Notes From The Editor

Sometimes I wish the market had a good mother. You know, the kind of mom who stands with her hands on her hips and says "Calm down!" when everyone is freaking out. I can see her at the NYSE podium with gavel in hand, warning us that if we don't start acting our age instead of our shoe size we'll all have to take a nap!

Then she'd tell us to stand still and look at ourselves. "Are you doing what I taught you about following your trading plan? Or have you forgotten it and started running with the wrong crowd?"

Thanks Mom, we needed that!

Honest answers to these types of questions help us gauge where we are emotionally and mentally. Once we recognize our actions, we can begin to see what lies beneath the surface.

This insight lets us make any adjustments needed to improve our effectiveness in the markets. It's really not very complicated, yet knowing what to do intellectually is much easier than accepting it emotionally.

For example, we all know that we should practice risk management on every trade. This basically means that we first select our position size using the RightLine Risk Calculator, place the trade at the suggested entry level, and then use stops to protect us against a possible loss.

Simple enough intellectually, but the first emotional challenge comes if the trade moves against us and reaches our planned stop. Now we have to make a decision.

Do we accept the loss, which may have occurred very quickly, or do we give in to our emotions, ignore the stop and start hoping that the trade will turn around? As easy as it is to know that the wisest course of action is to follow the trading plan, it can be very difficult to accept when the moment comes.

Don't worry if this happens to you, it's completely normal. The reason for the internal conflict comes from our human reluctance to change and accept new ideas, even when the new idea might be better than the old.

"Losing" is something that we've all been conditioned to avoid, so intentionally taking a loss is a brand new concept for most people. To make it easier to accept, we have to understand how we think and feel. This self-awareness enables us to grow by managing our emotions.

Remember that money can be made in any market if you just stay calm and do the right things ... and that's a direct quote from Mom!

Trade well,

~Thomas Sutton, Editor

Quick List

    
Stock     01/30     01/30      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

APY       26.61      0.10     26.98     25.19        1.79/0.90      1.78
RFL       20.63      0.41     21.06                  2.30/1.15      2.28
OYST      31.94     -0.72     33.63                  5.12/2.56      5.42
RDVT      21.42      0.34     21.76                  2.22/1.11      1.98

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

US stocks closed higher on Thursday despite global concerns over the coronavirus outbreak and a domestic unemployment report showing claims above expectations. In earnings news, Facebook (FB $210) beat expectations on both the top and bottom line yet shares fell as the social media company's revenue growth potential came under scrutiny. Shares of Tesla (TSLA $641) surged higher on a strong profit announcement plus an upbeat outlook for 2020 deliveries. Treasury yields and gold stepped higher, oil prices and the USD/dollar declined.

                        Jan 29, 2020           Jan 30, 2020   
                  --------------------   --------------------
Dow                    28,734   +11.60        28,859  +124.99
Nasdaq                  9,275    +5.48      9,298.93   +23.77
S&P 500                 3,273    -2.84         3,284   +10.26

NYSE Volume                      3.61B                  3.83B
NYSE Advancers                    1462                   1514
NYSE Decliners                    1453                   1385

Nasdaq Volume                    2.26B                  2.37B
Nasdaq Advancers                  1226                   1405
Nasdaq Decliners                  1985                   1811

                                 New Highs/Lows

                   01/23  01/24  01/27  01/28  01/29  01/30
                 --------------------------------------------
NYSE New Highs       202    238    111    144    202    179
NYSE New Lows         45     63    102     57     59    111
Nasdaq New Highs     145    196     78     85    108    104
Nasdaq New Lows       44     60     96     42     60    100
   

TRADER'S TIP: "Fading the Gap"

Often, news can dramatically impact the price of a stock after the close or prior to the next session's open. This is often reflected in the opening price being much different than the price at the previous close. The difference between the closing and opening price is commonly referred to as a gap. "Fading the gap" is a trader's tactic that involves trading in the opposite direction of a gap at the market open.

For example, the market has a tendency to pullback after a strong open. This usually happens because of an imbalance between buy and sell orders. Once Market Makers and Specialists work through their overnight and pre-market orders, they will usually either drop their bids or go short. As the price begins to drop, many traders will also sell short, or "fade the gap" in anticipation that the gap will fill. Whenever you see a considerable gap up or down in price at the open, watch for the first major move to be in the opposite direction of the gap.

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 - 3283.66 January 30, 2020

52-Week High: 3337.77
52-Week Low: 2681.83
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3417.40
Resistance 2: 3361.16
Resistance 1: 3328.31
Pivot: 3304.92
Support 1: 3272.07
Support 2: 3248.68
Support 3: 3192.44


NASDAQ Composite - 9298.93 January 30, 2020

52-Week High: 9451.43
52-Week Low: 7205.95
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 9702.92
Resistance 2: 9524.72
Resistance 1: 9419.81
Pivot: 9346.52
Support 1: 9241.61
Support 2: 9168.32
Support 3: 8990.12
        
Dow Industrials - 28859.44 January 30, 2020

52-Week High: 29373.62
52-Week Low: 24680.57
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 30129.45
Resistance 2: 29599.17
Resistance 1: 29294.45
Pivot: 29068.88
Support 1: 28764.16
Support 2: 28538.59
Support 3: 28008.30
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, January 27, 2020:
27-Jan  10 am   New home sales

Tuesday, January 28, 2020:
NONE

Wednesday, January 29, 2020:
05-Aug  8:30 am   Durable goods orders
05-Aug  8:30 am   Core capital goods orders
05-Aug   9 am   Case-Shiller home prices
05-Aug  10 am   Consumer confidence index
29-Jan  8:30 am   Advance trade in goods
29-Jan  10 am   Pending home sales index
29-Jan   2 pm   FOMC announcement
29-Jan  2:30p;m   Jerome Powell press conference

Thursday, January 30, 2020:
30-Jan  8:30 am   Weekly jobless claims
30-Jan  8:30 am   GDP

Friday, January 31, 2020:
31-Jan  8:30 am   Employment cost index
31-Jan  8:30 am   Personal income
31-Jan  8:30 am   Consumer spending
31-Jan  8:30 am   Core price index
31-Jan  9:45 am   Chicago PMI
31-Jan  10 am   Consumer sentiment index



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

TRADER'S TIP: "The Accuracy of an Economist"

"An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today."

- Laurence J. Peter

Stocks Covered in This Issue

ENERGY SECTOR

Apergy Corporation (APY: Energy/Oil & Gas Equipment & Services) - SQUEEZE PLAY. Trader indecision has put APY squarely in the center of a Bull versus Bear standoff. This tight spot should soon give way to a clear winner in the short-term, and we want to be in position for the move. To do that we've set a BUY entry at 26.98 and a SELL short entry at 25.19. Now it's up to APY to show us which entry will be filled. Once the trade is underway place a 1.79 trailing stop, which can be tightened to 0.90 after you achieve a 1.78 profit. APY closed on Thursday at 26.61. Earnings Report Date: Feb 23, 2020. Beta: N/A. Market-Cap: 2.061B. Optionable.

HEALTHCARE SECTOR

Rafael Holdings, Inc. (RFL: Healthcare/Biotechnology) - BULLISH BOUNCE. The charts for RFL show that despite the downward pressure from sellers recently, the weekly uptrend is still going strong. Buyers showed up again on Thursday, resulting in the early stages of a rebound that started near moving average support. The resulting Bullish Bounce set-up offers a potential entry point for a long play. Set your trigger to BUY shares at 21.06, and follow your entry with a trailing stop of 2.30. Tighten it to 1.15 when a 2.28 profit is reached. RFL ended the latest session at 20.63. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 325.632M. Optionable.

Oyster Point Pharma, Inc. (OYST: Healthcare/Biotechnology) - BULLISH BOUNCE. Here is another example of a stock in an established uptrend that has recently experienced a counter-trend drop. The sliding price action has now found support near a moving average zone, bouncing upward during Thursday's session to close at 31.94. Anticipate the rebound to continue, and be ready to buy OYST at 33.63. Follow your entry with a trailing stop of 5.12 which can be tightened to 2.56 on a 5.42 profit. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 682.318M. Not Optionable.

TECHNOLOGY SECTOR

Red Violet, Inc. (RDVT: Technology/Software-Application) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Thursday RDVT seemed intent on initiating a rebound. With moving average support nearby, RDVT is at a logical place for Bulls to regroup and extend the familiar uptrend that shareholders have become accustomed to. On continued buying, plan on taking long entries with a BUY at 21.76. Manage risk with a 2.22 stop. Tighten your stop to 1.11 when you have a 1.98 profit. RDVT ended the day at 21.42. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 247.103M. 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.

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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