March 1, 2022 - The RightLine Report
Notes From The Editor
Most investors never consider using charts when making decisions about when to buy and sell stocks. This is easy to understand in a world where financial news banter heavily influences the investment crowd perspective. However, by taking a closer look at what actually takes place, it's also easy to understand how price and volume action on a chart reveals more good information than most folks would ever imagine.
Start with the concept that sooner or later all news and fundamentals are reflected in a stock's price. The changes that occur in a company's financial picture don't normally happen overnight. Key employees of the firm are usually the first to know when changes are underway that may impact the company stock - their stock. Although SEC regulations do govern what insiders can say and do with the information they obtain, the fact remains that we are all human, and humans love to talk!
What starts out as innocent chatter among employees soon spreads to those beyond the company's inner circle. The news then quickly makes its way to friends and acquaintances. They in turn share it with others. As more and more people learn about the changing prospects of a company, they either buy or sell the stock, and the chart begins to signal that something significant could be taking place.
Serious chart readers recognize the signs of change, and then dig into the fundamentals and other aspects of the company to find out if an opportunity exists to profit from the situation. This group includes the much talked about "smart money." These deep pockets soon recognize what is going on and take action. Due to the size involved, the buying or selling can't be easily hidden. It invariably shows up on the charts.
Eventually the price action draws chart patterns that provide powerful clues about where the stock is headed. While it may seem slightly peculiar, there is nothing new about any of this - technical analysts have known about the process for many decades.
Bottom Line: Those of us who use charts as part of our trading strategy simply follow along with the smart money. Although charts do contain a predictive element, the real power comes from the low risk entries available at key support and resistance levels. Understanding how price tends to respond at these decisive crossroads gives us an advantage. The lines in the sand provide boundaries that emit relatively clear exit signals when crossed, and at the same time offer ideal locations to place safety stops.
Trade well!
- Thomas Sutton
Stocks Covered Today Stock Splits
Quick List
Stock 03/01 03/01 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
LMND 24.27 -1.18 25.9 23.04 2.86/1.43 5.48
LAND 29.72 -0.17 28.56 2.03/1.02 2
STAR 25.05 -0.07 25.65 24.04 1.61/0.81 2.26
AI 22.06 -0.36 21.02 2.02/1.01 3.52
TSAT 20.61 -0.12 21.41 19.56 1.85/0.93 2.64
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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Stocks Covered Today Stock Splits
Market Summary
Stocks closed lower on Tuesday following news that Russia is escalating its invasion of Ukraine despite the USA and other countries imposing sanctions on Russian financial institutions, plus restrictions from using the SWIFT global payment system. Economic headlines included a rise in manufacturing activity for February, and an increase in January construction spending. In equities, shares of Workday (WDAY $240) and Target (TGT $219) addvanced higher after both firms topped quarterly earnings expectations. Oil prices jumped to multi-year highs, gold, treasuries and the USD/dollar all rallied.
Feb 28, 2022 Mar 1, 2022
-------------------- --------------------
Dow 33,892.60 -166.15 33,294.95 -597.65
Nasdaq 13,751.40 56.77 13,532.46 -218.94
S&P 500 4,373.94 -10.71 4,306.26 -67.68
NYSE Volume 6.14B 5.92B
NYSE Advancers 1,559 1,331
NYSE Decliners 1,799 2,048
Nasdaq Volume 5.92B 6.14B
Nasdaq Advancers 2,340 1,683
Nasdaq Decliners 2,408 3,094
New Highs/Lows
02/22 02/23 02/24 02/25 02/28 03/01
--------------------------------------------
NYSE New Highs 30 23 22 44 68 109
NYSE New Lows 337 394 792 73 104 133
Nasdaq New Highs 32 28 29 47 62 67
Nasdaq New Lows 661 728 1,344 135 185 229
Stocks Covered Today Stock Splits
TRADER'S TIP: "The Psychology of Psychology"
In the stock market, psychology obviously plays a huge role in the dynamics of sometimes frenzied, sometimes subdued human beings - especially when substantial sums of cash get thrown in the mix. It's just one of the unique characteristics of social cultures, and we're all affected at some point or another. Remember that trade you planned out so perfectly, entered so carefully, and then so inexplicably abandoned it when your confidence waivered? We've all been there.
To help overcome that recurring possibility, consider the following:
1. Use a trading system that requires you to execute ALL aspects of your plan at the beginning of each trade, not just entry points.
2. Keep a trading log. Even if never revisited for analytical purposes, they provide a written reminder of your ability to stick with your plan. To boot, it's in your own handwriting, which can be pretty persuasive when self-doubt rears its ugly head.
3. Remove actively traded stocks from your trading program's topmost page. That prevents your natural curiosity from lulling you into ticker-tape-fixation, which tends to breed suspicion over each and every tick.
Try these ideas for starters, they have been shown to help traders better manage the potential psychological pitfalls of the markets.
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 - 4306.26 March 1, 2022
52-Week High: 4818.62
52-Week Low: 3723.34
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4858.00
Resistance 2: 4577.99
Resistance 1: 4481.32
Pivot: 4297.98
Support 1: 4201.31
Support 2: 4017.97
Support 3: 3737.96
NASDAQ Composite - 13532.46 March 1, 2022
52-Week High: 16212.23
52-Week Low: 12397.05
Daily Trend: UP
Weekly trend: DOWN
Dow Industrials - 33294.95 March 1, 2022
52-Week High: 36952.65
52-Week Low: 30547.53
Daily Trend: UP
Weekly trend: DOWN
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, February 28, 2022: 28-Feb 8:30 am Trade in goods, advance report 28-Feb 9:45 am Chicago PMI Tuesday, March 01, 2022: 01-Mar 9:45 am Markit manufacturing PMI (final) 01-Mar 10 am ISM manufacturing index 01-Mar 10 am Construction spending Wednesday, March 02, 2022: 02-Mar 8:15 am ADP employment report 02-Mar 2 pm Beige Book Thursday, March 03, 2022: 03-Mar 8:30 am Initial jobless claims 03-Mar 8:30 am Continuing jobless claims 03-Mar 8:30 am Productivity revision (SAAR) 03-Mar 8:30 am Unit labor costs revision (SAAR) 03-Mar 9:45 am Markit services PMI (final) 03-Mar 10 am ISM services index 03-Mar 10 am Factory orders 03-Mar 10 am Core capital equipment orders (revision) Friday, March 04, 2022: 04-Mar 8:30 am Nonfarm payrolls 04-Mar 8:30 am Unemployment rate 04-Mar 8:30 am Average hourly earnings 04-Mar 8:30 am Labor force participation rate, prime working age 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: "Planning Entries"
Typically when our analysts determine entry points, they evaluate setups from more than one perspective. They usually look at a relatively longer-term chart when determining the underlying trend, then use shorter-term analysis to figure out where in that longer trend the stock currently is. For example, if a stock sits mired in a downtrend, but is nearing the lower edge of the trading range, we anticipate a potential long bounce entry yet use a relatively tight stop since the prevailing winds are pressuring prices downward. It's a matter of integrating BOTH perspectives when formulating a plan.
Stocks Covered in This Issue
FINANCIAL SERVICES SECTOR
Lemonade, Inc. (LMND: Financial Services/Insurance-Property & Casualty) - SQUEEZE PLAY. LMND is caught in a dilemma. The stock's compressed price range on Tuesday 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. LMND is now at 24.27. We can capture price action either way by placing a BUY trigger at 25.9 and a SELL short trigger at 23.04. Once LMND 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 2.86. When you acquire a 5.48 profit, tighten the stop to 1.43. Earnings Report Date: May 09, 2022. Beta: N/A. Market-Cap: 1.497B. Optionable.
REAL ESTATE SECTOR
Gladstone Land Corporation (LAND: Real Estate/REIT-Industrial) - BEARISH U-TURN. This short setup turns common stock behavior into profits. Grounded in the tendency for down-trending stocks to bounce briefly and then return to the familiar down-trend, the Bearish U-Turn points traders to weak stocks when conditions are calling for more downward price action. LAND's behavior on Tuesday near moving average support signals a potential SELL short entry at 28.56, followed by a 2.03 trailing stop which can be tightened to 1.02 upon earning 2. LAND closed Tuesday at 29.72. Earnings Report Date: May 10, 2022. Beta: 0.62. Market-Cap: 1.023B. Optionable.
iStar Inc. (STAR: Real Estate/REIT-Diversified) - 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 STAR. A move to the upside will trigger our BUY entry at 25.65, while a drop to 24.04 will trigger our SELL short entry. Follow your position with a 1.61 trailing stop. Tighten the stop to 0.81 once you have a 2.26 gain. STAR closed Tuesday at 25.05. Earnings Report Date: Apr 27, 2022. Beta: 0.82. Market-Cap: 1.729B. Optionable.
TECHNOLOGY SECTOR
C3.ai, Inc. (AI: Technology/Information Technology Services) - BEARISH U-TURN. A quick look at the charts for AI show that despite the upward pressure caused by recent buying, the weekly downtrend is still in place. Tuesday's chart shows a potential return to that downtrend is in the works. This Bearish U-Turn set-up offers a potential entry point for a SHORT play. Set your trigger to SELL shares at 21.02, and follow your entry with a trailing stop of 2.02. Tighten the stop to 1.01 after reaching a 3.52 profit. AI ended the latest session at 22.06. Earnings Report Date: Mar 02, 2022. Beta: N/A. Market-Cap: 2.317B. Optionable.
Telesat Corporation (TSAT: Technology/Communication Equipment) - SQUEEZE PLAY. Tuesday's trading action forced TSAT'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 TSAT 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 21.41 if TSAT moves higher, and place your order to SELL short at 19.56 if price declines to that level. As usual follow your entry with a trailing stop, 1.85 should be sufficient. Reduce your stop to 0.93 on a 2.64 gain. TSAT closed Tuesday at 20.61. Earnings Report Date: Mar 07, 2022. Beta: N/A. Market-Cap: 1.019B. 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
---------------- ------- -------- ------- ------ -------
ePlus PLUS 11/9/2021 12/14/2021 2-for-1 Yes
NAPCO Security NSSC 12/8/2021 1/5/2022 2-for-1 Yes
AeroCentury Corp ACY 12/17/2021 1/10/2022 5-for-1 No
Merchants Bancorp MBIN 11/17/2021 1/18/2022 2-for-1 No
SMART Global Hold SGH 1/4/2022 2/2/2022 2-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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