July 19, 2022 - The RightLine Report
Notes From The Editor
Sometimes stocks just sit in a tight trading range with no indication of upcoming market direction. In times like this traders face the temptation to force the action by buying or selling stocks for no good reason, perhaps due to habit or over-eagerness.
That's obviously not a good idea. We're much better off letting the market decide when we should enter positions and whether we should go long or go short. One good way to do this is to use trade setups trades such as the RightLine "Squeeze Play" which can be triggered by either up and down price action. If the market goes up, the long trades are triggered and the shorts aren't. If the market goes down, the short trades are triggered and the longs aren't.
This "two-way" method contrasts sharply with the common investor routine of relying on predictions about what the market will do. However, it has proven to be much more effective than the "one-way" method of putting all your eggs in the prediction basket.
We humans naturally want to know what the future holds. So much so that we will usually find someone or anyone to tell us what they think lies ahead. When it comes to stocks, many people are in the habit of asking what the market will do. I would suggest we're better off letting the market speak for itself, especially when market uncertainty is indicated by narrow range sessions.
Trade well,
Thomas Sutton, Editor
Note: For details on how to trade the "Squeeze Play" go to https://prorightline.com/trading-squeeze-plays-for-profits/.
Stocks Covered Today Stock Splits
Quick List
Stock 07/19 07/19 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
LTHM 21.90 1.00 22.32 20.62 1.7/0.85 2.8
WB 20.47 0.46 20.93 19.41 1.52/0.76 1.86
RCUS 28.68 0.94 29.36 2.59/1.3 3.34
UPWK 21.27 0.68 21.69 20 1.69/0.85 2.66
FLYW 21.59 0.95 22.01 20.21 1.8/0.9 3.08
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
Stocks were higher again on Tuesday despite central banks tightening their monetary policies recently which has raised concerns of a possible recession. The economic calendar reported an unexpected dip in housing starts, as building permits also dipped but less than predicted. In equities headlines, International Business Machines Corporation (IBM $130) announced upbeat earnings and revenues for the quarter, while Johnson & Johnson (JNJ $172) also topped forecasts, yet a downward adjustment to its outlook put pressure on its share price. Treasuries and the USD/dollar were lower, oil prices moved higher, gold finished the session near even.
Jul 18, 2022 Jul 19, 2022
-------------------- --------------------
Dow 31,072.61 -215.65 31,827.05 754.44
Nasdaq 11,360.05 -92.37 11,713.15 353.10
S&P 500 3,830.85 -32.31 3,936.69 105.84
NYSE Volume 4.11B 4.1B
NYSE Advancers 1,709 2,712
NYSE Decliners 1,525 546
Nasdaq Volume 5.02B 5.3B
Nasdaq Advancers 2,195 3,551
Nasdaq Decliners 2,357 1,058
New Highs/Lows
07/12 07/13 07/14 07/15 07/18 07/19
--------------------------------------------
NYSE New Highs 10 3 3 9 17 14
NYSE New Lows 158 211 379 90 60 48
Nasdaq New Highs 23 23 17 38 30 37
Nasdaq New Lows 211 297 448 166 108 94
Stocks Covered Today Stock Splits
TRADER'S TIP: "Choose Courage"
"Being a successful trader also takes courage; the courage to try, the courage to fail, the courage to succeed, and the courage to keep on going when the going gets tough."
~ Michael Marcus
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 - 3936.69 July 19, 2022
52-Week High: 4818.62
52-Week Low: 3636.85
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4140.64
Resistance 2: 3981.26
Resistance 1: 3922.21
Pivot: 3821.88
Support 1: 3762.83
Support 2: 3662.50
Support 3: 3503.12
NASDAQ Composite - 11713.15 July 19, 2022
52-Week High: 16212.23
52-Week Low: 10565.14
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 12403.49
Resistance 2: 11868.32
Resistance 1: 11660.37
Pivot: 11333.15
Support 1: 11125.20
Support 2: 10797.98
Support 3: 10262.81
Dow Industrials - 31827.05 July 19, 2022
52-Week High: 36952.65
52-Week Low: 29653.27
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 33380.48
Resistance 2: 32156.86
Resistance 1: 31722.56
Pivot: 30933.24
Support 1: 30498.94
Support 2: 29709.62
Support 3: 28486.00
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Wednesday, July 20, 2022: 20-Jul 10 am Existing home sales (SAAR) Thursday, July 21, 2022: 21-Jul 8:30 am Initial jobless claims 21-Jul 8:30 am Continuing jobless claims 21-Jul 8:30 am Philadelphia Fed manufacturing index 21-Jul 10 am Leading economic indicators Friday, July 22, 2022: 22-Jul 9:45 am 22-Jul 9:45 am 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: "Nay-Sayers and Hay-Makers"
It seems that practically every market turn comes draped in commentary and analysis from all angles of pundits and prophets. For every pullback there's the requisite reasoning for a "golden buying opportunity," which comes equally weighted with the seemingly sound logic of numerous warning signs signaling impending doom. Enough already! Once in a while try turning down the volume and simply observing the charts and figures that come across without the rhetoric. It can be so much more informative.
Stocks Covered in This Issue
BASIC MATERIALS SECTOR
Livent Corporation (LTHM: Basic Materials/Specialty Chemicals) - SQUEEZE PLAY. When a stock's daily price range contracts to an unusually low point, you can safely assume that in most cases a breakout from that range will result in a nice price move. To capture a portion of this potential movement we have set both a long and a short entry into LTHM. A move to the upside will trigger our BUY entry at 22.32, while a drop to 20.62 will trigger our SELL short entry. Follow your position with a 1.7 trailing stop. Tighten the stop to 0.85 once you have a 2.8 gain. LTHM closed Tuesday at 21.90. Earnings Report Date: Aug 02, 2022. Beta: 2.08. Market-Cap: 3.925B. Optionable.
COMMUNICATION SERVICES SECTOR
Weibo Corporation (WB: Communication Services/Internet Content & Information) - SQUEEZE PLAY. A look at WB'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 20.93 and a SELL short trigger at 19.41. Once WB shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.52 and tighten to 0.76 on a 1.86 gain. WB closed Tuesday at 20.47. Earnings Report Date: Aug 16, 2022. Beta: 0.78. Market-Cap: 4.842B. Optionable.
HEALTHCARE SECTOR
Arcus Biosciences, Inc. (RCUS: Healthcare/Biotechnology) - BULLISH BOUNCE. Among other strengths, the Bullish Bounce protects traders from buying a stock "at the top" of its current cycle. The entry into this setup always takes place in upward-moving stocks that have retreated a bit under normal conditions. Now sitting at 28.68, RCUS is on our radar for a BUY entry at 29.36. If you purchase shares of RCUS, be sure to also place a trailing stop of 2.59. Snug it up to 1.3 on a 3.34 gain. Earnings Report Date: Aug 03, 2022. Beta: 0.73. Market-Cap: 2.057B. Optionable.
INDUSTRIALS SECTOR
Upwork Inc. (UPWK: Industrials/Staffing & Employment Services) - SQUEEZE PLAY. Tuesday's trading action forced UPWK'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 UPWK 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 21.69 if UPWK moves higher, and place your order to SELL short at 20 if price declines to that level. As usual follow your entry with a trailing stop, 1.69 should be sufficient. Reduce your stop to 0.85 on a 2.66 gain. UPWK closed Tuesday at 21.27. Earnings Report Date: Jul 27, 2022. Beta: 1.64. Market-Cap: 2.758B. Optionable.
TECHNOLOGY SECTOR
Flywire Corporation (FLYW: Technology/Information Technology Services) - SQUEEZE PLAY. FLYW is caught in a dilemma. The stock's compressed price range on Tuesday 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. FLYW is now at 21.59. We can capture price action either way by placing a BUY trigger at 22.01 and a SELL short trigger at 20.21. Once FLYW 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 1.8. When you acquire a 3.08 profit, tighten the stop to 0.9. Earnings Report Date: Aug 09, 2022. Beta: N/A. Market-Cap: 2.315B. 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
---------------- ------- -------- ------- ------ -------
Gamestop GME 7/7/2022 7/22/2022 4-for-1 Yes
Alphabet GOOG 2/1/22 7/18/22 20-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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