June 9, 2020 - The RightLine Report
Notes From The Editor
Stock trading opportunities come in all shapes and sizes. The very best of these trades share one important characteristic - rapid price movement.
In any market it is essential to find stocks that are moving. Short sellers like stocks that are trending down, while buyers want stocks that are going up. 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 that are tired of losing money give up and bail out. 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.
Bottom Line: Market volatility swings from one extreme to the other. The RightLine Report delivers plenty of new high and low setups during periods of rapid price movement, as well as during the slower periods. Trading these setups is relatively simple. Just make sure that you size all positions intelligently before entering, and stick with the planned exit strategy for each one.
Trade well!
~ Thomas Sutton, Editor
Note: Click on the following link for more information about the Bullish Bounce and Bearish U-Turn trading strategies: http://www.rightline.net/education/bullbear.html
Stocks Covered Today...Stock Splits...
Quick List
Stock 06/09 06/09 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
GAN 20.26 0.15 21.08 18.63 2.45/1.23 2.96
FDS 304.90 -9.83 313.62 24.49/12.24 14.78
NTLA 20.23 0.23 21.09 19.11 1.98/0.99 3.08
TLND 34.10 0.52 34.66 3.22/1.61 3.02
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 mixed on Tuesday, with the Dow and S&P 500 down modestly and the Nasdaq up slightly. The Federal Open Market Committee began a two-day monetary policy meeting that will end with an interest rate announcement on Wednesday. In economic news, small business optimism has gone up, and job openings are down more than predicted. In equities, Macy's (M $9) posted a smaller loss than expected, while Tiffany & Company (TIF $125)reported an unexpected loss, but its positive commentary caused share prices to rally. Gold and oil prices ended the session higher, the USD/dollar and treasury yields were higher.
Jun 8, 2020 Jun 9, 2020
-------------------- --------------------
Dow 27,572 +461.46 27,272 -300.14
Nasdaq 9,925 +110.66 9,953.75 +29.01
S&P 500 3,232 +38.46 3,207 -25.21
NYSE Volume 8.52B 6.42B
NYSE Advancers 2440 618
NYSE Decliners 545 2350
Nasdaq Volume 6.20B 5.28B
Nasdaq Advancers 2517 1173
Nasdaq Decliners 823 2167
New Highs/Lows
06/02 06/03 06/04 06/05 06/08 06/09
--------------------------------------------
NYSE New Highs 56 71 41 64 57 36
NYSE New Lows 4 2 3 0 4 3
Nasdaq New Highs 104 122 72 119 128 88
Nasdaq New Lows 8 8 13 8 4 5
Stocks Covered Today...Stock Splits...
TRADER'S TIP: "Have You Heard . . .?"
"Nobody ever went broke taking a quick profit." A common saying, yet it isn't necessarily so. The most common theme among losing traders is the tendency to take a fast profit and hang onto losing positions. In fact, the combination is often lethal.
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 - 3207.18 June 9, 2020
52-Week High: 3393.52
52-Week Low: 2191.86
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3506.08
Resistance 2: 3325.91
Resistance 1: 3259.92
Pivot: 3145.73
Support 1: 3079.74
Support 2: 2965.55
Support 3: 2785.37
NASDAQ Composite - 9953.75 June 9, 2020
52-Week High: 10002.50
52-Week Low: 6631.42
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 10474.10
Resistance 2: 10090.73
Resistance 1: 9952.40
Pivot: 9707.36
Support 1: 9569.03
Support 2: 9323.99
Support 3: 8940.62
Dow Industrials - 27272.30 June 9, 2020
52-Week High: 29568.57
52-Week Low: 18213.65
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 30791.92
Resistance 2: 28674.28
Resistance 1: 27892.63
Pivot: 26556.64
Support 1: 25774.99
Support 2: 24439.00
Support 3: 22321.36
Stocks Covered Today...Stock Splits...
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, June 08, 2020: 08-Jun None scheduled Tuesday, June 09, 2020: 09-Jun 6 am NFIB small-business index 09-Jun 10 am Job openings 09-Jun 10 am Wholesale inventories Wednesday, June 10, 2020: 10-Jun 8:30 am Consumer price index 10-Jun 8:30 am Core CPI 10-Jun 2 pm Federal budget 10-Jun 2 pm FOMC announcement 10-Jun 2:30 pm Jerome Powell press conference Thursday, June 11, 2020: 11-Jun 8:30 am Initial jobless claims (regular state program, SA) 11-Jun 8:30 am Initial jobless claims (total, not seasonally adjusted) 11-Jun 8:30 am Producer price index 11-Jun 10 am Quarterly services survey Friday, June 12, 2020: 12-Jun 8:30 am Import price index 12-Jun 10 am Consumer sentiment index 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: "Small Account?"
As a rule of thumb, we believe that the maximum amount a trader should put at risk on a single trade, including commissions, is 2% of their total account value. While this may seem WAY too conservative to traders with small accounts, the research indicates otherwise. However, due to the minimum transaction fees imposed by most brokers, smaller accounts have a more difficult time including commission costs within the recommended maximum risk level of 2%. Over the past few years lower commissions have helped make trading an affordable venture for many smaller players.
Traders with small accounts should shop for the lowest costs - but keep in mind that while it is important to hold the cost of commissions down, good service and reliability should also be among the top considerations. Smaller traders should also try to resist the temptation to increase their exposure by ignoring the 2% risk cap. The principals underlying risk management are designed to minimize losses and give as many chances as possible for winning trades to develop. Following these guidelines will even keep a string of five or six losers from inflicting seriously damage to our trading accounts.
Regardless of what size account a trader has, it's important to acquire intelligent trading habits that insure a steady progression of profits over the long haul. Substituting high-risk short cuts for reliable risk management methods usually results in a quick and expensive trip down Bust-Out Boulevard!
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
GAN Limited (GAN: Consumer Cyclical/Gambling) - SQUEEZE PLAY. Tuesday's trading session left GAN in a very narrow price range after buyers and sellers fought to a near stalemate. Both sides are looking for some traction, and a breakout either way could provide a nice gain in the short term. To get aboard, set your BUY trigger at 21.08 and your SELL short trigger at 18.63. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 2.45 trailing stop. Once you have a 2.96 profit, reduce the stop to 1.23. Earnings Report Date: N/A. Beta: 1.77. Market-Cap: 586.14M. Optionable.
FINANCIAL SERVICES SECTOR
FactSet Research Systems Inc. (FDS: Financial Services/Financial Data & Stock Exchanges) - NEW HIGH DIP. FDS's latest 52-week high and subsequent pullback has resulted in one of our favorite trade opportunities. An encounter with support on Tuesday sets the stage for a low-risk entry. Now watch for FDS to move up to our BUY trigger at 313.62. Once triggered, place your market order. When the order is filled, follow with a trailing stop of 24.49. Tighten the stop to 12.24 when you have a 14.78-point gain. FDS last closed at 304.90. Earnings Report Date: Jun 25, 2020. Beta: 0.78. Market-Cap: 11.547B. Optionable.
HEALTHCARE SECTOR
Intellia Therapeutics, Inc. (NTLA: Healthcare/Biotechnology) - SQUEEZE PLAY. The ticker for Tuesday's session shows NTLA is now stuck in a tight price band. With the cyclical contraction and expansion nature of volatility in force, we should see a new period of price expansion in the days ahead. To improve the odds of catching the next directional wave, place a BUY trigger at 21.09 and a SELL short trigger at 19.11. When NTLA starts moving out of its narrow range, your order will be triggered. Once you're in the trade, cancel the opposing trigger and set a 1.98 trailing stop. Upon reaching a 3.08 profit, resize the stop to 0.99. Earnings Report Date: N/A. Beta: 1.72. Market-Cap: 1.186B. Optionable.
TECHNOLOGY SECTOR
Talend S.A. (TLND: Technology/Software-Infrastructure) - 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. TLND's behavior on Tuesday could very well be a sign that a new bounce is underway. Place a BUY trigger at 34.66. In the event your trigger is met, also place a 3.22 trailing stop which can be trimmed down to 1.61 when you have a 3.02 profit. TLND closed Tuesday at 34.10. Earnings Report Date: Aug 05, 2020. Beta: 0.86. Market-Cap: 1.069B. 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.
Disclaimer
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