Notes From The Editor

The Market Goes Up, The Market Goes Down ... Part II

Stock trading is much more rewarding when you view it as a means of self-improvement rather than just a way to earn money. It makes sense when you think about it. Money is a result of learning to trade well, and the process of learning to trade well requires us to improve on a number of important levels.

This means we have to change the way we think and act.

Most traders would agree that making the changes necessary to be a successful stock trader is desirable. However, just because something is "desirable" doesn't mean we're willing to make the effort necessary to change the way we feel about it.

For instance, the majority of people are of the opinion that a Bull market is the only market where profits can be made. Bull equals good, and bear equals bad ... right?

Wrong. While the rest of the world may view the markets this way, you already know it isn't true for traders who have learned how to take advantage of both up and down trends. And though there are plenty of reasons why the majority of investors prefer bull markets, many of these "reasons" are simply one-dimensional beliefs that limit opportunity.

The process of moving beyond our trading limitations involves becoming aware of the false assumptions and bias we each have. Once we become conscious of the mental and emotional limits that exist inside of us, we can go about the business of upgrading our perspectives.

Learning how to view market action as neither good nor bad begins with paying attention to your feelings. Notice and accept how you feel when the market goes up, and when it goes down. Then remind yourself that you can choose to perceive market movement any way you want to.

When the market goes down, focus on the fact that a down market presents just as much opportunity as an up market. Be persistent. It can take months to replace limiting beliefs with new and more effective ones. Realize that although all of us have been taught that "down" is our enemy, "down" is actually is just as much our ally as "up."

The trend really is your friend ... even when the trend is down. It takes practice to accept all price movement as opportunity, yet this is a necessary step toward bringing about the changes in thinking that produce consistent success.

Trade well,

- Thomas Sutton, Editor

Quick List

    
Stock     06/23     06/23      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

CDLX      26.57      0.88      27.2     24.95        2.25/1.13      4.46
VTOL      22.73      0.22     23.32     21.57        1.75/0.88       2.6
CRSP      65.15      5.21     66.82                  10.79/5.4      8.28
MRUS      21.34      0.46      21.7     19.96        1.74/0.87       3.7
CRNC      27.00      0.40      27.5     25.75        1.75/0.88      2.96

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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Market Summary

US stocks were solidly higher on Thursday despite market concerns about inflation and the possibility of recession as Fed Bank Chairman Powell confirmed that aggressive monetary policy will continue until price reaches a reasonable level of stability. In economic news, unemployment claims declined by a smaller amount than predicted, as June manufacturing and services output decreased more than expected and moved closer to leaving expansion territory. In equities, Accenture (ACN $286) offered weak guidance, Darden Restaurants (DRI $116) released a mixed outlook, and KB Home (KBH $28) beat profit estimates. The USD/dollar was higher, treasuries rose as well, putting downward pressure on yields, oil and gold were both lower.

                        Jun 22, 2022           Jun 23, 2022   
                  --------------------   --------------------
Dow                 30,483.13   -47.12     30,677.36   194.23
Nasdaq              11,053.08   -16.22     11,232.19   179.11
S&P 500              3,759.89    -4.90      3,795.73    35.84

NYSE Volume                       5.1B                  5.17B
NYSE Advancers                   1,541                  1,968
NYSE Decliners                   1,734                  1,312

Nasdaq Volume                    5.25B                  5.28B
Nasdaq Advancers                 2,210                  2,874
Nasdaq Decliners                 2,395                  1,726

                                 New Highs/Lows

                   06/16  06/17  06/20  06/21  06/22  06/23
                 --------------------------------------------
NYSE New Highs         1      2      0     11      5      4
NYSE New Lows      1,092    566      0    158    270    261
Nasdaq New Highs      14     21      0     35     10     36
Nasdaq New Lows    1,147    485      0    204    305    288
   

TRADER'S TIP: "Stubborn?"

Is it really wise to fight the market? The tendency for new traders to stubbornly hold onto losing positions usually results in deep regret. Cut losses quick, and get on to the next trade. Remember, only the market is ALWAYS right. No one else.

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 - 3795.73 June 23, 2022

52-Week High: 4818.62
52-Week Low: 3636.85
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4119.18
Resistance 2: 3917.90
Resistance 1: 3796.37
Pivot: 3716.62
Support 1: 3595.09
Support 2: 3515.34
Support 3: 3314.06

NASDAQ Composite - 11232.19 June 23, 2022

52-Week High: 16212.23
52-Week Low: 10565.14
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 12227.49
Resistance 2: 11548.37
Resistance 1: 11173.36
Pivot: 10869.25
Support 1: 10494.24
Support 2: 10190.12
Support 3: 9511.00
        
Dow Industrials - 30677.36 June 23, 2022

52-Week High: 36952.65
52-Week Low: 29653.27
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 33212.23
Resistance 2: 31720.61
Resistance 1: 30804.69
Pivot: 30228.99
Support 1: 29313.07
Support 2: 28737.37
Support 3: 27245.75
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, June 20, 2022:
20-Jun          

Tuesday, June 21, 2022:
21-Jun  8:30 am   Chicago Fed national activity index
21-Jun  10 am   Existing home sales (SAAR)

Wednesday, June 22, 2022:
22-Jun          None scheduled

Thursday, June 23, 2022:
23-Jun  8:30 am   Initial jobless claims
23-Jun  8:30 am   Continuing jobless claims
23-Jun  8:30 am   Current account
23-Jun  9:45 am   
23-Jun  9:45 am   

Friday, June 24, 2022:
24-Jun  10 am   UMich consumer sentiment index (final)
24-Jun  10 am   5-year inflation expectations (final)
24-Jun  10 am   New home sales (SAAR)


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

TRADER'S TIP: "Everybody In The Pool!"

Like swimming, trading can be awkward and uncomfortable sometimes - especially when we get water up our noses. Here's a wee bit of advice from a former flounderer - don't be discouraged, just stay in the pool. What starts with a lot of effort and splashing around soon becomes a pleasurable experience for those who don't give up.

Stocks Covered in This Issue

COMMUNICATION SERVICES SECTOR

Cardlytics, Inc. (CDLX: Communication Services/Advertising Agencies) - SQUEEZE PLAY. One interesting trait of price volatility is that it cycles back and forth through periods of expansion and contraction. Stocks that have recently seen their daily price range shift from an average or wide range to an extremely contracted state are ideal candidates for expansive price moves. In many cases the next move is relatively fast and covers a sizable amount of territory. To take advantage of these trades we use both a BUY and a SELL entry. This allows us to enter in whichever direction the breakout takes. In CDLX's case we will enter a BUY should it reach the 27.2 level, or a SELL short trade if it drops to 24.95. As usual a trailing stop is essential, 2.25 which should be tightened to 1.13 on a 4.46 gain. CDLX closed Thursday at 26.57. Earnings Report Date: Aug 01, 2022. Beta: 2.48. Market-Cap: 906.438M. Optionable.

ENERGY SECTOR

Bristow Group Inc. (VTOL: Energy/Oil & Gas Equipment & Services) - SQUEEZE PLAY. VTOL 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. VTOL is now at 22.73. We can capture price action either way by placing a BUY trigger at 23.32 and a SELL short trigger at 21.57. Once VTOL 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 1.75. When you acquire a 2.6 profit, tighten the stop to 0.88. Earnings Report Date: Aug 02, 2022. Beta: 1.17. Market-Cap: 643.248M. Optionable.

HEALTHCARE SECTOR

CRISPR Therapeutics AG (CRSP: Healthcare/Biotechnology) - BULLISH BOUNCE. Here is another example of a stock in an established uptrend that has recently experienced a counter-trend drop. The sliding price action has now found support near a moving average zone, bouncing upward during Thursday's session to close at 65.15. Anticipate the rebound to continue, and be ready to buy CRSP at 66.82. Follow your entry with a trailing stop of 10.79 which can be tightened to 5.4 on a 8.28 profit. Earnings Report Date: N/A. Beta: 2.03. Market-Cap: 5.046B. Optionable.

Merus N.V. (MRUS: Healthcare/Biotechnology) - 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 MRUS. A move to the upside will trigger our BUY entry at 21.7, while a drop to 19.96 will trigger our SELL short entry. Follow your position with a 1.74 trailing stop. Tighten the stop to 0.87 once you have a 3.7 gain. MRUS closed Thursday at 21.34. Earnings Report Date: Aug 03, 2022. Beta: 1.12. Market-Cap: 929.359M. Optionable.

TECHNOLOGY SECTOR

Cerence Inc. (CRNC: Technology/Software-Application) - SQUEEZE PLAY. Trader indecision has put CRNC 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 27.5 and a SELL short entry at 25.75. Now it's up to CRNC to show us which entry will be filled. Once the trade is underway place a 1.75 trailing stop, which can be tightened to 0.88 after you achieve a 2.96 profit. CRNC closed on Thursday at 27.00. Earnings Report Date: Aug 08, 2022. Beta: 2.76. Market-Cap: 1.061B. 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  
---------------- -------     --------    -------     ------  -------   
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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