02, 2022. Beta: 0.95. Market-Cap: 992.054M. Optionable.
REAL ESTATE SECTOR
City Office REIT, Inc. (CIO: Real Estate/REIT-Office) - 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. CIO's current price action near moving average support signals a potential BUY entry at 20.5, followed by a 1.28 trailing stop which can be tightened to 0.64 upon earning 0.9. CIO closed Thursday at 20.05. Earnings Report Date: Feb 23, 2022. Beta: 1.57. Market-Cap: 873.266M. Optionable.
TECHNOLOGY SECTOR
Lightspeed Commerce Inc. (LSPD: Technology/Software-Application) - BEARISH U-TURN. During Thursday's trading action, LSPD 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 LSPD on a further decline to our trigger at 36.35. Set a 4.32 trailing stop, tightening to 2.16 on a 4.72 gain. LSPD ended the latest session at 37.57. Earnings Report Date: Feb 03, 2022. Beta: 3.06. Market-Cap: 5.565B. 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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