Notes From The Editor

As the globalized economy becomes more and more integrated, the ability to trade in overseas markets will emerge as a major option for traders. Hundreds of foreign companies are already traded in the U.S. in the form of American Depository Receipts (ADRs). These include everything from Japanese powerhouses to European oil giants to Chinese internet companies. In terms of industries and sectors, the universe of ADR stocks is just as broad as USA based equities.

The common thread you'll notice with ADRs is that their daily charts don't look like a typical stock. Whereas most stocks usually start the day close to where they finished the prior session, ADR's almost always experience overnight gaps. The reason is that while you're eating dinner or sleeping, the company's shares are trading on their "home" exchanges in Tokyo, London, or wherever they're based.

Short-term traders need to take these gap tendencies into account, perhaps by slightly increasing the size of their stop-loss. It's also important to be aware of any regional dynamics or news events that might impact trading overseas. For example, taking a position in Sony (SNE) would be risky if the Japanese government was about to announce some closely-watched economic data.

Another thing to be aware of is earnings reports. Foreign companies often issue earnings between the typical U.S. cycle of quarterly announcements. Many corporations - especially those based in Europe - also issue earnings on biannual basis, rather than four times a year. Make sure you're aware of these dates; as with U.S. stocks, holding over the announcement is usually a risky proposition.

For traders contemplating direct trading on overseas markets, there are some other considerations: foreign exchanges may have different trading rules and fee structures, electronic access may be less reliable, and low liquidity may make it harder for orders to get filled. In other words, take a Caveat Emptor approach - and when possible, use the company's ADR rather than its domestic stock.

Here's to profits,

Kent Barton
Senior Analyst

Quick List

    
Stock     06/18     06/18      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

ARCE      46.17     -0.56               44.35        3.44/1.72      5.40
PACW      20.17      0.02     20.80     19.09        1.71/0.85      2.22
BHC       20.07      0.27     20.50     18.75        1.75/0.88      1.74
BVXV      20.20      0.93     20.47     18.71        1.76/0.88      4.60

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

The US market indices were mixed on Thursday as improving economic conditions along with monetary and fiscal relief efforts by the Fed continue to provide support. Economic news featured a bigger rebound in the Leading Index than expected, plus a surprising improvement in Philadelphia manufacturing activity that elevated the reading into expansion territory. In equities, grocery retailer Kroger (KR $32) beat quarterly earnings forecasts, while T-Mobile US (TMUS $106) raised its outlook for a key subscriber metric. Gold and treasury yields were lower, the USD/dollar and oil prices moved higher.

                        Jun 17, 2020           Jun 18, 2020   
                  --------------------   --------------------
Dow                    26,120  -170.37        26,080   -39.51
Nasdaq                  9,911   +14.66      9,943.05   +32.52
S&P 500                 3,113   -11.25         3,115    +1.85

NYSE Volume                      4.60B                  4.48B
NYSE Advancers                     971                   1299
NYSE Decliners                    1982                   1661

Nasdaq Volume                    4.27B                  4.31B
Nasdaq Advancers                  1257                   1638
Nasdaq Decliners                  2081                   1683

                                 New Highs/Lows

                   06/11  06/12  06/15  06/16  06/17  06/18
                 --------------------------------------------
NYSE New Highs         8     12     27     44     57     38
NYSE New Lows          4      2      6      1      0      4
Nasdaq New Highs      25     24     62    127    154    109
Nasdaq New Lows       11      7     11      5     10      5
   

TRADER'S TIP: "Know WHY To Buy or Sell"

Studies show that most investors buy and sell on emotion instead of reasoning. For example most investors will sell their winning positions to make up for losers, then hold the losers way too long in hopes they will recover. This is the opposite of what should be done, for the winners tend to keep on winning, while losers usually keep losing.

The most common management strategy used by successful traders is pretty simple. Get rid of losers quickly, and keep winners profitable with an exit strategy that includes stop orders. It isn't that difficult to understand intellectually how this approach pays off, but sticking with it is too much of an emotional challenge for most people. The solution comes from the discipline gained through repetitive conditioning.

"Repetitive conditioning?" That's selling any and all losing positions immediately upon their reaching a predetermined level, and holding any and all winners until they meet the specific sell criteria of your exit strategy. Just another term for "good experience!"

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 - 3115.34 June 18, 2020

52-Week High: 3393.52
52-Week Low: 2191.86
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3583.62
Resistance 2: 3334.96
Resistance 1: 3188.13
Pivot: 3086.30
Support 1: 2939.47
Support 2: 2837.64
Support 3: 2588.98


NASDAQ Composite - 9943.05 June 18, 2020

52-Week High: 10086.89
52-Week Low: 6631.42
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 11042.97
Resistance 2: 10369.70
Resistance 1: 9979.26
Pivot: 9696.44
Support 1: 9305.99
Support 2: 9023.17
Support 3: 8349.90
        
Dow Industrials - 26080.10 June 18, 2020

52-Week High: 29568.57
52-Week Low: 18213.65
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 31091.65
Resistance 2: 28589.85
Resistance 1: 27097.69
Pivot: 26088.05
Support 1: 24595.89
Support 2: 23586.25
Support 3: 21084.45
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, June 15, 2020:
15-Jun  8:30 am   Empire State index

Tuesday, June 16, 2020:
16-Jun  8:30 am   Retail sales
16-Jun  8:30 am   Retail sales ex-autos
16-Jun  9:15 am   Industrial production
16-Jun  9:15 am   Capacity utilization
16-Jun  10 am   Home builders' index
16-Jun  10 am   Business inventories

Wednesday, June 17, 2020:
17-Jun  8:30 am   Housing starts (annual rate)
17-Jun  8:30 am   Building permits (annual rate)

Thursday, June 18, 2020:
18-Jun  8:30 am   Initial jobless claims (regular state program)
18-Jun  8:30 am   Initial jobless claims (total, NSA)
18-Jun  8:30 am   Philly Fed manufacturing index
18-Jun  10 am   Leading economic indicators

Friday, June 19, 2020:
19-Jun  8:30 am   Current account deficit



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

TRADER'S TIP: "Price Action Near Support And Resistance"
It pays to keep an eye on support and resitance lines. One of the best low-risk buy signals takes place when price dips below a significant support line, then comes back up and closes above it. In the same fashion, an excellent shorting opportunity is provided when price rises marginally above a clear resistance line, then reverses to close below it.

Stocks Covered in This Issue

CONSUMER DEFENSIVE SECTOR

Arco Platform Limited (ARCE: Consumer Defensive/Education & Training Services) - BEARISH U-TURN. ARCE's weekly downtrend was recently interrupted by a bullish counter-trend rebound. Unfortunately for Bulls this uphill bounce reversed on Thursday after running into resistance. ARCE is now at risk of dropping even lower. On a continued pullback, short entries can be taken at 44.35. Manage your position with a 3.44 stop, pulling it up to 1.72 on a gain of 5.40. ARCE closed at 46.17 on Thursday. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 2.537B. Not Optionable.

FINANCIAL SERVICES SECTOR

PacWest Bancorp (PACW: Financial Services/Banks-Regional) - SQUEEZE PLAY. Thursday's trading action forced PACW'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 PACW 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 20.80 if PACW moves higher, and place your order to SELL short at 19.09 if price declines to that level. As usual follow your entry with a trailing stop, 1.71 should be sufficient. Reduce your stop to 0.85 on a 2.22 gain. PACW closed Thursday at 20.17. Earnings Report Date: Jul 14, 2020. Beta: 1.65. Market-Cap: 2.378B. Optionable.

HEALTHCARE SECTOR

Bausch Health Companies Inc. (BHC: Healthcare/Drug Manufacturers-Specialty & Generic) - SQUEEZE PLAY. A look at BHC'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 20.50 and a SELL short trigger at 18.75. Once BHC shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 1.75 and tighten to 0.88 on a 1.74 gain. BHC closed Thursday at 20.07. Earnings Report Date: N/A. Beta: 1.25. Market-Cap: 7.141B. Optionable.

BiondVax Pharmaceuticals Ltd. (BVXV: Healthcare/Biotechnology) - SQUEEZE PLAY. BVXV is caught in a dilemma. The stock's compressed price range on Thursday 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. BVXV is now at 20.20. We can capture price action either way by placing a BUY trigger at 20.47 and a SELL short trigger at 18.71. Once BVXV 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 1.76. When you acquire a 4.60 profit, tighten the stop to 0.88. Earnings Report Date: N/A. Beta: 2.15. Market-Cap: 229.343M. Not 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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