Notes From The Editor

Almost all traders enjoy discussing different trading strategies and the merits of one stock or sector over another. However there is one important subject that rarely gets much attention - "discipline." The very thought of discipline often conjures up images of punishment and pain. Fortunately when it comes to trading, the word carries a different meaning.

Forget about the usual negative definitions associated with discipline. For our purposes "discipline" simply means drafting a set of trading rules that we believe in, then sticking with them. While the rules can be changed to reflect a trader's growth, they shouldn't be arbitrarily deleted or ignored.

It's rarely a good idea to change your trading rules while you're in an open position. If you see or learn something that causes you to consider revising your methods, always exit the position under the old rules before implementing new ones.

Why? Because it prevents overreacting to every minor price move or some other distraction when you are emotionally wrapped up the trade. It's extremely difficult to make intelligent trading decisions when you have money on the table.

The wisest approach to "rule change" is to stay with your plan until it takes you out of the position, or intentionally exit the trade before making a rule change. Waiting to finish the trade before making rule changes emphasizes the importance of having a "formal" set of trading procedures.

Having a rule that regulates how and when you change your rules implies that you respect for your own rules. This alone will set you apart from most casual traders who don't follow any consistent methods.

Some rules never change. For example "Use the Risk Control Calculator to determine position size" should always be on the list. On the other hand, "only go long in a bull market" or "only go short in a bear market" are rules that work well for some traders, but may be too broad for others who have learned to play counter-trends successfully.

Bottom Line: When I was a kid I wasn't particularly fond of rules, and no one ever accused me of being disciplined. In fact, I still fall off the wagon from time to time. I guess it's normal to take a few "shortcuts" occasionally, but I've found things tend to work out best when I follow my own rules.

Discipline - just another way of showing you have the self-respect to be a winner.

Trade well,

- Thomas Sutton, Editor

Quick List

    
Stock     06/11     06/11      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

CLW       33.93     -2.50     35.91                  4.31/2.15      2.64
DKL       26.01     -1.35     26.84                  3.27/1.64      2.72
PDCE      14.82     -0.61     15.72                  2.44/1.22      1.94
AVRO      21.63     -0.90     22.51                  2.31/1.16      3.92

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

Stocks closed sharply lower on Thursday, with the S&P 500 now testing the 200 Day Simple Moving Average. There was no obvious trigger for the sell-off, certainly the Fed Banks dovish comments on Wednesday offered little concern for traders. Economic news included a report that initial unemployment claims are moderate but still remain elevated, while price inflation at the wholesale level was mixed. Equities featured a 3% dividend increase by Target (TGT $118), and Jack in the Box presented a positive projection for third quarter sales. The USD/dollar rebounded a bit, treasury yields were mixed, gold and oil prices declined.

                        Jun 10, 2020           Jun 11, 2020   
                  --------------------   --------------------
Dow                    26,990  -282.31        25,128   -1,862
Nasdaq              10,020.35   +66.59         9,493  -527.62
S&P 500                 3,190   -17.04         3,002  -188.04

NYSE Volume                      6.64B                  7.04B
NYSE Advancers                     805                     92
NYSE Decliners                    2164                   2932

Nasdaq Volume                    5.12B                  5.26B
Nasdaq Advancers                  1173                    239
Nasdaq Decliners                  2192                   3153

                                 New Highs/Lows

                   06/04  06/05  06/08  06/09  06/10  06/11
                 --------------------------------------------
NYSE New Highs        41     64     57     36     40      8
NYSE New Lows          3      0      4      3      1      4
Nasdaq New Highs      72    119    128     88    142     25
Nasdaq New Lows       13      8      4      5      5     11
   

TRADER'S TIP: "Volume . . . High or Low?"

"High" and "low" volume are relative terms. "High" volume for one stock is often considered "low" for another. Generally, "high" volume for any given stocks is at least 25% above the 10-day average, and "low" volume is at least 25% below the average.

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 - 3002.10 June 11, 2020

52-Week High: 3393.52
52-Week Low: 2191.86
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3506.08
Resistance 2: 3325.91
Resistance 1: 3259.92
Pivot: 3145.73
Support 1: 3079.74
Support 2: 2965.55
Support 3: 2785.37


NASDAQ Composite - 9492.73 June 11, 2020

52-Week High: 10086.89
52-Week Low: 6631.42
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 10474.10
Resistance 2: 10090.73
Resistance 1: 9952.40
Pivot: 9707.36
Support 1: 9569.03
Support 2: 9323.99
Support 3: 8940.62
        
Dow Industrials - 25128.17 June 11, 2020

52-Week High: 29568.57
52-Week Low: 18213.65
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 30791.92
Resistance 2: 28674.28
Resistance 1: 27892.63
Pivot: 26556.64
Support 1: 25774.99
Support 2: 24439.00
Support 3: 22321.36
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, June 08, 2020:
08-Jun          None scheduled

Tuesday, June 09, 2020:
09-Jun   6 am   NFIB small-business index
09-Jun  10 am   Job openings
09-Jun  10 am   Wholesale inventories

Wednesday, June 10, 2020:
10-Jun  8:30 am   Consumer price index
10-Jun  8:30 am   Core CPI
10-Jun   2 pm   Federal budget
10-Jun   2 pm   FOMC announcement
10-Jun  2:30 pm   Jerome Powell press conference

Thursday, June 11, 2020:
11-Jun  8:30 am   Initial jobless claims (regular state program, SA)
11-Jun  8:30 am   Initial jobless claims (total, not seasonally adjusted)
11-Jun  8:30 am   Producer price index
11-Jun  10 am   Quarterly services survey

Friday, June 12, 2020:
12-Jun  8:30 am   Import price index
12-Jun  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: "Time, Risk, and Reward"

Profit is the reward traders get for doing the right things at the right time. The objective is to be in a trade for the least amount of time possible in order to minimize risk, yet long enough to realize the existing profit potential. While risk tends to increase over time, profit potential doesn't. As a result, holding onto a slightly profitable trade for too long raises risk enough to offset any profit potential.

Stocks Covered in This Issue

BASIC MATERIALS SECTOR

Clearwater Paper Corporation (CLW: Basic Materials/Paper & Paper Products) - NEW HIGH DIP. The price momentum required to set a new high doesn't usually disappear over night. Traders can capitalize on this fact by entering positions when stocks making new highs pull back to a support level, then follow the pullback with signs of bouncing higher. CLW meets the setup criteria, so get ready to BUY into this outstanding performer at 35.91. Enter a trailing stop of 4.31 when your order is filled, then tighten it to 2.15 on a 2.64 gain. Earnings Report Date: Aug 04, 2020. Beta: 1.85. Market-Cap: 562.251M. Optionable.

ENERGY SECTOR

Delek Logistics Partners, LP (DKL: Energy/Oil & Gas Midstream) - NEW HIGH DIP. The best stocks move steadily higher in a two-steps-forward and one-step-back series of repetitive new highs. DKL reached a new 52-week high a few days ago and has since retreated into Thursday's encounter with moving average support. A bounce appears to be in the making, so prepare to pick up a few shares should DKL move up to our BUY trigger at 26.84. Post a 3.27 trailing stop which should be tightened to 1.64 after gaining 2.72. Earnings Report Date: Aug 03, 2020. Beta: 2.93. Market-Cap: 765.36M. Optionable.

PDC Energy, Inc. (PDCE: Energy/Oil & Gas E&P) - BULLISH BOUNCE. Another bullish bouncer, PDCE appears ready to resume trading in an uptrend after recent selling forced the stock lower for several days. Thursday's positive price action near Moving Average support says it's time to BUY shares if PDCE reaches our entry trigger set at 15.72. Also place a 2.44 trailing stop which can be narrowed to 1.22 when you reach a 1.94 profit. PDCE closed Thursday at 14.82. Earnings Report Date: Aug 05, 2020. Beta: 2.88. Market-Cap: 1.475B. Optionable.

HEALTHCARE SECTOR

AVROBIO, Inc. (AVRO: Healthcare/Biotechnology) - BULLISH BOUNCE. Positive price behavior near moving average support on Thursday qualifies AVRO for a Bullish Bounce setup. After several sessions of declining prices, AVRO should soon begin trading in step with its established weekly uptrend. Tell your broker to BUY shares if AVRO moves up to our entry trigger set at 22.51. You can also enter a 2.31 trailing stop, to be replaced with a 1.16 trailing stop when you obtain a 3.92 profit. AVRO closed Thursday at 21.63. Earnings Report Date: Aug 06, 2020. Beta: N/A. Market-Cap: 779.448M. 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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