March 31, 2020 - The RightLine Report
Notes From The Editor
Two Rules for Investors:
Rule Number One:
Make certain that you know exactly when and at what price you will get out of a stock or mutual fund before you get into it. If you find yourself in a tough situation because you didn't follow this rule, then it's time for a gut check. Take each of your holdings one at a time and ask yourself this question: "If I didn't already own this, would I buy it right now at this price?" If the answer is NO, then you should consider getting out of the position and putting the money to work into another stock or mutual fund that you WOULD buy right now.
Rule Number Two:
Never let a small, manageable loss turn into a large one. The typical gateway to violating this rule is to hold onto a losing position for too long.
Violations of the second rule almost always occur as a result of ignoring the first one. Both of these rules are very simple to follow; yet few people actually do it. Why? Because although most of us know what to do intellectually, we tend to let our emotions get in the way. This is why we all need at least one honest, experienced mentor.
If you're holding onto losing positions, call your broker and set up a meeting to talk about the Two Rules. Don't wait, do it right away. Making intelligent choices won't immediately restore previous losses, but it will stop them from getting worse AND prevent the situation from ever reoccurring.
With careful planning and sufficient risk control measures, the current market conditions are ideal for trading and investing. If you are new to the markets, or have been sitting on the sidelines, consider applying these two simple rules to protect your capital and accumulate profits at the same time.
Trade well,
- Thomas Sutton, Editor
Stocks Covered Today...Stock Splits...
Quick List
Stock 03/31 03/31 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
LKQ 20.51 -0.49 21.73 19.68 2.05/1.02 3.24
LZB 20.55 0.06 20.90 19.16 1.74/0.87 3.64
AMK 20.39 0.20 20.81 19.15 1.66/0.83 3.74
MAIN 20.51 -0.96 22.62 19.84 2.78/1.39 5.12
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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Stocks Covered Today...Stock Splits...
Market Summary
US stocks closed lower on Tuesday as the ongoing uncertainty regarding COVID-19 continues to keep the market off balance. On the plus side is the soon to be released $2.2 trillion aid package along with the Federal Reserve's drastic monetary policy measures, along with signs of hope from the healthcare sector regarding expedited detection and treatment of the virus. In economic headlines, home prices were up in January, while more recent reports show Consumer Confidence and regional manufacturing declined by smaller amounts than predicted. Gold and the USD/dollar finished lower, treasuury yields were mixed and oil prices crept higher.
Mar 30, 2020 Mar 31, 2020
-------------------- --------------------
Dow 22,327 +690.70 21,917 -410.32
Nasdaq 7,774.15 +271.77 7,700.10 -74.05
S&P 500 2,627 +85.18 2,585 -42.06
NYSE Volume 5.75B 6.68B
NYSE Advancers 1802 1326
NYSE Decliners 1198 1660
Nasdaq Volume 3.82B 4.12B
Nasdaq Advancers 2048 1620
Nasdaq Decliners 1217 1667
New Highs/Lows
03/24 03/25 03/26 03/27 03/30 03/31
--------------------------------------------
NYSE New Highs 1 3 4 3 5 5
NYSE New Lows 87 54 21 43 59 29
Nasdaq New Highs 8 5 5 12 15 18
Nasdaq New Lows 115 72 31 46 41 46
Stocks Covered Today...Stock Splits...
TRADER'S TIP: "EMAs, SMAs, or DMAs?"
Did you know that EMAs - Exponential Moving Averages - are calculated based on "yesterday's" EMA? That's where the "exponential" part comes in. This means that if you're looking at a 200 Daily EMA based on 500 days of data vs. 2000 days of data, the results will be different. This explains why various charts programs display differing EMAs for the same stock.
Though this calculation also affects the shorter moving averages like the 22 and 50 DMA (Daily Moving Average), it is not as dramatic as with the 200 EMA. For daily charts the most widely used 200 MA is the 200 SMA (Simple Moving Average). However, in recent years some traders have begun using 200 EMAs because of the default settings in the charting packages. It pays to know which you are viewing.
For the record, at RightLine we use EMAs for all moving averages except the 200 DMA, for which we use the SMA. One powerful feature found in RightLine and some other charting programs is the ability to change the time frame referenced on the chart. While this is a very helpful feature, be aware that changing this setting will affect any displayed EMAs (Exponential Moving Average) lines.
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 - 2584.59 March 31, 2020
52-Week High: 3393.52
52-Week Low: 2191.86
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 3347.08
Resistance 2: 2901.93
Resistance 1: 2721.70
Pivot: 2456.78
Support 1: 2276.55
Support 2: 2011.63
Support 3: 1566.48
NASDAQ Composite - 7700.10 March 31, 2020
52-Week High: 9838.37
52-Week Low: 6631.42
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 9671.33
Resistance 2: 8492.93
Resistance 1: 7997.66
Pivot: 7314.54
Support 1: 6819.26
Support 2: 6136.14
Support 3: 4957.74
Dow Industrials - 21917.16 March 31, 2020
52-Week High: 29568.57
52-Week Low: 18213.65
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 29577.98
Resistance 2: 25196.57
Resistance 1: 23416.67
Pivot: 20815.16
Support 1: 19035.26
Support 2: 16433.75
Support 3: 12052.34
Stocks Covered Today...Stock Splits...
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, March 30, 2020: 30-Mar 10 am Pending home sales index Tuesday, March 31, 2020: 31-Mar 9 am Case-Shiller home price index 31-Mar 9:45 am Chicago PMI 31-Mar 10 am Consumer confidence index Wednesday, April 01, 2020: 01-Apr 8:15 am ADP employment report 01-Apr 9:45 am Markit manufacturing PMI 01-Apr 10 am ISM manufacturing index 01-Apr 10 am Construction spending 01-Apr Varies Motor vehicle sales 01-Apr Thursday, April 02, 2020: 02-Apr 8:30 am Weekly jobless claims 02-Apr 8:30 am Trade deficit 02-Apr 10 am Factory orders Friday, April 3, 2020: 03-Apr 8:30 am Nonfarm payrolls 03-Apr 8:30 am Unemployment rate 03-Apr 8:30 am Average hourly earnings 03-Apr 9:45 am Markit services PMI 03-Apr 10 am ISM nonmanufacturing 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: "Sweet Emotion"
Studies show that most investors buy and sell on emotion instead of logic. For example most people will sell their winning positions to make up for losers, then hold the losers way too long in hopes they will recover. This is the opposite of what should be done, for the winners tend to keep on winning, while losers usually keep losing. The most common management strategy used by successful traders is pretty simple. Get rid of losers quickly, and keep winners profitable with a stop order based exit strategy.
Stocks Covered in This Issue
CONSUMER CYCLICAL SECTOR
LKQ Corporation (LKQ: Consumer Cyclical/Auto Parts) - 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. LKQ found itself in this condition on Tuesday 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 21.73 and a SELL short trigger at 19.68. When LKQ moves outside of Tuesday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 2.05 trailing stop. After you've got a 3.24 profit, tighten the stop to 1.02. LKQ closed at 20.51 on Tuesday. Earnings Report Date: Apr 22, 2020. Beta: 1.38. Market-Cap: 6.311B. Optionable.
La-Z-Boy Incorporated (LZB: Consumer Cyclical/Furnishings, Fixtures & Appliances) - SQUEEZE PLAY. The ticker for Tuesday's session shows LZB 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 20.90 and a SELL short trigger at 19.16. When LZB 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 1.74 trailing stop. Upon reaching a 3.64 profit, resize the stop to 0.87. Earnings Report Date: Jun 15, 2020. Beta: 0.80. Market-Cap: 945.972M. Optionable.
FINANCIAL SERVICES SECTOR
AssetMark Financial Holdings, Inc. (AMK: Financial Services/Asset Management) - SQUEEZE PLAY. AMK traders on both sides of the fence are now locked in a head-to-head shootout. Tuesday'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 20.81 and a SELL short trigger at 19.15. When one of the orders is filled, cancel the remaining order and enter a 1.66 trailing stop. When you've reached a 3.74 paper profit, tighten the stop to 0.83. AMK closed at 20.39 on Tuesday. Earnings Report Date: May 17, 2020. Beta: N/A. Market-Cap: 1.476B. Not Optionable.
Main Street Capital Corporation (MAIN: Financial Services/Asset Management) - SQUEEZE PLAY. MAIN shareholders know what it feels like to be squeezed. Tuesday'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. MAIN closed Tuesday at 20.51. The plan is to enter in the right direction by placing a BUY trigger at 22.62 and a SELL short trigger at 19.84. Once MAIN establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 2.78. After you've collected a 5.12 profit, tighten the stop to 1.39. Earnings Report Date: May 06, 2020. Beta: 0.86. Market-Cap: 1.321B. 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
---------------- ------- -------- ------- ------ -------
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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