Notes From The Editor

Financial media gurus are always willing to give their opinions as to which direction stocks are certain to go. Trouble is, no one knows for sure. Even if they did, there's no way to know which of the hundreds of future-tellers are to be believed.

Actually, anyone's opinion about whether the markets are going up or down should have no impact on how you trade. Market predictions are just noise. Sometimes the noise inspires the crowd to buy, and in some cases it scares them into selling.

It really doesn't matter whether predictions are Bullish or Bearish; they tend to make the listener feel either better or worse - depending on the listener's bias. That's why most forecasters are usually bullish. They know that most investors and traders are hoping the market will go up, so they give them what they want to hear.

This type of catering to expectations is a common trait found wherever money is involved. For example, I occasionally visit a local Chinese restaurant for a run at the buffet. At the end of each meal the waitress faithfully delivers fortune cookies for everyone at the table. Here are a few words of wisdom that have turned up in the past:

1) "You will step on the soil of many countries."

2) "Sing and rejoice, fortune is smiling."

3) "People find it difficult to resist your persuasive manner."

4) "Practice is the best of all instructors."

Okay, you can choose any one you want. I happen to prefer number four, though number three got the biggest laugh at our table. Oh, and I almost forget to tell you that the lucky numbers are 5, 42, 31, 46, 8, and 2.

Trade well!

- Thomas Sutton, Editor

Quick List

    
Stock     01/06     01/06      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

ONEW      57.09      2.02     57.98                  5.73/2.87      4.72
BVH       34.41      0.40     34.98     32.78          2.2/1.1      3.26
EWCZ      28.37     -0.22     29.26     27.17        2.09/1.05      2.66
RLMD      21.35     -0.11      22.2     20.33        1.87/0.94       2.9
XMTR      53.87      2.32     55.24                  7.48/3.74      8.12

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" 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

Questions? Send us an email using our Contact Form.

Market Summary

Thursday's choppy trading session ended lower following Wednesday's sell-off triggered by the minutes from the Federal Reserve Bank's December monetary policy meeting. Investors continue to assess the implications of the report, which suggest that the Fed may take a more aggressive tightening approach than previously thought. In equities, Conagra Brands (CAG $34) missed earnings estimates, Walgreens Boots Alliance (WBA $52) outperformed forecasts and raised its guidance, while Constellation Brands (STZ $245) also topped profit estimates but only met analysts' revenue numbers. Economic news included data showing an unexpected updraft in unemployment claims, a slowdown in services sector activity and modestly improved factory orders. Gold, the USD/dollar and oil prices were higher, treasuries were lower, pushing yields to the upside.

                        Jan 5, 2022            Jan 6, 2022    
                  --------------------   --------------------
Dow                 36,884.44    84.79     36,236.47  -170.64
Nasdaq              15,493.05  -129.66     15,080.86   -19.31
S&P 500              4,786.42    -7.12      4,696.05    -4.53

NYSE Volume                      1.65B                   4.3B
NYSE Advancers                   1,774                  1,873
NYSE Decliners                   1,346                  1,474

Nasdaq Volume                    1.86B                  4.75B
Nasdaq Advancers                 1,778                  2,183
Nasdaq Decliners                 2,439                  2,488

                                 New Highs/Lows

                   12/31  01/03  01/04  01/05  01/05  01/06
                 --------------------------------------------
NYSE New Highs       131     96    132    132    112     64
NYSE New Lows         42     29     49    118     38    185
Nasdaq New Highs      84     98    148    123    104     90
Nasdaq New Lows      174     86    146    406    138    612
   

TRADER'S TIP: "Sometimes You Gotta ..."

The fear of "missing out" can cloud a trader's judgment, so be sure to base all buy or sell decisions on careful planning instead of emotional reactions. The market is full of opportunities - there's plenty for everyone. Rushing in can lead to problems, so remember the old saying "sometimes you gotta slow down to go fast!"

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 - 4696.05 January 6, 2022

52-Week High: 4818.62
52-Week Low: 3694.12
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4919.58
Resistance 2: 4844.64
Resistance 1: 4805.41
Pivot: 4769.70
Support 1: 4730.46
Support 2: 4694.75
Support 3: 4619.81

NASDAQ Composite - 15080.86 January 6, 2022

52-Week High: 16212.23
52-Week Low: 12397.05
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 16245.18
Resistance 2: 15987.65
Resistance 1: 15816.31
Pivot: 15730.12
Support 1: 15558.78
Support 2: 15472.59
Support 3: 15215.06
        
Dow Industrials - 36236.47 January 6, 2022

52-Week High: 36952.65
52-Week Low: 29856.30
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 37773.99
Resistance 2: 37049.03
Resistance 1: 36693.66
Pivot: 36324.07
Support 1: 35968.70
Support 2: 35599.11
Support 3: 34874.15
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Thursday, January 06, 2022:
06-Jan  8:30 am   Initial jobless claims (regular state program)
06-Jan  8:30 am   Continuing jobless claims (regular state program)
06-Jan  8:30 am   Trade deficit
06-Jan  10 am   ISM services index
06-Jan  10 am   Factory orders

Friday, January 07, 2022:
07-Jan  8:30 am   Nonfarm payrolls
07-Jan  8:30 am   Unemployment rate
07-Jan  8:30 am   Average hourly earnings
07-Jan   3 pm   Consumer credit


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

TRADER'S TIP: "Trendlines & Volume"

When expanding volume accompanies price action in the direction of a trendline, it confirms the trend. The same is true when volume dries up as prices retreat back to the trendline. However, if volume increases as prices pull back to a trendline, or if volume drops when prices pull away from a trendline, consider it a warning that the trendline may be in trouble.

Stocks Covered in This Issue

CONSUMER CYCLICAL SECTOR

OneWater Marine Inc. (ONEW: Consumer Cyclical/Recreational Vehicles) - NEW HIGH DIP. You know a stock is performing well when it sets a new 52-week high. Such is the case with ONEW, which recently entered new-high territory before dipping lower the past few sessions. A rebound from Moving Average support on Thursday indicates ONEW may be ready to resume its upward climb. Now sitting at 57.09, a move to 57.98 will trigger a BUY entry. Place a 5.73 trailing stop after entering and tighten it to 2.87 once you've gained 4.72. Earnings Report Date: Feb 02, 2022. Beta: N/A. Market-Cap: 768.608M. Not Optionable.

Bluegreen Vacations Holding Corporation (BVH: Consumer Cyclical/Resorts & Casinos) - SQUEEZE PLAY. The ticker for Thursday's session shows BVH is now stuck in a tight price band. With the cyclical contraction and expansion nature of volatility in force, we should see a new period of price expansion in the days ahead. To improve the odds of catching the next directional wave, place a BUY trigger at 34.98 and a SELL short trigger at 32.78. When BVH starts moving out of its narrow range, your order will be triggered. Once you're in the trade, cancel the opposing trigger and set a 2.2 trailing stop. Upon reaching a 3.26 profit, resize the stop to 1.1. Earnings Report Date: Feb 28, 2022. Beta: 1.83. Market-Cap: 721.062M. Optionable.

CONSUMER DEFENSIVE SECTOR

European Wax Center, Inc. (EWCZ: Consumer Defensive/Household & Personal Products) - SQUEEZE PLAY. EWCZ shareholders know what it feels like to be squeezed. Thursday's slim price range reveals uncertainty on both sides of the table, a situation which often resolves itself by either Bears or Bulls quickly gaining a clear advantage. The question is "who will win?" Near-term market action tell us whether we should sell short or we should buy shares instead. EWCZ closed Thursday at 28.37. The plan is to enter in the right direction by placing a BUY trigger at 29.26 and a SELL short trigger at 27.17. Once EWCZ establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 2.09. After you've collected a 2.66 profit, tighten the stop to 1.05. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 966.617M. Not Optionable.

HEALTHCARE SECTOR

Relmada Therapeutics, Inc. (RLMD: Healthcare/Biotechnology) - 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. RLMD found itself in this condition on Thursday 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 22.2 and a SELL short trigger at 20.33. When RLMD moves outside of Thursday'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 2.9 profit, tighten the stop to 0.94. RLMD closed at 21.35 on Thursday. Earnings Report Date: Mar 21, 2022. Beta: 0.22. Market-Cap: 591.952M. Optionable.

INDUSTRIALS SECTOR

Xometry, Inc. (XMTR: Industrials/Specialty Industrial Machinery) - BULLISH BOUNCE. Positive price behavior near moving average support on Thursday qualifies XMTR for a Bullish Bounce setup. After several sessions of declining prices, XMTR should soon begin trading in step with its established weekly uptrend. Tell your broker to BUY shares if XMTR moves up to our entry trigger set at 55.24. You can also enter a 7.48 trailing stop, to be replaced with a 3.74 trailing stop when you obtain a 8.12 profit. XMTR closed Thursday at 53.87. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 2.505B. 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  
---------------- -------     --------    -------     ------  -------   
Arista Networks   ANET      11/1/2021   11/18/2021  4-for-1   Yes
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
    

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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