Notes From The Editor

Want to improve your trading results? Most traders say that they do. If you're really serious about it then get ready to change the formula that is producing those results. This means making some important changes in your perceptions, your attitudes, and your actions.

There's an almost magical aspect in each of us that determines the outcome of our efforts. Finding that optimum place is one of the most rewarding journeys you'll ever make. Many traders discover along the way just how extremely valuable they are as a person. Others give up when faced with changing their own deeply rooted negative opinions of themselves.

This trek requires commitment, patience, and belief in the process. And like most worthwhile expeditions there are plenty of obstacles along the way to challenge even the most determined among us.

- Want To Make Big Bucks? First Learn How to make Small Change

One attribute of all great traders is the ability to adapt. That's just another way of saying they have learned how to recognize the changes they need to make, and have developed the ability to make those changes.

This sounds simple enough, but anyone who has ever attempted to overcome a bad habit knows how frustrating change can be. Fortunately the process of change is an excellent teacher that provides exactly what we need, exactly when we need it.

The secret to applying this insight is learning how to recognize what we really need, and then genuinely accept it ... even if it isn't what we necessarily want at that moment.

The first step toward improving your trading has nothing to do with money management, stocks, brokers, or strategies. Though most of our training at RightLine focuses on those areas, the process of change is much more personal.

Let's look at three of the most valuable assets you have ... your perspective, your attitudes, and your actions.

- Say Hello To Your Perspective ...

There's a strong tendency for each one of us to believe that the way WE view the world is the way everyone else views the world. We don't really think about it, we just assume it. This inclination to feel that our perspective is the only one that matters begins in early childhood. Once in place, it creates our results in life until we become aware of two important things:

1) We have our own unique perspective

2) We can change our perspective if we choose.

The Early Days ... Think about how a ten-month old child views the world. If they see something they want, they reach for it. If mom or dad says "no, that's not good for you," the baby ignores them and reaches for it anyway. Mom and Dad have experience, the baby doesn't.

After a certain amount of pain and suffering a young toddler begins to accept the parent's point of view. However since the parent perspective is just too complex for a child, the youngster views most of it as just unnecessary noise.

As a result, the child gets a mix of baby and parent perspective. Attitudes and actions are created around this perspective. Years later the young person has grown up to be an adult trader. However, deep down inside are many of the attitudes of the child.

It's often said, "the boy is the father of the man." The child has been around much longer than the adult trader. So guess who usually wins if there is a conflict between self-destructive babyish attitudes and a mature trader mind-set?

"Give it to me!"

The kid in us just wants the money ... or candy ... now! The mature trader says "hang on, there are some things we need to do in order to get the money." Let's hope that patience prevails, because putting too much attention on the money is one of the worst things a trader can do.

If you struggle with being consumed by thoughts of money, you can relax .. that's normal for a time. However, to be truly successful you'll have to change the way you think about wealth.

Most people begin their trading journey by focusing way too much on the potential financial gains. Though it's the most common way to start, it isn't the best way. You can bet that the carrot-on-the-stick holding our attention will always be just beyond our reach, UNTIL we change our perspective.

Bottom Line: The ability to choose our perspective is a powerful skill that opens doors to better opportunities. When we choose how we view things, we can choose the best view. It's like choosing the best seat at a sporting event instead of being stuck with whatever place we're given.

Enjoy the weekend,

- Thomas Sutton, Editor

Quick List

    
Stock     03/20     03/20      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

CBT       21.08     -1.59     22.70     19.40        3.30/1.65      4.60
MDC       20.16      0.97     21.26     17.87        3.39/1.70      3.28
SKX       21.14      0.08     23.18     20.35        2.83/1.42      3.00
WBS       20.20     -0.05     21.53     18.40        3.13/1.56      3.88

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

US stocks finished the Friday session lower as traders remain ultra-cautious about the continuing spread of the COVID-19 virus. Unprecedented measures have been taken to reduce the economic impact of the spreading virus as US cities and countries around the globe continue to ramp up efforts to combat the disease. Social distancing, lockdowns in Europe, as well as orders to stay at home in the states of California, New Jersey and New York have been implemented. The New York Stock Exchange will temporarily close its live trading floor after Friday's session and shift fully to electronic trading next week. Economic headlines featured a jump in existing home sales. Equites news included an announcement that Wal-Mart will be hiring 150,000 new employees to meet demand as a result of the coronavirus outbreak. Oil prices continued to fall as did treasury yields, the USD/dollar was near even, while gold moved higher.

                      Friday                 On The Week      
                  --------------------   --------------------
Dow                    19,174  -913.21        -4012    -17.3%
Nasdaq               6,879.52  -271.06      -995.36   -12.64%
S&P 500                 2,305  -104.47         -406   -14.98%

NYSE Volume                      9.14B                       
NYSE Advancers                    1316                       
NYSE Decliners                    1703                       

Nasdaq Volume                    5.26B                       
Nasdaq Advancers                  1301                       
Nasdaq Decliners                  2022                       

                                 New Highs/Lows

                   03/13  03/16  03/17  03/18  03/19  03/20
                 --------------------------------------------
NYSE New Highs         3      0      8     14      5      1
NYSE New Lows        644   2002   1324   2235   1051    299
Nasdaq New Highs       7     12     12     16     13      8
Nasdaq New Lows      833   1937   1106   1698    811    336
   

TRADER'S TIP: "Trade In Sync"

Always know YOUR preferred trading time frame, and then trade in sync with the chosen stock's related index (S&P 500, Dow, Nasdaq). This keeps you on the strong side of the market and on the path of least resistance. Most stocks follow the index, so it pays to know the trend of the index for the same time frame that you are trading.

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 - 2304.92 March 20, 2020

52-Week High: 3393.52
52-Week Low: 2280.52
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 2947.72
Resistance 2: 2665.26
Resistance 1: 2485.09
Pivot: 2382.80
Support 1: 2202.63
Support 2: 2100.34
Support 3: 1817.88


NASDAQ Composite - 6879.52 March 20, 2020

52-Week High: 9838.37
52-Week Low: 6686.36
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 8467.70
Resistance 2: 7731.86
Resistance 1: 7305.69
Pivot: 6996.02
Support 1: 6569.85
Support 2: 6260.18
Support 3: 5524.34
        
Dow Industrials - 19173.98 March 20, 2020

52-Week High: 29568.57
52-Week Low: 18917.46
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 25654.88
Resistance 2: 22804.06
Resistance 1: 20989.02
Pivot: 19953.24
Support 1: 18138.20
Support 2: 17102.42
Support 3: 14251.60
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, March 23, 2020:
23-Mar  8:30 am   Chicago Fed national activity

Tuesday, March 24, 2020:
24-Mar  9:45 am   Markit manufacturing PMI (flash)
24-Mar  9:45 am   Markit services PMI (flash)
24-Mar  10 am   New home sales

Wednesday, March 25, 2020:
25-Mar  8:30 am   Durable goods orders
25-Mar  8:30 am   Core capital goods orders

Thursday, March 26, 2020:
26-Mar  8:30 am   Weekly jobless claims
26-Mar  8:30 am   GDP
26-Mar  8:30 am   Advance trade in goods

Friday, March 27, 2020:
27-Mar  8:30 am   Personal income
27-Mar  8:30 am   Consumer spending
27-Mar  8:30 am   Core inflation
27-Mar  10 am   Consumer sentiment

For a chart of typical Up or Down market reactions to specific major US economic reports go to:
Economic Indicator Effects

TRADER'S TIP: "Always Plan For Three Possibilities"

As traders and investors we've learned not to spend too much time speculating on market direction, but to focus on careful planning and trade management. It's far better to prepare and have a specific plan ready for any possible price action than to become so devoted to our expectations that we fail to plan for the opposite of what we expect to happen.

The market, and our chosen stocks can really only do three simple things that affect price: (1) move up, (2) move down, or (3) stay the same. Unless our trading plan includes specific instructions on what we will do in the event any one of these three scenarios occur, the plan is incomplete.

Stocks Covered in This Issue

BASIC MATERIALS SECTOR

Cabot Corporation (CBT: Basic Materials/Specialty Chemicals) - SQUEEZE PLAY. The ticker for Friday's session shows CBT 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 22.70 and a SELL short trigger at 19.40. When CBT 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 3.30 trailing stop. Upon reaching a 4.60 profit, resize the stop to 1.65. Earnings Report Date: May 03, 2020. Beta: 1.52. Market-Cap: 1.195B. Optionable.

CONSUMER CYCLICAL SECTOR

M.D.C. Holdings, Inc. (MDC: Consumer Cyclical/Residential Construction) - 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. MDC found itself in this condition on Friday 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 21.26 and a SELL short trigger at 17.87. When MDC moves outside of Friday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 3.39 trailing stop. After you've got a 3.28 profit, tighten the stop to 1.70. MDC closed at 20.16 on Friday. Earnings Report Date: Apr 27, 2020. Beta: 0.96. Market-Cap: 1.271B. Optionable.

Skechers U.S.A., Inc. (SKX: Consumer Cyclical/Footwear & Accessories) - SQUEEZE PLAY. SKX shareholders know what it feels like to be squeezed. Friday'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. SKX closed Friday at 21.14. The plan is to enter in the right direction by placing a BUY trigger at 23.18 and a SELL short trigger at 20.35. Once SKX establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 2.83. After you've collected a 3.00 profit, tighten the stop to 1.42. Earnings Report Date: Apr 15, 2020. Beta: 0.90. Market-Cap: 3.317B. Optionable.

FINANCIAL SERVICES SECTOR

Webster Financial Corporation (WBS: Financial Services/Banks-Regional) - SQUEEZE PLAY. WBS traders on both sides of the fence are now locked in a head-to-head shootout. Friday'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 21.53 and a SELL short trigger at 18.40. When one of the orders is filled, cancel the remaining order and enter a 3.13 trailing stop. When you've reached a 3.88 paper profit, tighten the stop to 1.56. WBS closed at 20.20 on Friday. Earnings Report Date: Apr 15, 2020. Beta: 1.29. Market-Cap: 1.827B. 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.

Trader's Corner

Intra-day Traders: "Unlock The Secrets Of The Ticker Tape"

Many good traders lose money because of tape-reading incompetence. After all, the markets are little more than a set of numbers and their rate of change over time. Watching how these numbers interact offers traders a precise method for short-term prediction. It works because the flow of the tape reveals the crowd's intentions.

Technical analysis alone won't make you a profitable trader. You still need to learn the fine art of reading the tape. That could be a shock after all of the time you've spent studying the charts and probing the indicators. Of course you can continue to trade without the tape, but you do so at your own risk.

Charts often paint pretty pictures that trigger perfectly wrong signals, but the tape never lies. This goes back to the old admonition to trade what you see, not what you believe. Once you learn how to read the tape, it becomes much harder to get fooled by the whipsaws that are tossing other traders around.

The bottom line is that price and volume provide most of the information needed to play the markets successfully. The flow of buying and selling pressure reveals forces that remain hidden on the charts and in the news flow. It reflects the real activities of market players, as opposed to the smoke and mirrors being offered to the public.

Mastering the ticker tape is tough, because there's no definitive book or formula on the subject. It can only be learned through long periods of personal observation. But once you develop your tape-reading skills, you'll have a lifetime advantage over other traders, because you're accessing the hidden pulse of the markets.

Here are 15 tricks to learning the secrets of the ticker tape.

1. Start your education by memorizing key levels on your favorite charts. Then watch the tape closely when price approaches these pivot points. Record your observations and see if you can predict reversals before the crowd does.

2. Most tape signals help you anticipate the unexpected. For example, a bull trap is set when volume dries up for no reason after a breakout. The tape reader has the advantage, because this occurs long before a reversal shows up on the chart.

3. Study the tape with one eye on the clock, because swings tend to occur in predictable cycles. For example, watch for the "third bar reversal" about 11 minutes into the new day. Follow the tape in whatever direction price moves at the open, then see if momentum fades at the critical time.

4. Interpret the crowd's excitement level with an average volume reading next to the real-time volume on your watch list. Look for stocks that trade well above their average volume, because this is where the real action will be for the day.

5. Look for divergences between market sentiment and the tape flow. Are interested buyers holding up prices in the middle of a broad selloff? Or do the rally fires fizzle when everything else is moving higher?

6. Ask if price action matches your expectations. Look for buyers at breakout levels and sellers at breakdown levels. When they don't show up, stand aside or fade the move. Don't be patient. Contrarians step in immediately when the crowd doesn't appear at price pivots.

7. Market makers and specialists use knowledge of the order book to move markets in whatever direction yields the greatest volume. They routinely manipulate crowd emotions against order flow to shake weak hands out of positions.

8. Use Nasdaq Level II as a contrary indicator. Its purpose is to fool the public into making bad decisions. The best feedback from this tool comes when you see a few shares hold a market up or down for extended periods. It means someone important is hiding a large order.

9. Ignore the players who are lined up on either side of the spread, and track only the depth of their interest through many tiers. Pay attention to whoever steps in to fill the gap when the spread opens more than a few cents. That's the highly motivated player who will most likely move the market.

10. Get out of the way when NYSE specialists show big size on one side of the market. They intend to push price through many tiers until their orders gets filled. Alternatively, scalpers can trade with size until it works out of the system.

11. Use the opening price principle. The opening tick on the SP 500 futures remains a pivot number through the entire session. Draw a line across it to remind yourself where it is. Then use opening price breakouts, breakdowns and reversals as trading signals.

12. Closely watch the relationship between current price and the daily range. A stock that holds high within its range has hidden strength, while a stock that holds low has hidden weakness.

13. Interpreting the bid/ask spread requires a different skill-set than reading price. Keep in mind that most spread movement is pure noise. Watch for those few times when the spread widens and price surges farther on fewer shares. That's where directional signals will appear.

14. Follow the professionals in quiet times and the public in wild times. Insiders push price in the direction that sets up their accounts for the most gain, but they lose control of the tape when the public enters the market in force.

15. Keep one eye on market breadth and exchange tick, and the other on the ticker tape. Interrelationships between these forces generate convergence and divergence that predict market direction.

***************

This special guest article was written by Alan Farley, author of "The Master Swing Trader." To order a copy of Alan's book, go to this link: http://www.invest-store.com/rightline/.

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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