June 16, 2022 - The RightLine Report
Notes From The Editor
Stock trading opportunities come in all flavors. Fortunately, the very best share at least one important characteristic - price movement. In any market it is essential to find stocks that are moving. Buyers prefer stocks that are trending higher, and short sellers favor stocks that are trending down. While the definition of a "moving" stock is somewhat subjective, there are several things to consider when looking for good stocks to trade.
The first place to look is at stocks that are making new highs and new lows. Stocks that have just set new highs make ideal buy-side candidates. The ability to rise to new heights reflects investor interest, and indicates the demand for shares is in excess of available supply.
On the flip side, stocks making new lows are exhibiting extreme weakness. This usually results in even more weakness as wave after wave of investors get tired of losing money and give up. The list of New Lows often contains stocks that are begging to be shorted.
As a rule, new-highs lead to more strength, while new-lows point to more trouble ahead. To get into trends early, look for stocks that have just made new four-week highs or lows. Also check the slope of the 22-day moving average. If it's leaning decidedly in one direction or the other, you can assume that the trend is relatively stable.
Keep in mind that although the purpose of trading is to be profitable, we don't have to catch 100% of every move. Find stocks that are active within your chosen time frame, and take a reasonable amount out of the anticipated movement. As for timing entries, start with the basic reversal strategies like the Bullish Bounce and Bearish U-Turn.
Trade well!
~ Thomas Sutton, Editor
Note: Click on the following links for more information about the Bullish Bounce and Bearish U-Turn trading strategies: https://prorightline.com/bullish-bounce/ and https://prorightline.com/bearish-u-turn/.
Stocks Covered Today Stock Splits
Quick List
Stock 06/16 06/16 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
BYND 23.91 -1.65 22.39 3.16/1.58 5.96
TALO 20.02 -1.15 21.06 19.33 1.73/0.87 2.18
BPT 20.82 -1.88 22.8 20.03 2.77/1.39 2.66
SWTX 20.47 -0.50 21.15 19.02 2.13/1.07 6.36
CDNA 20.56 -0.53 21.07 19.37 1.7/0.85 3.7
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.
Stocks Covered Today Stock Splits
Market Summary
US stocks were lower on Thursday as higher interest rates, rising inflation and tighter financial conditions gave market bears the upper hand. In economic news, housing construction activity declined, jobless claims decreased by a smaller number than predicted, and Philadelphia manufacturing output unexpectedly slipped into the contraction zone. In equity headlines, Kroger (KR $50) beat quarterly earnings expectations and raised its guidance despite margins declining more than expected. The USD/dollar fell, oil prices, gold and treasuries were higher, lowering yields.
Jun 15, 2022 Jun 16, 2022
-------------------- --------------------
Dow 30,668.53 303.70 29,927.07 -741.46
Nasdaq 11,099.15 270.81 10,646.10 -453.06
S&P 500 3,789.99 54.51 3,666.77 -123.22
NYSE Volume 5.58B 5.68B
NYSE Advancers 2,398 335
NYSE Decliners 877 3,012
Nasdaq Volume 5.38B 5.7B
Nasdaq Advancers 3,391 845
Nasdaq Decliners 1,300 3,832
New Highs/Lows
06/09 06/10 06/13 06/14 06/15 06/16
--------------------------------------------
NYSE New Highs 12 4 1 4 5 1
NYSE New Lows 111 251 801 850 337 1,092
Nasdaq New Highs 25 23 22 15 21 14
Nasdaq New Lows 177 464 1,138 1,020 381 1,147
Stocks Covered Today Stock Splits
TRADER'S TIP: "Paid Two Ways"
When it comes to trading the stock market, everyone is paid in two ways - money and experience. Learn from the experience first, and the money will follow.
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 - 3666.77 June 16, 2022
52-Week High: 4818.62
52-Week Low: 3639.77
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4527.17
Resistance 2: 4258.55
Resistance 1: 4079.70
Pivot: 3989.93
Support 1: 3811.08
Support 2: 3721.31
Support 3: 3452.69
NASDAQ Composite - 10646.10 June 16, 2022
52-Week High: 16212.23
52-Week Low: 10565.14
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 13472.15
Resistance 2: 12555.02
Resistance 1: 11947.52
Pivot: 11637.89
Support 1: 11030.39
Support 2: 10720.76
Support 3: 9803.63
Dow Industrials - 29927.07 June 16, 2022
52-Week High: 36952.65
52-Week Low: 29740.35
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 35700.39
Resistance 2: 33852.86
Resistance 1: 32622.82
Pivot: 32005.33
Support 1: 30775.29
Support 2: 30157.80
Support 3: 28310.27
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Thursday, June 16, 2022: 16-Jun 8:30 am Initial jobless claims 16-Jun 8:30 am Continuing jobless claims 16-Jun 8:30 am Building permits (SAAR) 16-Jun 8:30 am Housing starts (SAAR) 16-Jun 8:30 am Philadelphia Fed manufacturing index Friday, June 17, 2022: 17-Jun 9:15 am Industrial production index 17-Jun 9:15 am Capacity utilization 17-Jun 10 am Leading economic indicators 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: "Earnings Conference Calls"
Since the SEC implemented the Fair Disclosure laws, most companies allow individual shareholders to listen in on earnings conference calls that were previously limited to analysts only. If you are tracking a stock as it approaches its scheduled earnings announcement, you may want to look for the related conference call and mark it on your calendar. The behavior of the stock during the call can telegraph early reaction to management's explanation of earnings related events. If you can't find any mention of the call, give the firm's Investor Relations department a ring to ask when or if a call will be held.
Stocks Covered in This Issue
CONSUMER DEFENSIVE SECTOR
Beyond Meat, Inc. (BYND: Consumer Defensive/Packaged Foods) - BEARISH U-TURN. The weight of BYND's declining weekly trend was lightened recently when shares began to move upward. However, like a swimmer against the tide BYND encountered strong resistance on Thursday. Price action indicates a likely return to the previous downtrend, so plan to short BYND upon reaching our SELL trigger at 22.39. Set a 3.16 trailing stop which can be tightened to 1.58 after you have a 5.96 gain. BYND ended the latest session at 23.91. Earnings Report Date: Aug 03, 2022. Beta: 1.72. Market-Cap: 1.519B. Optionable.
ENERGY SECTOR
Talos Energy Inc. (TALO: Energy/Oil & Gas E&P) - SQUEEZE PLAY. Trader indecision has put TALO 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 21.06 and a SELL short entry at 19.33. Now it's up to TALO to show us which entry will be filled. Once the trade is underway place a 1.73 trailing stop, which can be tightened to 0.87 after you achieve a 2.18 profit. TALO closed on Thursday at 20.02. Earnings Report Date: Aug 01, 2022. Beta: 2.37. Market-Cap: 1.652B. Optionable.
BP Prudhoe Bay Royalty Trust (BPT: Energy/Oil & Gas Refining & Marketing) - SQUEEZE PLAY. BPT traders on both sides of the fence are now locked in a head-to-head shootout. Thursday's price range was the narrowest in over a week, as neither Bears or Bulls have been able to clearly gain the upper hand. This gives us an opportunity to catch the next directional move with little risk of loss. To do this we'll place both a long and a short trigger with a BUY at 22.8 and a SELL short trigger at 20.03. When one of the orders is filled, cancel the remaining order and enter a 2.77 trailing stop. When you've reached a 2.66 paper profit, tighten the stop to 1.39. BPT closed at 20.82 on Thursday. Earnings Report Date: N/A. Beta: 0.11. Market-Cap: 445.548M. Optionable.
HEALTHCARE SECTOR
SpringWorks Therapeutics, Inc. (SWTX: Healthcare/Biotechnology) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in SWTX's narrowest trading range of the past seven sessions. With neither group able to take complete control on Thursday, the stock's short term destiny is up for grabs. You can capitalize on this unusually tight condition by placing both a BUY order at 21.15 and a SELL order at 19.02. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.13 trailing stop. Tighten the stop to 1.07 once you have a 6.36 gain. SWTX closed Thursday at 20.47. Earnings Report Date: Aug 02, 2022. Beta: 1.08. Market-Cap: 1.012B. Optionable.
CareDx, Inc (CDNA: Healthcare/Diagnostics & Research) - SQUEEZE PLAY. In certain stocks a tightly constricted price range is a sign that neither bulls nor bears are confident of winning in the near term. This often means that the side that gives up first causes a quick move in the opposite direction. In these fear dominated skirmishes, opposing traders always benefit from the retreat. In the Squeeze Play setup you can actually play both sides of the inevitable surge. CDNA traders reached this state of stand-off on Thursday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 21.07 and a SELL short trigger at 19.37. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.7 which can be tightened to 0.85 on a 3.7 gain. CDNA closed Thursday at 20.56. Earnings Report Date: Jul 27, 2022. Beta: 0.81. Market-Cap: 1.094B. 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
---------------- ------- -------- ------- ------ -------
Amazon AMZN 3/9/2022 6/6/2022 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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