Notes From The Editor

The market is always changing, and any successful approach to trading needs to adapt with it. But what exactly is meant by "adapt?" A brief consideration of how Bull and Bear markets cycle back and forth will help to illustrate the point.

The most obvious component is the underlying trend. Many traders develop a "bias" based on whether they've had more success with long or short trades. For example, a trader who becomes profitable in a Bull market will usually be more likely to stick with long plays - even when the market shifts to a clear downtrend. Even though long set-ups are certainly possible in a Bear market, any slavish devotion to the wrong direction will quickly eat away at your trading account.

Volatility is another major change that requires adaptation. For example, at times in the past the Dow Industrials has moved an average of 200 points each day. That same number represented a much larger percentage whenever the Dow was at a significantly lower price. At different times volatility (as measured by ATR - Average True Range) makes up a larger or smaller percentage of the stock price. This impacts both the decision to enter a trade (more volatility may or may not be acceptable, depending on how aggressive you are), and your stop-loss placement once the trade is active.

Another change has to do with sector-specific action. For example, financial stocks have traditionally been considered a great choice for conservative traders; they typically were less volatile than the broader market, and had reliable business models that didn't produce too many downside surprises. However, this "reliable" sector shocked everyone in 2008 when it became apparent that a significant number of these companies were hiding dark secrets that resulted in financial ruin. Any trading approach built on prior assumptions was rendered utterly useless. On the other hand, those who spotted the shifting tides were well-positioned to profit from the new dynamic.

These are just three of the most important ongoing market changes that traders need to be aware of. Understand them and factor them into your strategy - your trading account will thank you!

With all that said, there are some constants and "unbreakable" rules with trading. These revolve around risk management. However, a basic guideline such as "always use a trailing stop" doesn't constitute a formula or system. The ultimate call on when to enter a set-up is always open to interpretation and analysis - and therein is found the edge for successful traders.

Here's to profits,

Kent Barton
Senior Analyst

Quick List

    
Stock     03/12     03/12      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

PLCE      33.87     -3.54     36.54     31.90        4.64/2.32      5.16
PGNY      20.07     -2.24     21.58     19.39        2.19/1.09      4.60
BDTX      20.54     -2.11     22.65     19.38        3.27/1.64      5.28

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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Market Summary

Stocks closed sharply lower on Thursday after a 15-minute trading halt was implementedfor the second time this week as uncertainty surrounding the coronavirus COVID-19 outbreak intensified. Adding to the concerns, on Wednesday the World Health Organization (WHO) declared the outbreak a pandemic and President Donald Trump announced travel restrictions from Europe. The hard selling occurred despite a mid-session rally following an announcement from the Federal Reserve of new funding actions to help ease the strained capital markets. In economic news, unemployment claims dipped unexpectedly and wholesale price inflation was lower than predicted. Oil and gold declined, treasury yields were mixed, and the USD/dollar finished higher.

                        Mar 11, 2020           Mar 12, 2020   
                  --------------------   --------------------
Dow                    23,553   -1,465        21,201   -2,353
Nasdaq               7,952.05  -392.20         7,202  -750.25
S&P 500                 2,741  -140.85         2,481  -260.74

NYSE Volume                      7.42B                  8.98B
NYSE Advancers                     169                     76
NYSE Decliners                    2858                   2990

Nasdaq Volume                    4.29B                  5.23B
Nasdaq Advancers                   359                    183
Nasdaq Decliners                  2958                   3220

                                 New Highs/Lows

                   03/05  03/06  03/09  03/10  03/11  03/12
                 --------------------------------------------
NYSE New Highs        38     28     15     13      6      2
NYSE New Lows        389    714   1620    688   1129   2377
Nasdaq New Highs      57     62     53     16      7     10
Nasdaq New Lows      373    623   1406    704   1034   2097
   

TRADER'S TIP: "Market Direction & Economic Reports"

For a quick and easy table that shows what price movement to expect from just about any economic report, go to: http://www.rightline.net/education/economic.html.

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".

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, March 09, 2020:
09-Mar          None scheduled

Tuesday, March 10, 2020:
10-Mar   6 am   NFIB small business index

Wednesday, March 11, 2020:
11-Mar  8:30 am   Consumer price index
11-Mar  8:30 am   Core CPI
11-Mar   2 pm   Federal budget

Thursday, March 12, 2020:
12-Mar  8:30 am   Weekly jobless claims
12-Mar  8:30 am   Producer price index
12-Mar  12 noon   Financial accounts of the U.S.

Friday, March 13, 2020:
13-Mar  8:30 am   Import price index
13-Mar  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

TRADER'S TIP: "Learning To Fly"

Low-cost access to the markets via the Internet has without a doubt been the biggest single change to ever impact the stock market. In fact, it has literally revolutionized the entire industry. But cheap and fast trading tools don't produce successful traders and investors any more than cheap and fast planes produce good pilots. Just like learning to fly, learning to maneuver through the market profitably takes time, training, and sincere effort.

Stocks Covered in This Issue

CONSUMER CYCLICAL SECTOR

The Children's Place, Inc. (PLCE: Consumer Cyclical/Apparel Retail) - SQUEEZE PLAY. Thursday's trading session left PLCE 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 36.54 and your SELL short trigger at 31.90. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 4.64 trailing stop. Once you have a 5.16 profit, reduce the stop to 2.32. Earnings Report Date: Mar 18, 2020. Beta: 0.79. Market-Cap: 510.245M. Optionable.

HEALTHCARE SECTOR

Progyny, Inc. (PGNY: Healthcare/Health Information Services) - SQUEEZE PLAY. PGNY shareholders know what it feels like to be squeezed. Thursday's slim price range reveals uncertainty on both sides of the table, a situation which often resolves itself by either Bears or Bulls quickly gaining a clear advantage. The question is "who will win?" Near-term market action tell us whether we should sell short or we should buy shares instead. PGNY closed Thursday at 20.07. The plan is to enter in the right direction by placing a BUY trigger at 21.58 and a SELL short trigger at 19.39. Once PGNY establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 2.19. After you've collected a 4.60 profit, tighten the stop to 1.09. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.703B. Optionable.

Black Diamond Therapeutics, Inc. (BDTX: Healthcare/Biotechnology) - SQUEEZE PLAY. The ticker for Thursday's session shows BDTX 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 22.65 and a SELL short trigger at 19.38. When BDTX 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 3.27 trailing stop. Upon reaching a 5.28 profit, resize the stop to 1.64. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 737.606M. 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.

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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