March 22, 2022 - The RightLine Report
Notes From The Editor
Volatility is a fact of life in the stock market. For traders holding at least a few days, it's important to keep stop losses wide enough to ride out the daily gyrations - while at the same time, keeping risk to a manageable minimum. It's a balancing act that's easier said than done.
The simple act of using a stop-loss puts you head and shoulders above many traders/investors. Placing a limit on how much you stand to lose on any given trade prevents a manageable loss from turning into a big hit.
Stop placement, however, isn't an automatic and thoughtless procedure. Good stops take into account both a trader's intended timeframe and the stock's expected volatility.
Traders who intend to remain in a trade for more than a day will need to be prepared to ride out more price movement. Similarly, more movement should be expected of a stock with heightened volatility.
Imagine buying a stock that's sitting at 35.00. A trader might choose to place a stop at 34.50, with the thought that it's a great way to limit downside risk. This might very well be the case - but only if the equity tends to be a slow mover. Banking, utility, and raw materials stocks often fall into this category.
On the other hand, you'd run the risk of being stopped out in a matter of hours if you're dealing with a more volatile mover - something like a tech stock that covers a wide price range throughout a session.
The "Beta" line you find at the end of every stock write-up gives some insight into how much price movement to expect. A Beta of 1.00 means that an equity tends to be as volatile as the S&P 500, while a reading of 2.00 would indicate twice as much volatility.
"Average True Range" (ATR) is another way to gauge choppiness. The indictor measures the average range that a stock traces in one session. Under most circumstances, a trade's initial stop should never be less that the ATR. This would be begging to get bounced out of a stock before it had a chance to perform.
Rightline set-ups are typically designated with a "swing trade" in mind. The holding period is expected to be anywhere from 3 days to 3 weeks, sometimes longer. Our analysts determine stops based on the anticipated movement that a stock might experience over that timeframe, taking into account both the Beta and ATR. Technical analysis also plays a key role here; analyzing a daily chart often reveals subtle tendencies that don't show up in the indicators.
Stop placement is anything but arbitrary. After all, how you get out is just as important as how you get in.
Here's to profits!
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 03/22 03/22 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
FLXS 21.20 0.30 21.55 19.9 1.65/0.83 2.4
VET 21.29 -0.12 21.86 20.17 1.69/0.85 1.88
ARNC 25.32 -0.46 24.46 2.05/1.03 3.36
MAN 94.52 -0.30 91.53 5.79/2.9 8.4
RIOT 20.75 1.12 21.68 19.6 2.08/1.04 3
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
Questions? Send us an email using our Contact Form.
Stocks Covered Today Stock Splits
Market Summary
US stocks rallied on Tuesday despite comments from Federal Reserve Bank Chairman Jerome Powell suggesting the Fed is prepared to fight inflation even if it means larger interest rate hikes. Light economic news included the Richmond Fed Manufacturing Index showing an unexpected surge in activity. In equties, shares of NIKE (NKE $133) were higher after the athletic shoe retailer topped earnings and revenue expectations on strong online sales. Treasuries, oil prices and gold were lower, the USD/dollar closed near even.
Mar 21, 2022 Mar 22, 2022
-------------------- --------------------
Dow 34,552.99 -201.94 34,807.46 254.47
Nasdaq 13,838.46 -55.38 14,108.82 270.36
S&P 500 4,461.18 -1.94 4,511.61 50.43
NYSE Volume 4.96B 4.78B
NYSE Advancers 1,314 2,032
NYSE Decliners 2,009 1,277
Nasdaq Volume 5.69B 5.39B
Nasdaq Advancers 1,761 3,379
Nasdaq Decliners 2,990 1,336
New Highs/Lows
03/15 03/16 03/17 03/18 03/21 03/22
--------------------------------------------
NYSE New Highs 27 44 52 59 118 82
NYSE New Lows 390 174 67 57 61 74
Nasdaq New Highs 28 34 57 60 67 82
Nasdaq New Lows 562 254 114 78 126 130
Stocks Covered Today Stock Splits
TRADER'S TIP: "When Your Indicators Contradict The Trend"
Due to their overly sensitive nature, some technical indicators will turn in one direction while the price trend remains in the other. A rule of thumb - whenever a price trend and indicators are in conflict, always go with price until the trend is broken.
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 - 4511.61 March 22, 2022
52-Week High: 4818.62
52-Week Low: 3853.50
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4970.77
Resistance 2: 4667.09
Resistance 1: 4565.10
Pivot: 4363.41
Support 1: 4261.42
Support 2: 4059.73
Support 3: 3756.05
NASDAQ Composite - 14108.82 March 22, 2022
52-Week High: 16212.23
52-Week Low: 12555.35
Daily Trend: UP
Weekly trend: DOWN
Dow Industrials - 34807.46 March 22, 2022
52-Week High: 36952.65
52-Week Low: 32071.41
Daily Trend: UP
Weekly trend: DOWN
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, March 21, 2022: 21-Mar 8 am Atlanta Fed President Raphael Bostic speaks 21-Mar 8:30 am Chicago Fed national activity index 21-Mar 12 noon Fed Chair Jerome Powell speaks at NABE conference Tuesday, March 22, 2022: 22-Mar None scheduled Wednesday, March 23, 2022: 23-Mar 10 am New home sales (SAAR) Thursday, March 24, 2022: 24-Mar 8:30 am Initial jobless claims 24-Mar 8:30 am Continuing jobless claims 24-Mar 8:30 am Durable goods orders 24-Mar 8:30 am Core capital goods orders 24-Mar 8:30 am Current account deficit 24-Mar 9:45 am Markit manufacturing PMI (flash) 24-Mar 9:45 am Markit services PMI (flash) Friday, March 25, 2022: 25-Mar 10 am UMich consumer sentiment index (final) 25-Mar 10 am 5-year inflation expectations (final) 25-Mar 10 am Pending home sales 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: "Four Cornerstones of Successful Trading"
The four primary objectives of a Trader are to:
1. Clearly define how you see the market.
2. Know under what circumstances you will enter it.
3. Determine in advance what has to happen for you to accept that your trade is or isn't working.
4. Know when to exit your position.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
Flexsteel Industries, Inc. (FLXS: Consumer Cyclical/Furnishings, Fixtures & Appliances) - SQUEEZE PLAY. Traders are feeling the pressure as FLXS's intra-day price range on Tuesday shrunk to the narrowest spread in over a week. The tension between buyers and sellers should provide enough pent-up engergy for a breakout move in the days ahead, so get ready to trade with the new trend. To achieve that, place a BUY entry at 21.55 and a SELL short entry at 19.9. FLXS's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.65 trailing stop. Tighten it to 0.83 after you get a 2.4 gain. FLXS closed Tuesday at 21.20. Earnings Report Date: Apr 25, 2022. Beta: 0.86. Market-Cap: 120.204M. Not Optionable.
ENERGY SECTOR
Vermilion Energy Inc. (VET: Energy/Oil & Gas E&P) - SQUEEZE PLAY. Tuesday's narrow price range has created a potentially profitable setup in VET, as sellers and buyers find themselves in a near tie for control of price direction. The next short-term trend could go either way, so prepare for a move out of the draw within the next day or so. Set a BUY entry at 21.86 and a SELL short entry at 20.17. Let VET's price action determine your long or short entry. Once the order is filled, place a 1.69 trailing stop, and tighten it to 0.85 upon getting a 1.88 gain. VET closed Tuesday at 21.29. Earnings Report Date: Apr 26, 2022. Beta: 3.54. Market-Cap: 3.455B. Optionable.
INDUSTRIALS SECTOR
Arconic Corporation (ARNC: Industrials/Metal Fabrication) - BEARISH U-TURN. ARNC's reaction after running into moving average resistance on Tuesday sets up this stock for a Bearish U-Turn trade. Having spent the past few days of moving higher, ARNC is now likely to revert back to its dominant weekly downtrend. Get ready to SELL short shares if ARNC drops to our entry at 24.46. Once in the trade, place a 2.05 trailing stop, which should be tightened to 1.03 after a 3.36 profit. ARNC closed Tuesday at 25.32. Earnings Report Date: May 02, 2022. Beta: N/A. Market-Cap: 2.659B. Optionable.
ManpowerGroup Inc. (MAN: Industrials/Staffing & Employment Services) - BEARISH U-TURN. During Tuesday's trading action, MAN encountered solid resistance near its 50 EMA (Exponential Moving Average) and looks ready for a possible reversal. The resulting Bearish U-Turn set-up is the basis for a potential SHORT play, so get ready to enter a position in MAN on a further decline to our trigger at 91.53. Set a 5.79 trailing stop, tightening to 2.9 on a 8.4 gain. MAN ended the latest session at 94.52. Earnings Report Date: Apr 18, 2022. Beta: 1.89. Market-Cap: 5.058B. Optionable.
TECHNOLOGY SECTOR
Riot Blockchain, Inc. (RIOT: Technology/Software-Application) - SQUEEZE PLAY. RIOT is stuck in a Bull/Bear deadlock. Fortunately for traders this impasse should be resolved soon, with one side or the other taking control. We want to be positioned for a potential quick move up or down, so get ready to catch this train with a BUY entry at 21.68 and a SELL short entry at 19.6. Once your trade is filled, enter a 2.08 trailing stop. Tighten it to 1.04 after a 3 gain. RIOT closed on Tuesday at 20.75. Earnings Report Date: May 16, 2022. Beta: 4.17. Market-Cap: 2.433B. 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
---------------- ------- -------- ------- ------ -------
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
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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