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March 12, 2022 - The RightLine Report
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NOTES FROM THE EDITOR
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Every trader and investor should learn to recognize price trends. Trend identification is a relatively simple yet very valuable skill you can use to enhance your trading profitability.
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"QUICK LIST"
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Stock 03/11 03/11 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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NCMGY 19.34 -0.63 19.94 1.84/0.92 1.24
ASA 22.88 -0.22 23.3 1.45/0.73 1.48
VVI 33.60 -0.12 32.31 3.63/1.82 3.1
IAA 35.67 0.71 36.5 33.88 2.62/1.31 4.42
FOUR 49.77 -0.68 48.24 4.88/2.44 7.04
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" at https://prorightline.com/index.php/rightline-report-quick-list/. In addition,always use the RightLine Risk Calculator before entering any position. For access to the Risk Calculator, go to https://prorightline.com/index.php/risk-calculator/. To learn more about controlling risk go to the RightLine Risk Control System at https://prorightline.com/index.php/rightline-risk-control-system/ For a glossary of terms unique to The RightLine Report go to: https://prorightline.com/index.php/glossary/ Questions? Send us an email using our contact form at: https://prorightline.com/index.php/contact-us/
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MARKET SUMMARY
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US stock market was lower on Friday, chalking up a week of losses as early session gains evaporated on news that Russia has intensified its invasion of Ukraine. On the earnings front, Oracle Corporation (ORCL $78) fell short of profit forecasts but did meet analysts' expected revenue growth compared to the same quarter last year. In economic news, the preliminary University of Michigan Consumer Sentiment Index for March showed that sentiment has dropped more than expected and the 1-year inflation expectation is the highest since 1981. The USD/dollar and oil prices moved higher, treasuries were mixed and gold finished lower. Friday On The Week
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Dow 32,944.19 -229.88 -670.61 -1.99%
Nasdaq 12,843.81 -286.15 -469.63 -3.53%
S&P 500 4,204.31 -55.21 -124.56 -2.88%
NYSE Volume 5.01B
NYSE Advancers 902
NYSE Decliners 2,411
Nasdaq Volume 5.3B
Nasdaq Advancers 1,294
Nasdaq Decliners 3,370
New Highs/Lows
03/04 03/07 03/08 03/09 03/10 03/11
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NYSE New Highs 137 186 108 18 44 58
NYSE New Lows 275 486 500 97 241 338
Nasdaq New Highs 64 75 52 39 26 51
Nasdaq New Lows 542 805 793 167 313 446
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TRADER'S TIP:
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TRADER'S TIP: "More on Trading Frequency" "If we flip a coin only ten times our odds of having 50% heads and 50% tails are not very good. However if we flip the coin one thousand times we are likely to come much closer to obtaining 50% heads and 50% tails. The same logic applies to our real-time trading. If we have a large sample of real trades then our results should come closer to our expectations than if we only have one or two trades. The active system will approach our expectations much quicker than the system that trades infrequently. If we have 50 or more trades per month with a good system we might reasonably expect to be profitable every month. However if we have a system that is only producing two or three trades per month then our monthly results will less predictable and inconsistent. The infrequent trading system might be expected to produce a profit every year but it would not be realistic to expect it to show a profit every month because the sample size in a month will be very mall." ~Chuck LeBeau, Trader and author **************************
THE TECHNICAL ANALYST
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This section contains important technical data for the three major market averages -- the S&P 500, the Nasdaq Comp Index, and the Dow Industrial Average. For guidance on how to use this information, go to: https://prorightline.com/index.php/technical-analyst-section-rightline-report/ S&P 500 - 4204.31 March 11, 2022 52-Week High: 4818.62 52-Week Low: 3853.50 Daily Trend: DOWN Weekly trend: DOWN Weekly Pivot Levels Resistance 3: 4568.01 Resistance 2: 4398.87 Resistance 1: 4301.59 Pivot: 4229.73 Support 1: 4132.45 Support 2: 4060.59 Support 3: 3891.45 https://www.prorightline.com/rlch/031122SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, March 14, 2022: 14-Mar None scheduled Tuesday, March 15, 2022: 15-Mar 8:30 am Producer price index, final demand 15-Mar 8:30 am Empire state manufacturing index Wednesday, March 16, 2022: 16-Mar 8:30 am Retail sales 16-Mar 8:30 am Retail sales excluding motor vehicles 16-Mar 8:30 am Import price index 16-Mar 8:30 am Import price index excluding fuels 16-Mar 10 am NAHB home builders' index 16-Mar 10 am Business inventories (revision) 16-Mar 2 pm FOMC announcement on fed funds rate 16-Mar 2:30 pm Fed Chair Jerome Powell news conference Thursday, March 17, 2022: 17-Mar 8:30 am Initial jobless claims 17-Mar 8:30 am Continuing jobless claims 17-Mar 8:30 am Building permits (SAAR) 17-Mar 8:30 am Housing starts (SAAR) 17-Mar 8:30 am Philadelphia Fed manufacturing survey 17-Mar 9:15 am Industrial production index 17-Mar 9:15 am Capacity utilization rate Friday, March 18, 2022: 18-Mar 10 am Existing home sales (SAAR) 18-Mar 10 am Index of leading economic indicators For a chart of typical Up or Down market reactions to specific major US economic reports, go to "Economic Indicator Effects" at this link: https://prorightline.com/index.php/economic-indicator-effects/
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TRADER'S TIP:
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TRADER'S TIP: "Weekly Volume" Trading volume either confirms price movement or brings it into question. It's considered very bullish when a stock rises on higher than average volume, while a similar move on lower than average volume is less bullish. It's always a good idea to look at a weekly chart to confirm rising volume. You can have five sessions of moderately higher volume on a daily chart without seeing anything significant. But put it on a weekly chart and suddenly it stands out in stark contrast. When all of those slightly higher volume days are added together, they show a real spike. Rising volume often means that institutions are buying, and that's the kind of buying that drives stocks skyward. ***********************************
STOCKS COVERED IN THIS ISSUE
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BASIC MATERIALS SECTOR Newcrest Mining Limited (NCMGY: Basic Materials/Gold) - 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. NCMGY's behavior on Friday could very well be a sign that a new bounce is underway. Place a BUY trigger at 19.94. In the event your trigger is met, also place a 1.84 trailing stop which can be trimmed down to 0.92 when you have a 1.24 profit. NCMGY closed Friday at 19.34. Earnings Report Date: N/A. Beta: 0.44. Market-Cap: 16.036B. Not Optionable. FINANCIAL SERVICES SECTOR ASA Gold and Precious Metals Limited (ASA: Financial Services/Asset Management) - 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 ASA which met our setup criteria on Friday. The BUY trigger for this trade is at 23.3, and the trailing stop is sized at 1.45. Resize the stop to 0.73 upon collecting a 1.48 point gain. ASA closed Friday at 22.88. Earnings Report Date: N/A. Beta: 0.96. Market-Cap: 441.353M. Optionable. INDUSTRIALS SECTOR Viad Corp (VVI: Industrials/Specialty Business Services) - NEW LOW RISE. New lows always indicate a stock is doing exceptionally bad. This is the case with VVI, which has moved up a bit after setting a new 52-week low just a few days ago. Friday's reaction to Moving Average resistance tells us this stock may be ready to move back down to new low territory once again. VVI now sits at 33.60, and we're anticipating a move down to our SELL trigger at 32.31. Be ready to sell shares short at that point and follow your entry with a 3.63 trailing stop. Tighten the stop to 1.82 on a 3.1 gain. Earnings Report Date: May 02, 2022. Beta: 1.90. Market-Cap: 690.75M. Optionable. IAA, Inc. (IAA: Industrials/Specialty Business Services) - SQUEEZE PLAY. IAA is caught in a dilemma. The stock's compressed price range on Friday 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. IAA is now at 35.67. We can capture price action either way by placing a BUY trigger at 36.5 and a SELL short trigger at 33.88. Once IAA 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 2.62. When you acquire a 4.42 profit, tighten the stop to 1.31. Earnings Report Date: May 02, 2022. Beta: 1.70. Market-Cap: 4.794B. Optionable. TECHNOLOGY SECTOR Shift4 Payments, Inc. (FOUR: Technology/Software-Infrastructure) - NEW LOW RISE. Another troubled bottom dweller, FOUR just recently set a new 12-month low. Having bounced since then, FOUR's bearish response to an encounter with moving average support on Friday shows that the stock may be ready for another move lower. Now at 49.77, an downward push to 48.24 will signal a SELL short entry. Once in the trade, place a 4.88 trailing stop which can be tightened to 2.44 after you've gained 7.04. Earnings Report Date: May 04, 2022. Beta: N/A. Market-Cap: 2.838B. Optionable. IMPORTANT: Before entering any recommended positions, always use the RightLine "Risk Control System" to determine the level of acceptable risk and the maximum number of shares to buy. Link: https://prorightline.com/index.php/rightline-risk-control-system/ Use "Gap Adjusted Entries" to reset the Entry Price for stocks that gap beyond recommended entry levels. Link: https://prorightline.com/index.php/gap-adjusted-entries-increase-profits/ ***********************************
STOCK SPLIT SUMMARY
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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 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 ---------------- ------- -------- ------- ------ ------- ACM Research ACMR 3/4/2022 3/24/2022 3-for-1 Yes PAM Transport PTSI 3/9/2022 3/30/2022 2-for-1 Yes Amazon AMZN 3/9/2022 6/6/2022 20-for-1 Yes For a closer look at the different stages of a Stock Split go to: https://prorightline.com/index.php/trading-stock-splits-stages/ **********************************
TRADER'S CORNER
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"Moving Average Crossovers May Not Be The Best Entry Signals" There are many ways of using moving averages to trade but by far the most common method is to trade when a short-term moving average crosses over a longer term moving average. For example, if the 10-day MA crosses above the 30-day MA we typically assume that we have a new buy signal. Let's stop for a minute and think about what exactly is occurring at the point of a crossover. When the 10-day MA and the 30-day MA are at the same price, the trend is not nearly as clear as it should be. What we are really observing at the crossover point is that the average of the last 30 prices is exactly the same as the average of the last 10 prices. If we are looking for trends to trade, this equal relationship of the two moving averages is not a reliable or logical indication of a trend. In an upward trending market the average prices over the last 10 days should be much higher than the average of the last 30 days. By implementing new trades at crossover points we are limiting our trading to points that may not clearly reflect what we should be doing. For best results in a trend-following system we want to be trading when the trend is clear and reliable; not when the trend is confused and questionable. Instead of trading at crossovers we should be implementing our trades when the moving averages are parallel or when the short-term moving average is moving farther away from the longer-term moving average. Perhaps the short term MA should remain a minimum of some units of Average True Range above the longer term MA for several days. I believe that this procedure would give us more reliable and more frequent entry signals in the direction of the prevailing trend, which is exactly what we want. To identify the most reliable trends we want to see the slopes of various moving averages all moving steadily in the same direction and not crossing back and forth. Take a look at a chart of any market with a strong trend. You will see that the moving averages are not crossing back and forth repeatedly. They will be moving in the same general direction in a more or less parallel fashion. Now look at a chart of a non-trending market. As this market moves sideways the moving averages will be crossing back and forth very frequently. Look at the implications of this simple examination of the charts. If we are trading the crossovers we will be trading most frequently in non-trending markets and trading most infrequently in strongly trending markets. Is that what we want? No, it's obviously not what we want. We want just the opposite. We want frequent entry opportunities in trending markets and we want to avoid as many trades as possible in non-trending markets. ~ Chuck Lebeau ********************* Chuck LeBeau is the co-author of the book "Computer Analysis of the Futures Market". He has also published an instructional DVD set entitled "Precise Exits and Entries." ======================================================================
Best of luck and have a Great Week!
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The RightLine Report is an information service for investors and traders. It is not a solicitation nor a recommendation or offer to buy or sell securities. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. The publishers of The RightLine Report are not brokers or financial advisors, and are not acting in any way to influence the purchase or sale of any security. Stock picks, entry points and exit points should be considered an information resource to assist the trader in developing a trading plan and it is the sole responsibility of the reader to conduct his or her own due diligence before executing a trade. Trading securities should be considered speculative with a high degree of volatility and risk. The publishers of The RightLine Report recommend that anyone trading securities should do so with caution, exercise prudent trading discipline and have a personal risk management strategy in place before doing so. It is possible at this or some subsequent date, the publishers and staff of The Pro Right Line Corp. may own, buy or sell securities presented. The Pro Right Line Corp. is not a financial advisory service. Its publishers, owners or investors, are not liable for any losses or damages, monetary or otherwise, that result from the content of The RightLine Report. Past RightLine Report performance may not be indicative of future performance. All subscriptions and/or use of the RightLine.net website are subject to RightLine's "Terms of Use" and "Subscriber Terms & Conditions" which are posted at www.rightline.net. Any REDISTRIBUTION of the above information, without The RightLine's written consent, is STRICTLY PROHIBITED. Copyright / The Pro Right Line Corporation - All Rights Reserved To Unsubscribe, send an email to cs@prorightline.com or call 800-737-4518. |