March 8, 2022 - The RightLine Report
Notes From The Editor
The traditional broker/client relationship was transformed to a large degree by the internet, which now gives traders and investors direct control over their accounts. Taking out the middleman was a major development for active traders. High-profile scandals involving investment-banking relationships also helped rid the industry of some very blatant conflicts of interest.
But brokerages still thrive on commissions, even if they don't have a specific person dealing with every client. Anyone who tunes in to financial media is constantly bombarded with suggestions to trade, trade, and trade some more. One of my favorites is the commercial that makes it appear as though someone is trading from beyond the grave. Now that's commitment!
Lower commissions and the ability to buy or sell stocks with the click of a button have given traders an advantage they didn't have before. Unfortunately, it also widens the potential trap of over-trading.
Knowing when not to trade is just as important as knowing when to place an order. Those low commissions make it that much easier to justify a trade, even if the set-up is questionable. This can be problematic when a trader confronts a losing streak. It seems deceptively easy to make up lost ground when there's not much cost to entering an order.
To guard against this threat, many successful traders use a simple rule of thumb: temporarily walk away from the computer after a certain amount of losing trades. The market isn't going anywhere, and there's nothing wrong with stepping back and watching the action for a while. Observing as a neutral spectator rather than a participant, you also might notice things that you might've missed had you been actively trading.
Most traders occasionally deal with the feeling of being mentally overwhelmed. The brain must not only sort through a flood of information (price action, technical details, news stories, and so on), but also has to contend with human emotion. With so much going on, it's absolutely essential to clear your mind occasionally throughout the trading day: Take a lunch break. E-mail a friend. Take a nap.
Exercise is helpful as well. Some traders I know like to go for a walk during lunch, while others get in a full workout before the trading day starts. Whatever the approach, exercise is beneficial because it produces mood-lifting endorphins and helps you focus on something other than the market.
It all boils down to not letting the market control your actions. Today's low commissions and direct order placement make it all too easy to turn frustration into over-trading - but with a little self-control and relaxation, you'll have no trouble avoiding that common trap.
Kent Barton
Senior Analyst
Stocks Covered Today Stock Splits
Quick List
Stock 03/08 03/08 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
TMST 17.77 -0.67 18.61 2.13/1.07 1.28
BILI 22.70 -0.72 23.71 21.13 2.58/1.29 4.74
MMYT 21.01 0.55 21.69 19.47 2.22/1.11 2.48
BMY 67.74 -1.03 69.31 4.03/2.02 2.44
MRUS 25.30 -0.38 26.58 24.45 2.13/1.07 2.72
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
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Stocks Covered Today Stock Splits
Market Summary
US stocks were lower on Tuesday as traders continued to be cautious during escalating global concerns surrounding the ongoing conflict between Ukraine and Russia. The economic calendar added to the uneasiness, with small business optimism declining largely due to inflation wories, and the USA trade deficit rising more than expected. In equity headlines, shares of Dick's Sporting Goods (DKS $102) were up after the retailer topped earnings forecasts on strong sales, while Google parent company Alphabet (GOOGL $2,542) announced they are buying cybersecurity company Mandiant (MNDT $22) in a $5.4 Billion cash deal. The USD/dollar and treasuries declined, gold and oil moved higher.
Mar 7, 2022 Mar 8, 2022
-------------------- --------------------
Dow 32,817.38 -797.42 32,632.64 -184.74
Nasdaq 12,830.96 -482.48 12,795.55 -35.41
S&P 500 4,201.09 -127.78 4,170.70 -30.39
NYSE Volume 6.96B 7.26B
NYSE Advancers 710 1,702
NYSE Decliners 2,698 1,607
Nasdaq Volume 6.19B 6.66B
Nasdaq Advancers 1,214 2,458
Nasdaq Decliners 3,513 2,266
New Highs/Lows
03/01 03/02 03/03 03/04 03/07 03/08
--------------------------------------------
NYSE New Highs 109 127 104 137 186 108
NYSE New Lows 133 99 126 275 486 500
Nasdaq New Highs 67 77 59 64 75 52
Nasdaq New Lows 229 215 315 542 805 793
Stocks Covered Today Stock Splits
TRADER'S TIP: "Chutes and Ladders"
All trends are not created equal. Up moves tend to take longer than down moves with similar ranges. In other words, even when the distance in price movement is the same, declines usually occur faster than rallies.
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 - 4170.70 March 8, 2022
52-Week High: 4818.62
52-Week Low: 3851.93
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4616.20
Resistance 2: 4478.96
Resistance 1: 4403.91
Pivot: 4341.72
Support 1: 4266.67
Support 2: 4204.49
Support 3: 4067.25
NASDAQ Composite - 12795.55 March 8, 2022
52-Week High: 16212.23
52-Week Low: 12587.88
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 14683.89
Resistance 2: 14071.28
Resistance 1: 13692.36
Pivot: 13458.67
Support 1: 13079.75
Support 2: 12846.06
Support 3: 12233.45
Dow Industrials - 32632.64 March 8, 2022
52-Week High: 36952.65
52-Week Low: 30766.81
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 35776.64
Resistance 2: 34705.24
Resistance 1: 34160.02
Pivot: 33633.84
Support 1: 33088.62
Support 2: 32562.44
Support 3: 31491.04
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, March 07, 2022: 07-Mar 3 pm Consumer credit Tuesday, March 08, 2022: 08-Mar 6 am NFIB small-business index 08-Mar 8:30 am Foreign trade deficit 08-Mar 10 am Wholesale inventories (revision) Wednesday, March 09, 2022: 09-Mar 10 am Job openings 09-Mar 10 am Quits Thursday, March 10, 2022: 10-Mar 8:30 am Initial jobless claims 10-Mar 8:30 am Continuing jobless claims 10-Mar 8:30 am Consumer price index 10-Mar 8:30 am Core CPI 10-Mar 8:30 am CPI (year-over-year 10-Mar 8:30 am Core CPI (year-over-year) 10-Mar 1 pm Real domestic nonfinancial debt (SAAR) 10-Mar 1 pm Real household wealth (SAAR) 10-Mar 2 pm Federal budget deficit Friday, March 11, 2022: 11-Mar 10 am UMich consumer sentiment index (preliminary) 11-Mar 10 am Five-year inflation expectations (preliminary) 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: "Setting Stops"
Sometimes you'll notice that we include irregular numbers - like 1.02, or 2.56 - in the Initial or Trailing Stop section of our Quick List. There is a calculated reason for this. Market makers - better known by their brokerage firm names - will often manipulate prices to just above or below the daily highs and lows to generate order flow and broker commissions. One key to successful stop placement is to avoid getting swept by market makers in these artificial price moves. A penny or two beyond the usual stop amounts (0.10, .25, .50, etc) will often keep the trade alive. This is because market makers know that many traders with long positions will set stops at ten cents, a quarter, or fifty cents beyond the daily range levels.
Stocks Covered in This Issue
BASIC MATERIALS SECTOR
TimkenSteel Corporation (TMST: Basic Materials/Steel) - NEW HIGH DIP. TMST's recent new 52-week high proves just how well this stock is performing. Sellers have pushed prices down the past few sessions, but Tuesday's rebound near support has given us an excellent BUY setup. A continuation of this latest bounce has the potential to push above the recent 52-week high and set a new one. Be ready to get on board if TMST moves up to the 18.61 level, and set a 2.13 trailing stop to control risk. Tighten the stop to 1.07 when you have banked a 1.28-point gain. Earnings Report Date: May 04, 2022. Beta: 1.84. Market-Cap: 823.067M. Optionable.
COMMUNICATION SERVICES SECTOR
Bilibili Inc. (BILI: Communication Services/Electronic Gaming & Multimedia) - SQUEEZE PLAY. BILI 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 23.71 and a SELL short entry at 21.13. Once your trade is filled, enter a 2.58 trailing stop. Tighten it to 1.29 after a 4.74 gain. BILI closed on Tuesday at 22.70. Earnings Report Date: May 11, 2022. Beta: 1.34. Market-Cap: 8.692B. Optionable.
CONSUMER CYCLICAL SECTOR
MakeMyTrip Limited (MMYT: Consumer Cyclical/Travel Services) - SQUEEZE PLAY. Tuesday's narrow price range has created a potentially profitable setup in MMYT, 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 21.69 and a SELL short entry at 19.47. Let MMYT's price action determine your long or short entry. Once the order is filled, place a 2.22 trailing stop, and tighten it to 1.11 upon getting a 2.48 gain. MMYT closed Tuesday at 21.01. Earnings Report Date: May 23, 2022. Beta: 1.32. Market-Cap: 2.2B. Optionable.
HEALTHCARE SECTOR
Bristol-Myers Squibb Company (BMY: Healthcare/Drug Manufacturers-General) - NEW HIGH DIP. BMY's strong performance produced a new 52-week high several days ago. Since then we've been waiting for a pullback from that high in order to get on board with a low-risk entry. Tuesday's reversal near Moving Average support provides us with a New High Dip setup. Set your BUY trigger at 69.31, and follow your purchase with a 4.03 trailing stop which can be tightened to 2.02 when you have a 2.44-point gain. BMY closed Tuesday at 67.74. Earnings Report Date: Apr 27, 2022. Beta: 0.53. Market-Cap: 147.654B. Optionable.
Merus N.V. (MRUS: Healthcare/Biotechnology) - SQUEEZE PLAY. Traders are feeling the pressure as MRUS'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 26.58 and a SELL short entry at 24.45. MRUS's price movement will decide which entry is filled. As soon as you're in the trade, enter a 2.13 trailing stop. Tighten it to 1.07 after you get a 2.72 gain. MRUS closed Tuesday at 25.30. Earnings Report Date: May 04, 2022. Beta: 1.03. Market-Cap: 1.1B. 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
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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