January 18, 2022 - The RightLine Report
Notes From The Editor
The market has changed significantly during the past decade. Investors now have much less influence on price action than before, while traders have a larger impact on what takes place during each daily session. The "old school" taught that you can't time the market, while the new school of online traders accepts a reality where timing is part of a natural routine.
A solution to this conflict can be found in the different definitions of "timing" used by each group.
Old School: Successfully predicting the precise price level of all major reversals.
New School: Repeatedly taking a profit out of rallies, and shorting or sitting out any declines.
Though some might disagree, there is no contradiction between these two schools of thought. The old school is right - no one can always predict the exact level of all tops and bottoms. The new school is also right - you can take advantage of price trends in either direction.
Open-minded investors and traders will accept that while both definitions are true, they're not referring to the same thing. Unfortunately many investors only look at timing in the old way.
Bottom Line: Markets will always change. Profits will always flow to those who change with them.
Trade well,
~Thomas
Stocks Covered Today Stock Splits
Quick List
Stock 01/18 01/18 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
DKS 113.35 1.74 115.76 10.9/5.45 8.12
FLWS 23.28 -0.73 22.51 2.09/1.05 1.84
CONN 22.74 -0.13 23.4 21.53 1.87/0.94 2.26
TSLX 24.00 0.01 24.44 1.45/0.73 0.62
RANI 20.32 -0.35 21.19 19.4 1.79/0.9 4.42
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
The major market averages were lower on Tuesday as traders continue wrestling with rising odds that the Fed may become more aggressive with its monetary policy tightening campaign in order to lower persistent inflation. In addition, global supply chain issues and soft economic data further weakened bullish sentiment, as New York manufacturing output unexpectedly contracted and homebuilder sentiment declined. On the equities front, Goldman Sachs Group (GS $354) missed earnings estimates due to decreased trading activity and higher costs, while Microsoft Corporation (MSFT $303) announced a $69.0 billion deal to buy video game maker Activision Blizzard (ATVI $82). The acquisition will make Microsoft the world's third largest gaming company by revenue. MSFT shares were lower, while ATVI was up over 25%. The USD/dollar and oil prices finished the session higher, while gold and treasuries were lower.
Jan 17, 2022 Jan 18, 2022
-------------------- --------------------
Dow Closed 0 35,368.47 -543.34
Nasdaq Closed 0 14,506.90 -386.86
S&P 500 Closed 0 4,577.11 -85.74
NYSE Volume 0 4.79B
NYSE Advancers 0 526
NYSE Decliners 0 2,906
Nasdaq Volume 0 5.07B
Nasdaq Advancers 0 792
Nasdaq Decliners 0 3,913
New Highs/Lows
01/11 01/12 01/13 01/14 01/17 01/18
--------------------------------------------
NYSE New Highs 96 128 137 101 0 97
NYSE New Lows 57 64 103 199 0 299
Nasdaq New Highs 45 97 113 79 0 89
Nasdaq New Lows 172 169 431 683 0 818
Stocks Covered Today Stock Splits
TRADER'S TIP: "Husband and Wife"
It's okay to fall in love with a stock, but never marry it. Keeping an objective view of a trade is essential if you want to be able to exit without 'psychological' hang-ups. Do not become overly committed to a stock - the cost can be way too high.
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 - 4577.11 January 18, 2022
52-Week High: 4818.62
52-Week Low: 3694.12
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4997.82
Resistance 2: 4831.23
Resistance 1: 4747.04
Pivot: 4664.64
Support 1: 4580.45
Support 2: 4498.05
Support 3: 4331.46
NASDAQ Composite - 14506.90 January 18, 2022
52-Week High: 16212.23
52-Week Low: 12397.05
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 16491.93
Resistance 2: 15703.13
Resistance 1: 15298.44
Pivot: 14914.33
Support 1: 14509.64
Support 2: 14125.53
Support 3: 13336.73
Dow Industrials - 35368.47 January 18, 2022
52-Week High: 36952.65
52-Week Low: 29856.30
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 37769.80
Resistance 2: 36895.83
Resistance 1: 36403.82
Pivot: 36021.86
Support 1: 35529.85
Support 2: 35147.89
Support 3: 34273.92
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, January 17, 2022: 17-Jan None scheduled. Martin Luther King Jr. Day Tuesday, January 18, 2022: 18-Jan 8:30 am Empire state manufacturing index 18-Jan 10 am NAHB home builders index Wednesday, January 19, 2022: 19-Jan 8:30 am Building permits (SAAR) 19-Jan 8:30 am Housing starts (SAAR) 19-Jan 8:30 am Philadelphia Fed manufacturing survey Thursday, January 20, 2022: 20-Jan 8:30 am Initial jobless claims (regular state program) 20-Jan 8:30 am Continuing jobless claims (regular state program) 20-Jan 10 am Existing home sales (SAAR) Friday, January 21, 2022: 21-Jan 10 am Leading economic indicators 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: "Reversals"
When it comes to reversals on daily charts, the closing price is the key price. Also, it's a good idea to give any reversal from support or resistance at least one day to confirm itself.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
DICK'S Sporting Goods, Inc. (DKS: Consumer Cyclical/Specialty Retail) - BULLISH BOUNCE. Entering a position in the early stages of a bounce is great way to get on board an up-trending stock. The "Bullish Bounce" setup identifies probable candidates by evaluating the trading action that takes place near support levels. DKS's behavior on Tuesday could very well be a sign that a new bounce is underway. Place a BUY trigger at 115.76. In the event your trigger is met, also place a 10.9 trailing stop which can be trimmed down to 5.45 when you have a 8.12 profit. DKS closed Tuesday at 113.35. Earnings Report Date: Mar 07, 2022. Beta: 1.74. Market-Cap: 9.817B. Optionable.
1-800-FLOWERS.COM, Inc. (FLWS: Consumer Cyclical/Specialty Retail) - BEARISH U-TURN. FLWS's weekly downtrend was recently interrupted by a bullish counter-trend rebound. Unfortunately for Bulls this uphill bounce reversed on Tuesday after running into resistance. FLWS is now at risk of dropping even lower. On a continued pullback, short entries can be taken at 22.51. Manage your position with a 2.09 stop, pulling it up to 1.05 on a gain of 1.84. FLWS closed at 23.28 on Tuesday. Earnings Report Date: Jan 27, 2022. Beta: 1.62. Market-Cap: 1.515B. Optionable.
Conn's, Inc. (CONN: Consumer Cyclical/Specialty Retail) - SQUEEZE PLAY. Sometimes when Bulls and Bears face off in the market arena for a typical day-long battle, there is no clear winner. This is evident when the daily price range contracts to an unusually narrow state. CONN found itself in this condition on Tuesday when neither buyers or sellers were able to push ahead. This setup provides traders a chance to hop on board the next breakout - whether it's to the upside or down - with little risk of loss. To do this place a BUY order at 23.4 and a SELL short trigger at 21.53. When CONN moves outside of Tuesday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 1.87 trailing stop. After you've got a 2.26 profit, tighten the stop to 0.94. CONN closed at 22.74 on Tuesday. Earnings Report Date: Mar 29, 2022. Beta: 2.50. Market-Cap: 671.207M. Optionable.
FINANCIAL SERVICES SECTOR
Sixth Street Specialty Lending, Inc. (TSLX: Financial Services/Asset Management) - BULLISH BOUNCE. Some people hear of a stock that's performing nicely and then buy it without any regard for timing the entry. This approach usually leaves money on the table, money that could just as well be added to profits. The Bullish Bounce setup provides a well timed entry and reduces exposure to risk by placing both the entry trigger and exit stop near the bottom of the bounce. We have an opportunity to use this approach with TSLX which met our setup criteria on Tuesday. The BUY trigger for this trade is at 24.44, and the trailing stop is sized at 1.45. Resize the stop to 0.73 upon collecting a 0.62 point gain. TSLX closed Tuesday at 24.00. Earnings Report Date: Feb 17, 2022. Beta: 1.19. Market-Cap: 1.754B. Optionable.
HEALTHCARE SECTOR
Rani Therapeutics Holdings, Inc. (RANI: Healthcare/Biotechnology) - SQUEEZE PLAY. RANI traders on both sides of the fence are now locked in a head-to-head shootout. Tuesday's price range was the narrowest in over a week, as neither Bears or Bulls have been able to clearly gain the upper hand. This gives us an opportunity to catch the next directional move with little risk of loss. To do this we'll place both a long and a short trigger with a BUY at 21.19 and a SELL short trigger at 19.4. When one of the orders is filled, cancel the remaining order and enter a 1.79 trailing stop. When you've reached a 4.42 paper profit, tighten the stop to 0.9. RANI closed at 20.32 on Tuesday. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 400.546M. Not 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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