June 30, 2020 - The RightLine Report
Notes From The Editor
"Momo" is a term used to describe a trading method focusing on stocks that are moving in one direction on high volume. This type of momentum setup pays little or no concern to the company's fundamentals. Traders who follow this strategy know that trending stocks are more likely to continue in the same direction versus stocks which are not trending.
I guess you could say that most of us are Momo traders in some sense. Anyone who understands price momentum and believes that "the trend is your friend" would probably agree. However, momentum plays are just one of several trading methods that we can use to make money.
For example, just as the "momo" play is built on the solid trading principles of momentum and "trend," the Squeeze Play is founded on the principle of volatility expansion. Volatility has a proven tendency to contract, and then expand, and then contract again.
This contraction/expansion cycle is repetitive. Once the contraction phase ends and the expansion phase begins, you can usually count on the expansion period to continue long enough to gain a profit from the related price move.
Successful traders often disagree over how to pick the best stocks, or which entry methods to use. Yet most, if not all winning traders use a methodology grounded in risk management.
No matter what you call it, a consistently profitable trading method is a good trading method. Some investors look down their noses at others as if to say "My method is the only good method." This is an area where were should be careful to keep an open mind. Prejudice against other types of investing and trading can cause us to overlook profitable tactics that sometimes turn out to be based on solid market principles.
Trade well!
- Thomas Sutton, Editor
Stocks Covered Today...Stock Splits...
Quick List
Stock 06/30 06/30 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
IDYA 14.21 0.96 14.62 1.92/0.96 3.06
RCKT 20.93 -0.16 21.76 2.37/1.19 2.38
BCEL 21.28 0.66 22.17 2.58/1.29 2.88
FREQ 23.25 1.96 23.95 3.03/1.51 2.24
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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Stocks Covered Today...Stock Splits...
Market Summary
The major US stock averages finished higher on Tuesday to end the second quarter of 2020 with the best quarterly gains in several decades. Economic data was mixed, showing faster contraction in Chicago manufacturing output than predicted, and Consumer Confidence improving more than expected. In equities headlines, shares of Lululemon Athletica (LULU $312) surged higher after the sportswear firm agreed to acquire home fitness company MIRROR. Gold advanced to near the highest level in the last eight years, oil prices, treasury yields and the USD/dollar declined.
Jun 29, 2020 Jun 30, 2020
-------------------- --------------------
Dow 25,596 +580.25 25,813 +217.08
Nasdaq 9,874 +116.93 10,058.77 +184.61
S&P 500 3,053 +44.19 3,100 +47.05
NYSE Volume 4.56B 4.83B
NYSE Advancers 2275 1956
NYSE Decliners 716 1041
Nasdaq Volume 4.35B 4.55B
Nasdaq Advancers 2252 2275
Nasdaq Decliners 1131 1085
New Highs/Lows
06/23 06/24 06/25 06/26 06/29 06/30
--------------------------------------------
NYSE New Highs 63 15 25 35 46 58
NYSE New Lows 3 12 16 13 2 6
Nasdaq New Highs 200 54 74 69 84 102
Nasdaq New Lows 9 12 15 30 21 16
Stocks Covered Today...Stock Splits...
TRADER'S TIP: "The Market Trend: A Friend That's Too Big To Push Around"
"The manipulation of the primary trend is not possible. When large amounts of money are at stake, the temptation to manipulate is bound to be present. Speculators, specialists or anyone else involved in the markets could manipulate the prices, but it is not possible to manipulate the primary trend. Intraday, day-to-day and possibly even secondary movements could be prone to manipulation. These short movements, from a few hours to a few weeks, could be subject to manipulation by large institutions, speculators, breaking news or rumors. Individual shares could be manipulated, but manipulations usually end the same way: the security continues the primary trend. But it would be virtually impossible to manipulate the market as a whole. The market is simply too big for this to occur."
~ William Hamilton, the Dow theory
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 - 3100.29 June 30, 2020
52-Week High: 3393.52
52-Week Low: 2191.86
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3356.73
Resistance 2: 3206.46
Resistance 1: 3107.75
Pivot: 3056.19
Support 1: 2957.48
Support 2: 2905.92
Support 3: 2755.65
NASDAQ Composite - 10058.77 June 30, 2020
52-Week High: 10221.85
52-Week Low: 6631.42
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 10854.94
Resistance 2: 10382.16
Resistance 1: 10069.68
Pivot: 9909.37
Support 1: 9596.90
Support 2: 9436.59
Support 3: 8963.81
Dow Industrials - 25812.88 June 30, 2020
52-Week High: 29568.57
52-Week Low: 18213.65
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 28121.73
Resistance 2: 26777.79
Resistance 1: 25896.67
Pivot: 25433.85
Support 1: 24552.73
Support 2: 24089.91
Support 3: 22745.96
Stocks Covered Today...Stock Splits...
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, June 29, 2020: 29-Jun 10 am Pending home sales index Tuesday, June 30, 2020: 30-Jun 9 am Case-Shiller home price index 30-Jun 9:45 am Chicago PMI 30-Jun 10 am Consumer confidence index Wednesday, July 01, 2020: 01-Jul 8:15 am ADP employment report 01-Jul 9:45 am Markit manufacturing index 01-Jul 10 am ISM manufacturing index 01-Jul 10 am Construction spending 01-Jul 2 pm FOMC minutes 01-Jul Varies Motor vehicle sales Thursday, July 02, 2020: 02-Jul 8:30 am Nonfarm payrolls 02-Jul 8:30 am Unemployment rate 02-Jul 8:30 am Average hourly earnings 02-Jul 8:30 am Trade deficit 02-Jul 8:30 am Initial jobless claims (regular state program, SA) 02-Jul 8:30 am Continuing jobless claims (regular state program) 02-Jul 10 am Factory orders Friday, June 03, 2020: 03-Jul Independence Day holiday. None scheduled. 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: "Position Sizing"
"Position sizing is the most important part of your system in determining how much you are likely to make trading the system."
~ Van K. Tharp, from "Trade Your Way To Financial Freedom"
Stocks Covered in This Issue
HEALTHCARE SECTOR
IDEAYA Biosciences, Inc. (IDYA: 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 14.21, IDYA is on our radar for a BUY entry at 14.62. If you purchase shares of IDYA, be sure to also place a trailing stop of 1.92. Snug it up to 0.96 on a 3.06 gain. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 384.611M. Not Optionable.
Rocket Pharmaceuticals, Inc. (RCKT: Healthcare/Biotechnology) - BULLISH BOUNCE. Everyone familiar with price charts knows that a stock tends to bounce its way higher rather than move in a straight line. The lower levels of these short-term rebounds offer a safe and often early entry into stocks that are in the process of establishing longer-term uptrends. RCKT's reaction to support on Tuesday created a Bullish Bounce setup with a BUY entry trigger at 21.76. Use a 2.37 trailing stop, which should work well with RCKT's typical daily range. Tighten it to 1.19 on a 2.38 profit. RCKT closed at 20.93 on Tuesday. Earnings Report Date: N/A. Beta: 1.64. Market-Cap: 1.154B. Optionable.
Atreca, Inc. (BCEL: Healthcare/Biotechnology) - BULLISH BOUNCE. Some people hear of a stock that's performing nicely and then buy it without any regard for timing the entry. This approach usually leaves money on the table, money that could just as well be added to profits. The Bullish Bounce setup provides a well timed entry and reduces exposure to risk by placing both the entry trigger and exit stop near the bottom of the bounce. We have an opportunity to use this approach with BCEL which met our setup criteria on Tuesday. The BUY trigger for this trade is at 22.17, and the trailing stop is sized at 2.58. Resize the stop to 1.29 upon collecting a 2.88 point gain. BCEL closed Tuesday at 21.28. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 598.715M. Not Optionable.
Frequency Therapeutics, Inc. (FREQ: Healthcare/Biotechnology) - BULLISH BOUNCE. Entering a position in the early stages of a bounce is great way to get on board an up-trending stock. The "Bullish Bounce" setup identifies probable candidates by evaluating the trading action that takes place near support levels. FREQ's behavior on Tuesday could very well be a sign that a new bounce is underway. Place a BUY trigger at 23.95. In the event your trigger is met, also place a 3.03 trailing stop which can be trimmed down to 1.51 when you have a 2.24 profit. FREQ closed Tuesday at 23.25. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 721.055M. 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
---------------- ------- -------- ------- ------ -------
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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