|
January 4, 2020 - The RightLine Report
**********************************
NOTES FROM THE EDITOR
**********************************
Five Tips To Strengthen Your Trading Mindset
***********************************
"QUICK LIST"
***********************************
Stock 01/03 01/03 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
RAD 14.48 -0.04 15.49 1.97/0.98 0.80
XOMA 27.45 -0.23 27.98 26.18 1.80/0.90 2.26
TPTX 61.47 -1.53 63.53 58.89 4.64/2.32 6.22
HHR 21.35 -0.13 21.67 20.17 1.50/0.75 3.12
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. To learn more about controlling risk go to the RightLine Risk Control System at http://www.rightline.net/education/riskcontrol.html For a glossary of terms unique to The RightLine Report go to: http://www.rightline.net/education/glossary.html Problems? If you have any difficulty viewing this report, the link below will take you to a page where you will find a list of items that may affect normal viewing within your email client. http://www.rightline.net/home/reportprob.html Questions? Send us an email using our contact form at: http://www.rightline.net/home/contact.html
*****************************
MARKET SUMMARY
*****************************
Stocks closed lower on Friday following global tensions heightened by a US airstrike in Iraq on Thursday that killed a top Iranian military official. The deceased had orchestrated a series of attacks on allied bases in Iraq in recent months, most recently a rocket strike last week that killed a US contractor and wounded four other service members. In equity headlines, Tesla (TSLA $446) reported higher level of deliveries than predicted for the 4th quarter, while investors sold shares of Incyte Corp (INCY $77) after the company released disappointing results from a trial of its treatment for acute graft-versus-host-disease. Gold, oil and treasury yields all ended the session higher, the USD/dollar finished near even. Jan 2, 2020 Jan 3, 2020
-------------------- --------------------
Dow 28,868.80 +330.36 28,635 -233.92
Nasdaq 9,092.19 +119.58 9,020.77 -71.42
S&P 500 3,258 +27.07 3,235 -23.00
NYSE Volume 3.55B 3.53B
NYSE Advancers 1808 1387
NYSE Decliners 1147 1543
Nasdaq Volume 2.89B 2.58B
Nasdaq Advancers 1890 1188
Nasdaq Decliners 1331 2025
New Highs/Lows
12/27 12/30 12/31 01/01 01/02 01/03
--------------------------------------------
NYSE New Highs 203 97 103 0 214 145
NYSE New Lows 4 15 9 0 5 9
Nasdaq New Highs 216 114 109 0 265 109
Nasdaq New Lows 29 37 29 0 17 13
***********************************
TRADER'S TIP:
***********************************
TRADER'S TIP: "Paper Trading" "The purpose of rehearsal is to create the habit of the objective." ~ William H. Macy, actor Paper trading is helpful because it allows newcomers to learn and develop a certain degree of skill without putting real money into the market. However, this type of "virtual" experience is limited because it doesn't produce genuine emotional involvement. In fact there is a huge difference between the safety of imagined risk and the raw challenge of having to put cash - your cash - at risk. In the real world, emotional challenges due to routine losses usually influence a trader's attitude and decision-making process to a larger degree than ever expected. **************************
THE TECHNICAL ANALYST
**************************
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 - 3234.85 January 3, 2020
52-Week High: 3258.14
52-Week Low: 2524.56
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3327.22
Resistance 2: 3281.11
Resistance 1: 3257.98
Pivot: 3235.00
Support 1: 3211.87
Support 2: 3188.89
Support 3: 3142.78
http://www.rightline.net/rlch/010320SPX.jpg
NASDAQ Composite - 9020.77 January 3, 2020
52-Week High: 9093.43
52-Week Low: 6554.24
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 9376.27
Resistance 2: 9192.03
Resistance 1: 9106.40
Pivot: 9007.79
Support 1: 8922.16
Support 2: 8823.55
Support 3: 8639.31
Dow Industrials - 28634.88 January 3, 2020
52-Week High: 28872.80
52-Week Low: 22894.92
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 29620.76
Resistance 2: 29124.40
Resistance 1: 28879.63
Pivot: 28628.03
Support 1: 28383.27
Support 2: 28131.67
Support 3: 27635.31
**************************
MARKET CALENDAR
**************************
--ECONOMIC REPORTS AND EVENTS (all times are Eastern):
Monday, January 06, 2020: 06-Jan 1:15 pm John Williams speaks 06-Jan 9:45 am Markit services PMI Tuesday, January 07, 2020: 07-Jan 8:30 am Trade deficit 07-Jan 10 am ISM nonmanufacturing index 07-Jan 10 am Factory orders Wednesday, January 08, 2020: 08-Jan 8:15 am ADP employment 08-Jan 3 pm Consumer credit Thursday, January 09, 2020: 09-Jan 8 am Richard Clarida speaks 09-Jan 8:30 am Weekly jobless claims 09-Jan 8:30 am Philly Fed annual revision 09-Jan 1:20 pm Charles Evans speaks 09-Jan 2 pm James Bullard speaks Friday, January 10, 2020: 10-Jan 8:30 am Nonfarm payrolls 10-Jan 8:30 am Unemployment rate 10-Jan 8:30 am Average hourly earnings 10-Jan 10 am Wholesale inventories 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
***********************************
TRADER'S TIP:
***********************************
TRADER'S TIP: "Keep It Simple" When it comes to trading, bigger and more complex methods aren't usually better. However, over-simplification can have the same negative effects as over-complication. When trimming back unnecessary components from your trading approach, be sure to avoid increasing risk. All successful traders maintain a balance, with most leaning toward the KISS side of the equation. ***********************************
STOCKS COVERED IN THIS ISSUE
***********************************
HEALTHCARE SECTOR Rite Aid Corporation (RAD: Healthcare/Pharmaceutical Retailers) - 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. RAD's current price action near moving average support signals a potential BUY entry at 15.49, followed by a 1.97 trailing stop which can be tightened to 0.98 upon earning 0.80. RAD closed Friday at 14.48. Earnings Report Date: N/A. Beta: 1.73. Market-Cap: 795M. Optionable. XOMA Corporation (XOMA: Healthcare/Biotechnology) - SQUEEZE PLAY. Friday's trading action forced XOMA'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 XOMA 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 27.98 if XOMA moves higher, and place your order to SELL short at 26.18 if price declines to that level. As usual follow your entry with a trailing stop, 1.80 should be sufficient. Reduce your stop to 0.90 on a 2.26 gain. XOMA closed Friday at 27.45. Earnings Report Date: N/A. Beta: 1.20. Market-Cap: 240M. Not Optionable. Turning Point Therapeutics, Inc. (TPTX: Healthcare/Biotechnology) - SQUEEZE PLAY. TPTX is caught in a dilemma. The stock's compressed price range on Friday 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. TPTX is now at 61.47. We can capture price action either way by placing a BUY trigger at 63.53 and a SELL short trigger at 58.89. Once TPTX 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 4.64. When you acquire a 6.22 profit, tighten the stop to 2.32. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 2.2B. Optionable. INDUSTRIALS SECTOR HeadHunter Group PLC (HHR: Industrials/Staffing & Employment Services) - SQUEEZE PLAY. A look at HHR'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 21.67 and a SELL short trigger at 20.17. Once HHR shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.50 and tighten to 0.75 on a 3.12 gain. HHR closed Friday at 21.35. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.1B. Not 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 ***********************************
STOCK SPLIT SUMMARY
***********************************
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 ---------------- ------- -------- ------- ------ ------- 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 For a closer look at the different stages of a Stock Split go to: http://www.rightline.net/splits/index.html/#split-stages **********************************
TRADER'S CORNER
**********************************
"Program Trading" The financial news media often refers to "program trading," and CNBC even goes so far as to report program trading buy and sell levels for every session. According to Investopedia, "As of 2018, it was reported that program trading accounted for 50% to 60% of all market trades placed during a typical trading day, with that number rising to above 90% during periods of extreme volatility." So exactly what are they all talking about? Let's take a brief look at "program trading." This is a general term that refers to trades that are automatically executed by computers, usually in large volume "baskets" of stocks. There are different types of program trading, but the most common, and the one referred to on CNBC, is a type of securities trading intended to profit from temporary differences between an index like the S&P 500, and the actual value of the stocks that make up the index. This sort of program trading is called "index arbitrage," and is based purely on the price relationship between the two - not on any fundamental reason. The individual company's earnings, dividends, and growth prospects are not factors, and neither is any economic reason, like inflation, changes in interest rates, or government actions. Other frequently used program trading terms are "Fair Value" and "the premium," or "spread." - Fair Value is the total value of the stocks underlying an index security plus the cost of any expenses incurred while a position is being held, such as interest and trading commissions. - The "premium" (commonly referred to as the "PREM" or "spread") is the difference between the most active S&P 500 Index Futures Contract minus the actual cash value of the S&P 500 Stock Index. That difference makes up the profit that program trading is based on. When the PREM, or spread, rises to a certain level, computer-driven "buy" programs are automatically activated by large institutional clients, who buy the individual stocks in the S&P 500 Stock Index and sell the S&P 500 Stock Index Futures Contract against those positions. When the "spread" drops to a certain level, "sell" programs activate and the exact opposite takes place. These extremely low-risk transactions allow institutional traders to capture a few points of profit before the PREM returns to normal, or Fair Value. There you have a quick look at program trading and how it works. In the days ahead we will review some companies that offer fee-based information services for individual active traders and investors, and also examine the circuit breakers and curbs used by major stock exchanges to minimize the sometimes negative effects of program trading. In the meanwhile, always use Risk Control and strategically placed exit stops to insure that the tidal waves produced by these events give you profits and prevent any erosion to your trading account! For more on Risk Control go to: http://www.rightline.net/education/riskcontrol.html ======================================================================
Best of luck and have a Great Week!
**********
If you would prefer to receive this report in html with color and
graphics go to https://www.rightline.net/preferences/lookup.html to
access your account profile. Once your profile is accessed you can
change your report format preference and other items such as your
password.
**********
To subscribe go to: http://www.rightline.net/subscribe/index.html
Questions? Send us an email using our contact form at:
http://www.rightline.net/home/contact.html
======================================================================
DISCLAIMER
The RightLine Report is an information service for investors and traders. It is not a solicitation nor a recommendation or offer to buy or sell securities. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. The publishers of The RightLine Report are not brokers or financial advisors, and are not acting in any way to influence the purchase or sale of any security. Stock picks, entry points and exit points should be considered an information resource to assist the trader in developing a trading plan and it is the sole responsibility of the reader to conduct his or her own due diligence before executing a trade. Trading securities should be considered speculative with a high degree of volatility and risk. The publishers of The RightLine Report recommend that anyone trading securities should do so with caution, exercise prudent trading discipline and have a personal risk management strategy in place before doing so. It is possible at this or some subsequent date, the publishers and staff of The Pro Right Line Corp. may own, buy or sell securities presented. The Pro Right Line Corp. is not a financial advisory service. Its publishers, owners or investors, are not liable for any losses or damages, monetary or otherwise, that result from the content of The RightLine Report. Past RightLine Report performance may not be indicative of future performance. All subscriptions and/or use of the RightLine.net website are subject to RightLine's "Terms of Use" and "Subscriber Terms & Conditions" which are posted at www.rightline.net. Any REDISTRIBUTION of the above information, without The RightLine's written consent, is STRICTLY PROHIBITED. Copyright / The Pro Right Line Corporation - All Rights Reserved To Unsubscribe, Send us an email using the online contact form at: http://www.rightline.net/home/contact.html or call 800-737-4518. |