May 24, 2022 - The RightLine Report
Notes From The Editor
Take Control of Your Trading
If you're like most traders you place a lot of attention on improving your trading knowledge and skills. However, on one significant level your ability to gain control of your trading has nothing to do with what you know about the market or how well you can execute trades. It has more to do with your emotional state at the moment you make a decision to take action. It is on this deeper inner level you will discover the parts of you that control all of your behaviors - the actions that cause either success or failure.
Your emotional states are determined by your basic beliefs, attitudes, and values. These vital parts of your self exist on a subconscious level. This subconscious area of your mind is extremely important, for it produces the guiding principles that direct the decisions you make and the actions you take.
In addition to providing a great income, trading is an excellent way to learn more about your inner workings - about what makes do what you do. As you see your beliefs and attitudes more clearly, you can use this new information to adjust your beliefs and attitudes so they will accurately reflect your inner values.
When your beliefs and attitudes become more aligned with your values, the actions you take will consistently move you toward understanding what matters the most in your trading and in your life. This awareness will help produce new principles within your subconscious that will guide you along your way to even more successful thinking and action.
The Belief-Attitude-Value process quickly increases your sense of control when trading. It also enhances your ability to take actions that produce desired results both in terms of money and emotional satisfaction.
Bottom Line: Getting to know your beliefs, attitudes and values will help you locate any conflicts within the group. To eliminate conflict, upgrade your beliefs and attitudes so they are compatible with your most important values. This isn't always easy. It takes introspection, patience and commitment.
Traders typically find that following this path means putting spiritual values ahead of monetary values. After all, trading is just a way to make money, and having money is only worth the effort when your beliefs and attitudes are properly aligned with your deepest values.
Trade well!
- Thomas Sutton, Editor
Stocks Covered Today Stock Splits
Quick List
Stock 05/24 05/24 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
------ -------- -------- -------- -------- --------------- --------
CC 40.73 -0.62 41.59 3.18/1.59 3.74
TMST 22.46 -0.09 22.77 20.99 1.78/0.89 2.76
ZNTL 20.73 -0.69 21.38 19.31 2.07/1.04 4.68
ALBO 20.86 -0.70 21.72 19.97 1.75/0.88 3.78
ROAD 21.54 -0.31 22.17 20.52 1.65/0.83 2.96
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
The major US stock averages were mixed on Tuesday as the market continues to face headwinds, specifically chronic high inflation pressure that has resulted in the Federal Reserve Bank implementing an agressive tightening campaign. Economic highlights included less than stellar preliminary data on the domestic manufacturing and services sectors, a steep drop in new home sales, and a surprising plunge into contraction territory for regional manufacturing activity. Meanwhile in equities, Snap (SNAP $13) fell hard after the social media company lowered its guidance for the second quarter, while Best Buy (BBY $73) reported mixed results and Abercrombie & Fitch (ANF $19) announced an unexpected loss. The USD/dollar and oil prices finished lower, gold and treasuries were higher, putting downward pressure on yields.
May 23, 2022 May 24, 2022
-------------------- --------------------
Dow 31,880.24 618.34 31,928.62 48.38
Nasdaq 11,535.27 180.66 11,264.45 -270.83
S&P 500 3,973.75 72.39 3,941.48 -32.27
NYSE Volume 4.46B 4.97B
NYSE Advancers 2,259 1,463
NYSE Decliners 1,028 1,838
Nasdaq Volume 4.54B 4.75B
Nasdaq Advancers 2,734 1,397
Nasdaq Decliners 1,885 3,303
New Highs/Lows
05/17 05/18 05/19 05/20 05/23 05/24
--------------------------------------------
NYSE New Highs 50 24 9 15 36 23
NYSE New Lows 171 346 323 364 143 282
Nasdaq New Highs 26 17 8 16 30 24
Nasdaq New Lows 202 348 358 478 216 526
Stocks Covered Today Stock Splits
TRADER'S TIP: "The Volatility Index"
Many traders are familiar with the Volatility Index - or VIX - as a way to gauge long-term market tops and bottoms. Conventional wisdom suggests, "when the VIX is high, it's time to buy ... when the VIX is low, it's time to go." More specifically, readings over 40 are seen as a sign that market participants have grown overly bearish, and that the market is due for a strong rebound. The inverse is true of readings of under 20, which often foretell a market peak. In 2003 the Chicago Board of Options Exchange made some changes in the way the Volatility Index is calculated. The "new" formula takes a broader range of strike prices into account rather than using only "near-the-money" strikes as the original-formula index did. The VIX reflects these changes, while the "old" version is now listed as the "VXO".
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 - 3941.48 May 24, 2022
52-Week High: 4818.62
52-Week Low: 3810.32
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4494.93
Resistance 2: 4214.53
Resistance 1: 4057.94
Pivot: 3934.13
Support 1: 3777.54
Support 2: 3653.73
Support 3: 3373.33
NASDAQ Composite - 11264.45 May 24, 2022
52-Week High: 16212.23
52-Week Low: 11035.69
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 13365.06
Resistance 2: 12412.32
Resistance 1: 11883.47
Pivot: 11459.58
Support 1: 10930.73
Support 2: 10506.84
Support 3: 9554.10
Dow Industrials - 31928.62 May 24, 2022
52-Week High: 36952.65
52-Week Low: 30635.76
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 35635.69
Resistance 2: 33582.31
Resistance 1: 32422.10
Pivot: 31528.93
Support 1: 30368.72
Support 2: 29475.55
Support 3: 27422.17
Stocks Covered Today Stock Splits
Market Calendar
ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, May 23, 2022: 23-May None scheduled Tuesday, May 24, 2022: 24-May 9:45 am 24-May 9:45 am 24-May 10 am New home sales (SAAR) Wednesday, May 25, 2022: 25-May 8:30 am Durable goods orders 25-May 8:30 am Core capital equipment orders 25-May 2 pm FOMC minutes Thursday, May 26, 2022: 26-May 8:30 am Initial jobless claims 26-May 8:30 am Continuing jobless claims 26-May 8:30 am Real gross domestic product revision (SAAR) 26-May 8:30 am Real final sales to domestic purchasers revision (SAAR) 26-May 8:30 am Real gross domestic income (SAAR) 26-May 10 am Pending home sales index Friday, May 27, 2022: 27-May 8:30 am PCE inflation 27-May 8:30 am Core PCE inflation 27-May 8:30 am PCE inflation (year-over-year) 27-May 8:30 am Core PCE inflation 27-May 8:30 am Real disposable income 27-May 8:30 am Real consumer spending 27-May 8:30 am Nominal personal income 27-May 8:30 am Nominal consumer spending 27-May 8:30 am Advance trade in goods 27-May 10 am UMich consumer sentiment index (final) 27-May 10 am 5-year inflation expectations (final) 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: "In The Game"
We can take advantage of price movement with careful planning and proper trading execution, but there's no reason to ever force a trade. Taking reasonable risk always includes solid money management so be sure to include Risk Control in your trading plan. Also, we always have the option to stand aside when nothing seems to work - just remember that while the sidelines offer a safe place to watch as we wait for an opening, we have to be on the field to score!
Stocks Covered in This Issue
BASIC MATERIALS SECTOR
The Chemours Company (CC: Basic Materials/Specialty Chemicals) - BULLISH BOUNCE. Positive price behavior near moving average support on Tuesday qualifies CC for a Bullish Bounce setup. After several sessions of declining prices, CC should soon begin trading in step with its established weekly uptrend. Tell your broker to BUY shares if CC moves up to our entry trigger set at 41.59. You can also enter a 3.18 trailing stop, to be replaced with a 1.59 trailing stop when you obtain a 3.74 profit. CC closed Tuesday at 40.73. Earnings Report Date: Jul 27, 2022. Beta: 1.82. Market-Cap: 6.332B. Optionable.
TimkenSteel Corporation (TMST: Basic Materials/Steel) - SQUEEZE PLAY. Trader indecision has put TMST 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 22.77 and a SELL short entry at 20.99. Now it's up to TMST to show us which entry will be filled. Once the trade is underway place a 1.78 trailing stop, which can be tightened to 0.89 after you achieve a 2.76 profit. TMST closed on Tuesday at 22.46. Earnings Report Date: Aug 03, 2022. Beta: 1.77. Market-Cap: 1.047B. Optionable.
HEALTHCARE SECTOR
Zentalis Pharmaceuticals, Inc. (ZNTL: Healthcare/Biotechnology) - SQUEEZE PLAY. ZNTL is caught in a dilemma. The stock's compressed price range on Tuesday has resulted in a condition comparable to a wound up rubber band. We anticipate that this undecided equity will take off soon, but with the direction still in question we'll let upcoming market action tell us whether to buy shares or sell short. ZNTL is now at 20.73. We can capture price action either way by placing a BUY trigger at 21.38 and a SELL short trigger at 19.31. Once ZNTL reveals its direction, enter your triggered order and disregard the other one. As soon as your position is in place, follow up with a trailing stop of 2.07. When you acquire a 4.68 profit, tighten the stop to 1.04. Earnings Report Date: Aug 10, 2022. Beta: 2.73. Market-Cap: 1.181B. Optionable.
Albireo Pharma, Inc. (ALBO: Healthcare/Biotechnology) - SQUEEZE PLAY. When a stock's daily price range contracts to an unusually low point, you can safely assume that in most cases a breakout from that range will result in a nice price move. To capture a portion of this potential movement we have set both a long and a short entry into ALBO. A move to the upside will trigger our BUY entry at 21.72, while a drop to 19.97 will trigger our SELL short entry. Follow your position with a 1.75 trailing stop. Tighten the stop to 0.88 once you have a 3.78 gain. ALBO closed Tuesday at 20.86. Earnings Report Date: Aug 03, 2022. Beta: 0.95. Market-Cap: 408.362M. Optionable.
INDUSTRIALS SECTOR
Construction Partners, Inc. (ROAD: Industrials/Engineering & Construction) - 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 ROAD's case we will enter a BUY should it reach the 22.17 level, or a SELL short trade if it drops to 20.52. As usual a trailing stop is essential, 1.65 which should be tightened to 0.83 on a 2.96 gain. ROAD closed Tuesday at 21.54. Earnings Report Date: Aug 04, 2022. Beta: 0.93. Market-Cap: 1.132B. 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
---------------- ------- -------- ------- ------ -------
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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