Notes From The Editor

Every successful trader knows the importance of adapting to shifts in the market. One of the best ways to track these changes is to monitor your own trades. This allows you to see emerging trends more quickly, and helps protect you from unexpected twists and turns.

When it comes to monitoring tools, nothing beats a trading journal. In addition to helping you spot market patterns, they also help you track trends in your personal trading and identify which set-ups are most effective in the current trading environment.

A simple spreadsheet is all you need. Each row represents a trade, with the left-most column listing the date the position was entered. Moving right, in each column, you have details such as the ticker, the size of the position, whether you bought or sold short, the price you entered, and the stops that you've used. When the trade is exited, the remaining columns are filled in: date closed, net gain/loss in dollars, and net gain/loss as a percentage. For these final two columns, many traders prefer to color-code: red for losses, green for gains, black for breakeven.

To this basic information, it's a good idea to add some columns that help with monitoring. This might include the stock's sector, the prevailing market trend when you entered the trade, and a column for your general comments and thoughts on the trade.

While this may sound like a lot of information, it's actually quite digestible in spreadsheet format. At a quick glance you'll be able to spot patterns that can be used to increase your profitability. Are your tech sector trades gradually becoming less profitable? Are your short trades yielding larger gains? Is a certain sector consistently outperforming? Use this tool to find out! Your account will thank you.

Here's to profits,

Kent Barton
Senior Analyst

Quick List

    
Stock     01/16     01/16      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

ITCI      26.63      0.28     27.55     25.52        2.03/1.01      6.66
PGNY      31.61      0.58     32.76     29.99        2.77/1.39      3.46
SAIC      93.05     -1.91     94.68                  7.63/3.81      3.28
CRNC      21.61      0.09     22.29     20.66        1.63/0.81      2.32

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 higher on Thursday to set new record highs following the Senate passing of the USMCA USA/Mexico/Canada trade agreement. This landmark legislation came one day after the USA and China signed a "phase one" trade deal to begin leveling the playing field that for decades has favored the Chinese. Additional upbeat economic data highlighted a surge in regional manufacturing activity, a solid increase in retail sales and a decline in unemployment claims. In the earnings department, shares of Morgan Stanley rallied after the financial company released its numbers, while PPG Industries (PPG $127) and Alcoa (AA $18) shareholders responded to disappointing results by selling their positions. Gold ended the session lower, oil prices, treasury yields and the USD/dollar were higher.

                        Jan 15, 2020           Jan 16, 2020   
                  --------------------   --------------------
Dow                    29,030   +90.55        29,298  +267.42
Nasdaq                  9,259    +7.37         9,357   +98.44
S&P 500                 3,289    +6.14         3,317   +27.52

NYSE Volume                      3.78B                  3.62B
NYSE Advancers                    1613                   2046
NYSE Decliners                    1289                    851

Nasdaq Volume                    2.46B                  2.35B
Nasdaq Advancers                  1822                   2370
Nasdaq Decliners                  1391                    846

                                 New Highs/Lows

                   01/09  01/10  01/13  01/14  01/15  01/16
                 --------------------------------------------
NYSE New Highs       241    218    243    230    271    298
NYSE New Lows         13     20     23      8      7      6
Nasdaq New Highs     259    216    279    295    287    379
Nasdaq New Lows       17     29     34     27     24     14
   

TRADER'S TIP: "Get A Groove Going"

Most companies will announce stock splits concurrent with a "major" event, such as an earnings release or during an annual shareholder's meeting. When a corporation breaks from this pattern and announces a split just before one of these events, it many times is a good "tip off" that further good news is just around the corner.

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 - 3316.81 January 16, 2020

52-Week High: 3317.11
52-Week Low: 2612.86
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3391.02
Resistance 2: 3322.67
Resistance 1: 3294.01
Pivot: 3254.32
Support 1: 3225.66
Support 2: 3185.97
Support 3: 3117.62


NASDAQ Composite - 9357.13 January 16, 2020

52-Week High: 9357.92
52-Week Low: 6953.23
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 9702.58
Resistance 2: 9410.88
Resistance 1: 9294.87
Pivot: 9119.18
Support 1: 9003.17
Support 2: 8827.48
Support 3: 8535.78
        
Dow Industrials - 29297.64 January 16, 2020

52-Week High: 29300.32
52-Week Low: 24088.90
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 29931.37
Resistance 2: 29340.93
Resistance 1: 29082.35
Pivot: 28750.49
Support 1: 28491.91
Support 2: 28160.05
Support 3: 27569.61
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, January 13, 2020:
13-Jan  10 am   Eric Rosengren speaks
13-Jan  12:40pm   Raphael Bostic speaks
13-Jan   2 pm   Federal budget

Tuesday, January 14, 2020:
14-Jan   6 am   NFIB small business index
14-Jan  8:30 am   Consumer price index
14-Jan  8:30 am   Core CPI
14-Jan   9 am   John Williams speaks
14-Jan   1 pm   Esther George speaks

Wednesday, January 15, 2020:
15-Jan  8:30 am   Producer price index
15-Jan  8:30 am   Empire state index
15-Jan  11 am   Patrick Harker speaks
15-Jan  12 noon   Rob Kaplan speaks
15-Jan   2 pm   Beige Book

Thursday, January 16, 2020:
16-Jan  8:30 am   Weekly jobless claims
16-Jan  8:30 am   Retail sales
16-Jan  8:30 am   Retail sales ex-autos
16-Jan  8:30 am   Philly Fed
16-Jan  8:30 am   Import price index
16-Jan  10 am   Business inventories
16-Jan  10 am   NAHB home builders' index

Friday, January 17, 2020:
17-Jan  8:30 am   Housing starts
17-Jan  8:30 am   Building permits
17-Jan   9 am   Patrick Harker speaks
17-Jan  9:15 am   Industrial production
17-Jan  9:15 am   Capacity utilization
17-Jan  10 am   Consumer sentiment index
17-Jan  10 am   Job openings



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

TRADER'S TIP: "Short-term Trading = Long Term Results"

Occasionally we hear from traders who are frustrated and can't seem to do anything right. They usually haven't made money for a while and are starting to feel as if they never will.

The problem could be thinking short-term -- not about their trades but about their results. Even if your trades last only minutes or hours, you have to think about your results over the long term.

The laws of probabilities allow for losing streaks which can sometimes run longer than you think is possible. Realize that when you have a run of losers, it doesn't necessarily reflect your skill as a trader.

Every trader - no matter how good - has some periods of time when they do poorly. The most important thing you can do is to keep working at it day after day. When combined with Risk Management, persistence and hard work lead to good results.

Stocks Covered in This Issue

HEALTHCARE SECTOR

Intra-Cellular Therapies, Inc. (ITCI: Healthcare/Biotechnology) - SQUEEZE PLAY. Thursday's trading action forced ITCI'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 ITCI 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 27.55 if ITCI moves higher, and place your order to SELL short at 25.52 if price declines to that level. As usual follow your entry with a trailing stop, 2.03 should be sufficient. Reduce your stop to 1.01 on a 6.66 gain. ITCI closed Thursday at 26.63. Earnings Report Date: N/A. Beta: 1.95. Market-Cap: 1.476B. Optionable.

Progyny, Inc. (PGNY: Healthcare/Health Information Services) - SQUEEZE PLAY. PGNY 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. PGNY is now at 31.61. We can capture price action either way by placing a BUY trigger at 32.76 and a SELL short trigger at 29.99. Once PGNY 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 2.77. When you acquire a 3.46 profit, tighten the stop to 1.39. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 2.657B. Optionable.

TECHNOLOGY SECTOR

Science Applications International Corporation (SAIC: Technology/Information Technology Services) - NEW HIGH DIP. Thursday's price action is telling us that SAIC is preparing to move back up to the 52-week high that was set just a few days ago. Our BUY trigger at 94.68 is ready to take advantage of a likely bounce from the current support level. Once your order is filled, enter a trailing stop of 7.63. Resize the stop to 3.81 after you reach a 3.28 profit. Earnings Report Date: Mar 25, 2020. Beta: 1.27. Market-Cap: 5.371B. Optionable.

Cerence Inc. (CRNC: Technology/Software-Application) - SQUEEZE PLAY. A look at CRNC'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 22.29 and a SELL short trigger at 20.66. Once CRNC shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.63 and tighten to 0.81 on a 2.32 gain. CRNC closed Thursday at 21.61. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 786.567M. 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  
---------------- -------     --------    -------     ------  -------   

Penns Woods Banc   PWOD    09/03/2019  10/01/2019   3-for-2   No
Equity Lifestyle   ELS     09/20/2019  10/16/2019   2-for-1   Yes
Middlefield Banc   MBCN    10/07/2019  11/12/2019   2-for-1   No
    

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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