May 17, 2022 - The RightLine Report 

 
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                      NOTES FROM THE EDITOR
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Ask someone the question "What is a stock trader's main goal?" and you'll probably hear something like "To make a lot of money!" It surprises many people to find that the major goal of a truly successful trader isn't just to make money, but to make the best trades possible.

Most folks don't understand stock trading, and many believe that traders spend all day just thinking about money. It helps for them to look at other professions for comparison. Teachers, contractors, attorneys, doctors, and mechanics are all paid for what they do, but most don't count their money while they're working. Those that constantly think of money instead of the job at hand pay a severe price for not focusing on what's truly important. How would you feel if your doctor always wanted to talk about was how much money he or she was making?

Repeatedly calculating the amount of money in a trade sends a warning signal that a trader's emotions are running too high. In a highly emotional state of mind it's easy to let feelings substitute for intelligent trade management. Uneasiness over how much money is on the table quickly moves a trader from relaxation to apprehension. Fortunately it's not that hard to switch back to a much more productive trading mindset.

Here's how to do it. Immediately after entering a trade and putting initial stops in place, write down your feelings in your trading journal. If you are uneasy or feel overly concerned about the trade, take a short break away from your desk. Depending on which you prefer, either go for brief walk, or lie down with your eyes closed for at least ten to fifteen minutes.

As you are walking or resting, think about the fact that you have done everything needed to protect against any serious financial damage that might result from the trade. Calmly consider that you use the risk calculator to determine the number of shares in your position, and you set stops to prevent any possible harm.

As you begin to relax, feel the satisfaction that comes from knowing you are trading intelligently. Realize that it really doesn't matter whether price moves in the desired direction for this specific trade or not. Remind yourself that trading successfully doesn't depend on any one trade.

Contemplate the concept that trading with risk control prevents even a series of losses from spoiling your trading success. Take comfort in the reality that trading is a repetitive process that allows you to learn and improve your skills as you progress.

When you resume trading, you may still feel the temptation to concentrate on the cash in play. Just remember that money doesn't have to be the center of your focus. Money is simply the byproduct of the thoughts and subsequent actions you take while calmly trading stocks.

It helps tremendously to put your attention on the different aspects of your personal trading routine. By highlighting the importance of stock selection, trade planning, risk control, and execution, the money will soon become just a pleasant afterthought. And yes, it's certainly okay to enjoy counting the profits once the trade is closed!

Trade well,

- Thomas Sutton, Editor 

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                           "QUICK LIST"
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Stock     05/17     05/17      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

GOOS      20.82      0.61                19.5        1.98/0.99       2.2
BTU       22.87      0.74     23.66     21.71        1.95/0.98      5.06
SAVA      22.76      1.94               20.61        2.66/1.33      4.46
CSTL      20.13      0.64     20.78     19.05        1.73/0.87      3.72
FATE      23.73      1.09     24.37     22.19        2.18/1.09      5.24


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 https://prorightline.com/index.php/rightline-report-quick-list/. In addition,always use the RightLine Risk Calculator before entering any position. For access to the Risk Calculator, go to https://prorightline.com/index.php/risk-calculator/.

To learn more about controlling risk go to the RightLine Risk Control System at https://prorightline.com/index.php/rightline-risk-control-system/

For a glossary of terms unique to The RightLine Report go to: https://prorightline.com/index.php/glossary/

Questions? Send us an email using our contact form at: https://prorightline.com/index.php/contact-us/ 
 
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                           MARKET SUMMARY
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The major stock indices were significantly higher on Tuesday as the market faces ongoing challenges, notably the Fed Bank's aggressive tightening campaign to lower inflation. In economic headlines, industrial production, capacity utilization, business inventories and retail sales all moved higher, yet homebuilder sentiment dropped to its lowest level in almost two years due to rising prices and mortgage rates. In equities news, Walmart (WMT $131) lost ground after falling short on estimates, shares of Home Depot (HD $301) were higher after home the improvement retailer announced excellent earnings and raised its full-year guidance, while Twitter (TWTR $38) remained in focus after Elon Musk said the acquizition deal is still on hold. Gold finished near even, the USD/dollar, oil prices and treasuries were lower, lifting yeilds.


                       May 16, 2022           May 17, 2022   
                  --------------------   --------------------
Dow                 32,223.42    26.76     32,654.59   431.17
Nasdaq              11,662.79  -142.21     11,984.52   321.73
S&P 500              4,008.01   -15.88      4,088.85    80.84

NYSE Volume                      4.45B                  4.88B
NYSE Advancers                   1,688                  2,485
NYSE Decliners                   1,621                    845

Nasdaq Volume                    4.91B                  5.09B
Nasdaq Advancers                 1,999                  3,596
Nasdaq Decliners                 2,713                  1,127

                                 New Highs/Lows

                   05/10  05/11  05/12  05/13  05/16  05/17
                 --------------------------------------------
NYSE New Highs         5     13      4     12     32     50
NYSE New Lows        911    784  1,044    202    188    171
Nasdaq New Highs      22     16     11     13     21     26
Nasdaq New Lows    1,381  1,574  1,706    316    335    202

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                              TRADER'S TIP:  
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TRADER'S TIP: "Trading Smarter"

"A key requirement for trading smarter is to become totally objective. When committing hard-earned money to any investment, it's real easy to also commit your emotions. Emotional trading is probably the most common pitfall that traders face today. Generally, by letting emotions rule your trade decisions, the market has a funny way of finding and exposing this weakness. My experience has shown me that stock prices are determined by investor psychology, and both psychology and stock prices move in trends. These trends can be visually captured on price charts, and objectively analyzed using various technical tools and indicators. Once you know the trend of a trade candidate, you can then begin to look at optimal entry points, as well as identify risk levels and profit targets. This can all be done prior to entering a trade to help you mentally rehearse a trade's potential outcome ahead of time. If you don't mentally rehearse your trades before entering them, it is far easier to allow your emotions to take control when events go unexpectedly against you."

~ Martin Pring, Technical Analyst and Trader 
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                         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: https://prorightline.com/index.php/technical-analyst-section-rightline-report/ 
S&P 500 - 4088.85 May 17, 2022

52-Week High: 4818.62
52-Week Low: 3858.87
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4432.80
Resistance 2: 4210.41
Resistance 1: 4117.14
Pivot: 3988.01
Support 1: 3894.74
Support 2: 3765.60
Support 3: 3543.20
https://www.prorightline.com/rlch/051722SPX.jpg

NASDAQ Composite - 11984.52 May 17, 2022

52-Week High: 16212.23
52-Week Low: 11108.76
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 13398.49
Resistance 2: 12516.64
Resistance 1: 12160.82
Pivot: 11634.79
Support 1: 11278.97
Support 2: 10752.94
Support 3: 9871.09


Dow Industrials - 32654.59 May 17, 2022

52-Week High: 36952.65
52-Week Low: 31228.22
Daily Trend: UP
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 35106.91
Resistance 2: 33582.96
Resistance 1: 32889.81
Pivot: 32059.01
Support 1: 31365.86
Support 2: 30535.06
Support 3: 29011.11


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                             MARKET CALENDAR
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--ECONOMIC REPORTS AND EVENTS (all times are Eastern): 
Wednesday, May 18, 2022:
18-May  8:30 am   Building permits (SAAR)
18-May  8:30 am   Housing starts (SAAR)
18-May  8:30 am   Philadelphia Fed manufacturing index

Thursday, May 19, 2022:
19-May  8:30 am   Initial jobless claims
19-May  8:30 am   Continuing jobless claims
19-May  10 am   Existing home sales (SAAR)

Friday, May 20, 2022:
20-May  8:30 am   Advance services report

Monday, May 23, 2022:
16-May  8:30 am   Empire state manufacturing index

Tuesday, May 24, 2022:
17-May  8:30 am   Retail sales
17-May  8:30 am   Retail sales excluding vehicles
17-May  9:15 am   Industrial production index
17-May  9:15 am   Capacity utilization
17-May  10 am   NAHB home builders' index
17-May  10 am   Business inventories (revision)

For a chart of typical Up or Down market reactions to specific major US economic reports, go to "Economic Indicator Effects" at this link: https://prorightline.com/index.php/economic-indicator-effects/ 
 
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                              TRADER'S TIP: 
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TRADER'S TIP: "Hey Vinnie, I think I got a personality!"

Traders come in all shapes, sizes, and dispositions. It's important for each of us to recognize the type of person we are, then trade within that makeup. Identify your personality, and genuinely come to terms with your current strengths and limitations instead of what you would like to be. As you mature as a trader and individual you will acquire new skills and a wide range of positive qualities. Just remember that change takes time, so be who you are now, have no pretensions about it, and trade in a style that suits YOUR personality. 

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                      STOCKS COVERED IN THIS ISSUE    
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CONSUMER CYCLICAL SECTOR

Canada Goose Holdings Inc. (GOOS: Consumer Cyclical/Apparel Manufacturing) - BEARISH U-TURN. The weight of GOOS's declining weekly trend was lightened recently when shares began to move upward. However, like a swimmer against the tide GOOS encountered strong resistance on Tuesday. Price action indicates a likely return to the previous downtrend, so plan to short GOOS upon reaching our SELL trigger at 19.5. Set a 1.98 trailing stop which can be tightened to 0.99 after you have a 2.2 gain. GOOS ended the latest session at 20.82. Earnings Report Date: May 19, 2022. Beta: 1.37. Market-Cap: 2.218B. Optionable.

ENERGY SECTOR

Peabody Energy Corporation (BTU: Energy/Thermal Coal) - SQUEEZE PLAY. Trader indecision has put BTU squarely in the center of a Bull versus Bear standoff. This tight spot should soon give way to a clear winner in the short-term, and we want to be in position for the move. To do that we've set a BUY entry at 23.66 and a SELL short entry at 21.71. Now it's up to BTU to show us which entry will be filled. Once the trade is underway place a 1.95 trailing stop, which can be tightened to 0.98 after you achieve a 5.06 profit. BTU closed on Tuesday at 22.87. Earnings Report Date: Jul 27, 2022. Beta: 1.20. Market-Cap: 3.289B. Optionable.

HEALTHCARE SECTOR

Cassava Sciences, Inc. (SAVA: Healthcare/Biotechnology) - BEARISH U-TURN. SAVA's chronic decline over the past weeks was relieved by a recent upward bounce that has boosted hope for weary shareholders. Unfortunately for them, Tuesday's price action near moving average support indicates the bullish rebound may be over. If this turns out to be the case, short-sellers can enter a SELL position at 20.61. Control risk with a 2.66 stop that can be resized to 1.33 on a gain of 4.46. SAVA closed at 22.76 on Tuesday. Earnings Report Date: Aug 01, 2022. Beta: 0.57. Market-Cap: 912.237M. Optionable.

Castle Biosciences, Inc. (CSTL: Healthcare/Diagnostics & Research) - SQUEEZE PLAY. One interesting trait of price volatility is that it cycles back and forth through periods of expansion and contraction. Stocks that have recently seen their daily price range shift from an average or wide range to an extremely contracted state are ideal candidates for expansive price moves. In many cases the next move is relatively fast and covers a sizable amount of territory. To take advantage of these trades we use both a BUY and a SELL entry. This allows us to enter in whichever direction the breakout takes. In CSTL's case we will enter a BUY should it reach the 20.78 level, or a SELL short trade if it drops to 19.05. As usual a trailing stop is essential, 1.73 which should be tightened to 0.87 on a 3.72 gain. CSTL closed Tuesday at 20.13. Earnings Report Date: Aug 08, 2022. Beta: 0.58. Market-Cap: 528.632M. Optionable.

Fate Therapeutics, Inc. (FATE: Healthcare/Biotechnology) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in FATE's narrowest trading range of the past seven sessions. With neither group able to take complete control on Tuesday, the stock's short term destiny is up for grabs. You can capitalize on this unusually tight condition by placing both a BUY order at 24.37 and a SELL order at 22.19. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.18 trailing stop. Tighten the stop to 1.09 once you have a 5.24 gain. FATE closed Tuesday at 23.73. Earnings Report Date: Aug 02, 2022. Beta: 1.56. Market-Cap: 2.293B. 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: https://prorightline.com/index.php/rightline-risk-control-system/

Use "Gap Adjusted Entries" to reset the Entry Price for stocks that gap beyond recommended entry levels.
Link: https://prorightline.com/index.php/gap-adjusted-entries-increase-profits/ 

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                           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  
---------------- -------     --------    -------     ------  -------   
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

For a closer look at the different stages of a Stock Split go to: https://prorightline.com/index.php/trading-stock-splits-stages/ 
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Best of luck and have a Great Week!
 
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