June 4, 2020 - The RightLine Report
Notes From The Editor
The Dow or the S&P 500. Which Is More Important?
When it comes to tracking the market, the media usually focuses on the Dow Industrial Average. Although it is good to monitor the Dow if you are trading one of it's components or DIA, the fact that it consists of only 30 stocks makes the Dow too easily manipulated to be of much help when reading the larger market.
In contrast, the S&P 500 is made up of 500 stocks representing the most powerful companies in the world. When it comes to accurately assessing market performance at critical junctions, this broad index has proven to be much more reliable than either the Dow or the Nasdaq.
Similar to how the movement of a school of fish influences the movement of each individual fish in the school, the larger market influences the price movement of the individual stocks that make up the market.
Not all stocks move in exactly the same direction and same speed as the larger market, yet the greater "school" of stocks significantly affects the price action of most individual stocks.
Bottom Line: It pays to know the pivotal price levels in the S&P 500, which we include in the Technical Analyst section of the RightLine Report This is a good rule of thumb for anyone who trades individual stocks, and especially important for trading the SPY.
Trade well,
Thomas Sutton, Editor
Stocks Covered Today...Stock Splits...
Quick List
Stock 06/04 06/04 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
GCO 24.05 0.44 24.42 21.99 2.43/1.22 3.20
CRY 23.49 0.07 24.15 22.29 1.86/0.93 2.12
CCC 22.41 -0.49 22.95 21.71 1.24/0.62 2.22
SSTI 23.86 -0.21 24.51 22.63 1.88/0.94 5.26
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
Stocks ended a volatile Thursday session in a mixed fashion as traders responded cautiously to news that unemployment claims were a bit higher than predicted ahead of Friday's May labor report. Equities headlines featured stronger sales than expected from Costco (COST $311) in May, while eBay (EBAY $49) raised its guidance for the current quarter. Gold, oil prices and treasury yields were all higher, the USD/dollar declined.
Jun 3, 2020 Jun 4, 2020
-------------------- --------------------
Dow 26,270 +527.24 26,282 +11.93
Nasdaq 9,682.91 +74.54 9,615.81 -67.10
S&P 500 3,123 +42.05 3,112 -10.52
NYSE Volume 6.03B 6.53B
NYSE Advancers 2379 1603
NYSE Decliners 577 1354
Nasdaq Volume 4.62B 6.06B
Nasdaq Advancers 2279 1699
Nasdaq Decliners 1009 1584
New Highs/Lows
05/28 05/29 06/01 06/02 06/03 06/04
--------------------------------------------
NYSE New Highs 37 28 50 56 71 41
NYSE New Lows 1 13 5 4 2 3
Nasdaq New Highs 84 82 133 104 122 72
Nasdaq New Lows 11 18 9 8 8 13
Stocks Covered Today...Stock Splits...
TRADER'S TIP: "The Market is Out of Control!!"
Many traders subconsciously try to control the markets by placing too much emphasis on their trade entries. This is usually an attempt to force the market to do their bidding by requiring it to meet a long list of criteria before they get in. However, once in, the market will always do whatever it wants. This is why we emphasize trade management. Keep losses small and let winners grow. The market is literally out of anyone's control! As a result, success in stocks has a lot more to do with exits than entries.
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 - 3112.35 June 4, 2020
52-Week High: 3393.52
52-Week Low: 2191.86
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: -3124864.04
Resistance 2: -18429814.80
Resistance 1: -9214907.40
Pivot: 9214907.40
Support 1: 18429814.80
Support 2: -6090043.36
Support 3: -21394994.12
NASDAQ Composite - 9615.81 June 4, 2020
52-Week High: 9838.37
52-Week Low: 6631.42
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: -3124864.04
Resistance 2: -18429814.80
Resistance 1: -9214907.40
Pivot: 9214907.40
Support 1: 18429814.80
Support 2: -6090043.36
Support 3: -21394994.12
Dow Industrials - 26281.82 June 4, 2020
52-Week High: 29568.57
52-Week Low: 18213.65
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: -3124864.04
Resistance 2: -18429814.80
Resistance 1: -9214907.40
Pivot: 9214907.40
Support 1: 18429814.80
Support 2: -6090043.36
Support 3: -21394994.12
Stocks Covered Today...Stock Splits...
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, June 01, 2020: 01-Jun 9:45 am Markit manufacturing PMI 01-Jun 10 am ISM manufacturing index 01-Jun 10 am Construction spending Tuesday, June 02, 2020: 02-Jun Varies Motor vehicle sales Wednesday, June 03, 2020: 03-Jun 8:15 am ADP employment report 03-Jun 9:45 am Markit services PMI 03-Jun 10 am ISM nonmanufacturing index 03-Jun 10 am Factory orders Thursday, June 04, 2020: 04-Jun 8:30 am Initial jobless claims (regular state program, SA) 04-Jun 8:30 am Initial jobless claims (total, not seasonally adjusted)) 04-Jun 8:30 am Trade deficit 04-Jun 8:30 am Productivity (revision) 04-Jun 8:30 am Unit labor costs (revision) Friday, June 5, 2020: 05-Jun 8:30 am Nonfarm payrolls 05-Jun 8:30 am Unemployment rate 05-Jun 8:30 am Average hourly earnings 05-Jun 3 pm Consumer credit 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: "Hot Zones"
While up and down price behavior reflects the impact of news and sentiment, heavy hitters like market makers and institutional traders use technical analysis to locate potential breakout and reversal zones. Some of these areas are easy to see, for they line up with previous high and low pivot points. Others are less obvious. Trend lines, Bollinger Bands, Fibonacci overlays, and other technical tools are used to locate the hot spots.
Where two or more of these converge, support or resistance is stronger. Bullish moves beyond these limits occur when sellers give in and join the buyers. Bearish moves occur in the same fashion, only in reverse. As traders we can anticipate these points, and manage positions by preparing for possible breakouts or reversals at these junctions.
It doesn't pay to be stubborn! If a trade tells us it wants to break through support or resistance, we can play it that way. If it decides to reverse, we can follow along. One measure of a trader's strength is the ability to quickly adapt and go with the current price flow. To a large degree, this is what is meant by the saying, "let the market tell you what to do."
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
Genesco Inc. (GCO: Consumer Cyclical/Apparel Retail) - SQUEEZE PLAY. Sometimes when Bulls and Bears face off in the market arena for a typical day-long battle, there is no clear winner. This is evident when the daily price range contracts to an unusually narrow state. GCO found itself in this condition on Thursday when neither buyers or sellers were able to push ahead. This setup provides traders a chance to hop on board the next breakout - whether it's to the upside or down - with little risk of loss. To do this place a BUY order at 24.42 and a SELL short trigger at 21.99. When GCO moves outside of Thursday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 2.43 trailing stop. After you've got a 3.20 profit, tighten the stop to 1.22. GCO closed at 24.05 on Thursday. Earnings Report Date: Jun 09, 2020. Beta: 0.65. Market-Cap: 353.121M. Optionable.
HEALTHCARE SECTOR
CryoLife, Inc. (CRY: Healthcare/Medical Devices) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in CRY'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 24.15 and a SELL order at 22.29. Regardless of which order is triggered, cancel the other one and follow your entry with a 1.86 trailing stop. Tighten the stop to 0.93 once you have a 2.12 gain. CRY closed Thursday at 23.49. Earnings Report Date: Jul 28, 2020. Beta: 0.75. Market-Cap: 886.522M. Optionable.
TECHNOLOGY SECTOR
Clarivate Plc (CCC: Technology/Information Technology Services) - 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. CCC 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 22.95 and a SELL short trigger at 21.71. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.24 which can be tightened to 0.62 on a 2.22 gain. CCC closed Thursday at 22.41. Earnings Report Date: Aug 10, 2020. Beta: N/A. Market-Cap: 8.18B. Optionable.
ShotSpotter, Inc. (SSTI: Technology/Software-Application) - SQUEEZE PLAY. SSTI 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 24.51 and a SELL short trigger at 22.63. When one of the orders is filled, cancel the remaining order and enter a 1.88 trailing stop. When you've reached a 5.26 paper profit, tighten the stop to 0.94. SSTI closed at 23.86 on Thursday. Earnings Report Date: N/A. Beta: 2.61. Market-Cap: 271.987M. 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.
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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