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March 3, 2020 - The RightLine Report
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NOTES FROM THE EDITOR
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Volatility can be a swing trader's best friend. The more the market gyrates, the more trade set-ups are created. And when stocks are moving faster, it takes less time for profitable set-ups to come to fruition.
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"QUICK LIST"
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Stock 03/03 03/03 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
LAKE 17.76 -0.34 18.89 3.36/1.68 1.84
NEO 29.94 0.46 28.70 2.48/1.24 2.24
ARNA 46.94 -0.23 44.80 4.05/2.02 3.68
TBPH 25.37 -0.05 26.36 24.28 2.08/1.04 2.60
DAVA 53.68 0.65 54.86 4.31/2.15 4.28
SITM 24.80 0.13 25.28 23.26 2.02/1.01 4.74
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 www.rightline.net/education/using-quicklist.html. In addition,always use the RightLine Risk Calculator before entering any position. For access to the Risk Calculator, go to www.RightLine.net and login to the Member's area. To learn more about controlling risk go to the RightLine Risk Control System at http://www.rightline.net/education/riskcontrol.html For a glossary of terms unique to The RightLine Report go to: http://www.rightline.net/education/glossary.html Problems? If you have any difficulty viewing this report, the link below will take you to a page where you will find a list of items that may affect normal viewing within your email client. http://www.rightline.net/home/reportprob.html Questions? Send us an email using our contact form at: http://www.rightline.net/home/contact.html
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MARKET SUMMARY
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After the markets rallied Monday on anticipation that the US Federal Reserve Bank would take action to calm fears over the impact of the coronavirus, stocks declined on Tuesday despite the Fed lowering the funds rate by 50 basis points. Treasuries responded with record low yields, as the 10-year rate fell below 1% for the first time in history. The 30-year yield also set new record lows and the USD/dollar was lower, while gold rallied and oil prices rose modestly. In equities, Target (TGT $106) announced mixed quarterly earnings numbers and offered disappointing EPS guidance. Shares finished lower. Mar 2, 2020 Mar 3, 2020
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Dow 26,703 +1,294 25,917 -785.91
Nasdaq 8,952.17 +384.80 8,684.09 -268.08
S&P 500 3,090 +136.01 3,003 -86.86
NYSE Volume 6.59B 6.43B
NYSE Advancers 2477 1031
NYSE Decliners 542 1947
Nasdaq Volume 4.31B 4.34B
Nasdaq Advancers 2407 938
Nasdaq Decliners 895 2334
New Highs/Lows
02/25 02/26 02/27 02/28 03/02 03/03
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NYSE New Highs 52 28 22 8 16 27
NYSE New Lows 367 352 696 938 175 171
Nasdaq New Highs 64 41 56 57 68 77
Nasdaq New Lows 244 244 568 726 171 180
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TRADER'S TIP:
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TRADER'S TIP: "Sector Timeframes" When trading with the flow of sector rotation, it's wise to keep a clear view of the strategic timeframe being used for a holding period. On a micro scale, money flows across the trading floor rapidly throughout the day, moving in and out of specific industries as the Street looks for direction. Some days the morning session strongly favors one sector, only to abandon that same industry by midday as more attractive opportunities arise. It's fast paced, and following that price movement intra-day is for short-term traders with real-time tools and considerable experience. Longer-term investors, on the other hand, are usually better off watching support and resistance areas for the index as a whole (such as watching the $SOX when monitoring semiconductors). A chart of the index reads much like individual stocks, and often sheds light on the group's future direction. The bottom line is that we can all follow sector rotation and take advantage of the opportunities generated, as long as we keep an appropriate timeframe. **************************
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: www.rightline.net/education/how_to_use_rlr_technical_analyst.html. S&P 500 - 3003.37 March 3, 2020
52-Week High: 3393.52
52-Week Low: 2722.27
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3831.22
Resistance 2: 3427.25
Resistance 1: 3190.73
Pivot: 3023.28
Support 1: 2786.76
Support 2: 2619.31
Support 3: 2215.35
http://www.rightline.net/rlch/030320SPX.jpg
NASDAQ Composite - 8684.09 March 3, 2020
52-Week High: 9838.37
52-Week Low: 7292.22
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 10835.57
Resistance 2: 9776.85
Resistance 1: 9172.11
Pivot: 8718.13
Support 1: 8113.39
Support 2: 7659.41
Support 3: 6600.69
Dow Industrials - 25917.41 March 3, 2020
52-Week High: 29568.57
52-Week Low: 24680.57
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 33608.27
Resistance 2: 29886.35
Resistance 1: 27647.85
Pivot: 26164.43
Support 1: 23925.93
Support 2: 22442.51
Support 3: 18720.59
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MARKET CALENDAR
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--ECONOMIC REPORTS AND EVENTS (all times are Eastern):
Monday, March 02, 2020: 02-Mar 9:45 am Markit manufacturing PMI 02-Mar 10 am ISM manufacturing index 02-Mar 10 am Construction spending Tuesday, March 03, 2020: 03-Mar Varies Motor vehicle sales Wednesday, March 04, 2020: 04-Mar 8:15 am ADP employment report 04-Mar 9:45 am Markit services PMI 04-Mar 10 am ISM nonmanufacturing index 04-Mar 2 pm Beige book Thursday, March 05, 2020: 05-Mar 8:30 am Weekly jobless claims 05-Mar 8:30 am Productivity 05-Mar 8:30 am Unit labor costs 05-Mar 10 am Factory orders Friday, March 06, 2020: 06-Mar 8:30 am Nonfarm payrolls 06-Mar 8:30 am Unemployment rate 06-Mar 8:30 am Average hourly earnings 06-Mar 8:30 am Trade deficit 06-Mar 10 am Wholesale inventories 06-Mar 3 pm Consumer credit For a chart of typical Up or Down market reactions to specific major US economic reports, go to "Economic Indicator Effects" at this link: http://www.rightline.net/education/economic.html
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TRADER'S TIP:
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TRADER'S TIP: "A Bane or Boon?" Volatility can be a double-edged sword when trading, but a few reminders can help keep things in perspective. First of all, recall that volatility is what creates trading opportunities, so as long as we focus on the short term, share prices that move dramatically should be welcomed. Secondly, risk management is a must when volatile conditions prevail. Make absolutely certain that exit strategies are pre-planned in order to avoid unwanted losses. And finally, use the Gap Open Strategy to help determine buy and sell points. You'll be glad you did! For more on the Gap Open Strategy go to: http://www.rightline.net/education/gapopen.html ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR Lakeland Industries, Inc. (LAKE: Consumer Cyclical/Apparel Manufacturing) - NEW HIGH DIP. LAKE's latest 52-week high and subsequent pullback has resulted in one of our favorite trade opportunities. An encounter with support on Tuesday sets the stage for a low-risk entry. Now watch for LAKE to move up to our BUY trigger at 18.89. Once triggered, place your market order. When the order is filled, follow with a trailing stop of 3.36. Tighten the stop to 1.68 when you have a 1.84-point gain. LAKE last closed at 17.76. Earnings Report Date: N/A. Beta: 0.23. Market-Cap: 142.201M. Optionable. HEALTHCARE SECTOR NeoGenomics, Inc. (NEO: Healthcare/Diagnostics & Research) - BEARISH U-TURN. Shares of NEO have experienced the pain of selling pressure for a while, yet a recent bounce has given shareholders some welcome yet perhaps temporary relief. On Tuesday the upward bounce ran into a brick wall at a Moving Average. NEO now appears ready to head lower again. A continuation of this bearish reversal would signal a retracement of the recent gains, so prepare for SHORT entries at 28.70, using a 2.48 stop. Tighten to 1.24 on a gain of 2.24. Tuesday's closing tick was 29.94. Earnings Report Date: Apr 27, 2020. Beta: 1.00. Market-Cap: 3.004B. Optionable. Arena Pharmaceuticals, Inc. (ARNA: Healthcare/Biotechnology) - BEARISH U-TURN. ARNA's weekly downtrend was recently interrupted by a bullish counter-trend rebound. Unfortunately for Bulls this uphill bounce reversed on Tuesday after running into resistance. ARNA is now at risk of dropping even lower. On a continued pullback, short entries can be taken at 44.80. Manage your position with a 4.05 stop, pulling it up to 2.02 on a gain of 3.68. ARNA closed at 46.94 on Tuesday. Earnings Report Date: May 05, 2020. Beta: 1.67. Market-Cap: 2.359B. Optionable. Theravance Biopharma, Inc. (TBPH: Healthcare/Biotechnology) - SQUEEZE PLAY. Tuesday's trading action forced TBPH's daily price range into an abnormally narrow state. This translates into opportunity; for the cyclical nature of price volatility is to shrink extensively, then swell rapidly as shares move in one direction or another. Instead of trying to predict the direction TBPH will take when price volatility begins to increase, we'll set both a BUY (long) and a SELL (short) trigger to get us into the right trade. Be ready to BUY shares at 26.36 if TBPH moves higher, and place your order to SELL short at 24.28 if price declines to that level. As usual follow your entry with a trailing stop, 2.08 should be sufficient. Reduce your stop to 1.04 on a 2.60 gain. TBPH closed Tuesday at 25.37. Earnings Report Date: N/A. Beta: 1.74. Market-Cap: 1.586B. Optionable. TECHNOLOGY SECTOR Endava plc (DAVA: Technology/Software-Infrastructure) - BULLISH BOUNCE. If you are looking for another bouncer with profits in mind, DAVA fits the bill. Shares have been in retreat-mode lately, but now this stock is in the process of bouncing from support. Currently priced at 53.68, plan to buy shares at 54.86 and use a 4.31 trailing stop. Tighten the stop to 2.15 on a 4.28 gain. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 2.951B. Not Optionable. SiTime Corporation (SITM: Technology/Semiconductors) - SQUEEZE PLAY. A look at SITM's daily chart shows what a price squeeze is all about. The constricted high-low daily trading range has produced a setup similar to a tightly coiled spring. Expect price to move sharply soon, with the direction yet to be determined. Let the upcoming market action resolve whether you will buy shares or sell short. To capture a move either way, place a BUY trigger at 25.28 and a SELL short trigger at 23.26. Once SITM shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 2.02 and tighten to 1.01 on a 4.74 gain. SITM closed Tuesday at 24.80. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 354.64M. Not 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: http://www.rightline.net/education/riskcontrol.html Use "Gap Adjusted Entries" to reset the Entry Price for stocks that gap beyond recommended entry levels. Link: http://www.rightline.net/education/gap-adjusted.html ***********************************
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 ---------------- ------- -------- ------- ------ ------- Currently there are no upcoming stock splits on the major US exchanges. For a closer look at the different stages of a Stock Split go to: http://www.rightline.net/splits/index.html/#split-stages ======================================================================
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