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May 31, 2022 - The RightLine Report
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NOTES FROM THE EDITOR
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In today's age of instant information, technical traders have access to an endless variety of data to help them make decisions. Stock charts, while still combining the same basic features they always have, offer more and more indicators every year. Then there's the matter of deciding which intervals to use. At times it can seem daunting!
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"QUICK LIST"
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Stock 05/31 05/31 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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CNNE 20.27 -0.56 21.11 19.59 1.52/0.76 2.34
ONON 20.65 -0.35 21.71 19.88 1.83/0.92 3.9
GES 20.86 -0.12 21.26 19.73 1.53/0.77 2.12
URBN 21.05 -0.63 21.73 20.17 1.56/0.78 2.04
CFLT 21.13 -0.23 22.33 20.26 2.07/1.04 6.94
CFLT 21.13 -0.23 22.33 20.26 2.07/1.04 6.94
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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US stocks were lower on Tuesday, closing out the month of May with market challenges that include the highest inflation in forty years, a highly hawkish Fed Bank that is now causing a slowdown in economic activity and increasing the possibility of shifting into a recession. In economic news, consumer confidence has dropped to decade lows, home prices moved up more than predicted, Dallas manufacturing activity slipped into contraction territory and the Chicago Purchasing Managers Index surged upward. In equties, chipmaker Qualcomm (QCOM $143) has reportedly expressed interest in buying part of the UK based semiconductor and chip designer company Arm in its upcoming IPO.The USD/dollar was higher, gold, oil prices and treasuries were all lower, lifting yields. May 30, 2022 May 31, 2022
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Dow Closed 0 32,990.12 -222.84
Nasdaq Closed 0 12,081.39 -49.74
S&P 500 Closed 0 4,132.15 -26.09
NYSE Volume 0 7.19B
NYSE Advancers 0 1,164
NYSE Decliners 0 2,151
Nasdaq Volume 0 6.29B
Nasdaq Advancers 0 1,968
Nasdaq Decliners 0 2,824
New Highs/Lows
05/24 05/25 05/26 05/27 05/30 05/31
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NYSE New Highs 23 47 87 88 0 105
NYSE New Lows 282 82 40 36 0 33
Nasdaq New Highs 24 35 32 49 0 64
Nasdaq New Lows 526 307 165 113 0 116
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TRADER'S TIP:
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TRADER'S TIP: "Whipping the Sea" "You have to analyze your behavior in the market instead of acting out your feelings. We get angry at the market, we become afraid of it, we develop silly superstitions. All the while, the market keeps cycling through its rallies and declines like an ocean going through its storms and calm periods. Mark Douglas writes in The Disciplined Trader that in the market, "There is no beginning, middle, or end - only what you create in your own mind. Rarely do any of us grow up learning to operate in an arena that allows for complete freedom of creative expression, with no external structure to restrict it in any way." We try to cajole or manipulate the market, acting like the ancient emperor Xerxes, who ordered his soldiers to horsewhip the sea for sinking his fleet. Most of us are not aware how manipulative we are, how we bargain, how we act out our feelings in the market. Most of us consider ourselves the center of the universe and expect every person or group to be either good or bad to us. This does not work in the market which is completely impersonal." ~ Dr. Alex Elder, trader and author of "Trading For A Living" **************************
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 - 4132.15 May 31, 2022 52-Week High: 4818.62 52-Week Low: 3810.32 Daily Trend: UP Weekly trend: DOWN Weekly Pivot Levels Resistance 3: 4630.67 Resistance 2: 4347.31 Resistance 1: 4252.77 Pivot: 4063.95 Support 1: 3969.41 Support 2: 3780.59 Support 3: 3497.23 https://www.prorightline.com/rlch/053122SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Wednesday, June 01, 2022: 01-Jun 9:45 am S&P Global U.S. manufacturing PMI (final) 01-Jun 10 am ISM manufacturing index 01-Jun 10 am Job openings 01-Jun 10 am Quits 01-Jun 10 am Construction spending 01-Jun 2 pm Beige book 01-Jun Varies Motor vehicle sales (SAAR) Thursday, June 02, 2022: 02-Jun 8:30 am ADP employment report 02-Jun 8:30 am Initial jobless claims 02-Jun 8:30 am Continuing jobless claims 02-Jun 8:30 am Productivity revision (SAAR) 02-Jun 8:30 am Unit labor costs revision (SAAR) 02-Jun 10 am Factory orders 02-Jun 10 am Core capital goods orders revision Friday, June 03, 2022: 03-Jun 8:30 am Nonfarm payrolls 03-Jun 8:30 am Unemployment rate 03-Jun 8:30 am Average hourly earnings 03-Jun 8:30 am Labor-force participation, ages 25-54 03-Jun 9:45 am S&P Global U.S. services PMI (final) 03-Jun 10 am ISM services index 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: "Breakaway Gaps" Breakaway gaps occur when a stock price leaps out of a consolidation or basing pattern. If the gap is to the upside, consider buying immediately, but be sure to put a stop loss just beneath the bottom of the gap. A true breakaway gap won't look back. To apply the same approach to stocks that gap lower, just reverse the procedure and enter a short position. Always use a protective stop order to protect against losses. ***********************************
STOCKS COVERED IN THIS ISSUE
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CONSUMER CYCLICAL SECTOR Cannae Holdings, Inc. (CNNE: Consumer Cyclical/Restaurants) - SQUEEZE PLAY. Tuesday's trading session left CNNE in a very narrow price range after buyers and sellers fought to a near stalemate. Both sides are looking for some traction, and a breakout either way could provide a nice gain in the short term. To get aboard, set your BUY trigger at 21.11 and your SELL short trigger at 19.59. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.52 trailing stop. Once you have a 2.34 profit, reduce the stop to 0.76. Earnings Report Date: Aug 03, 2022. Beta: 0.79. Market-Cap: 1.721B. Optionable. On Holding AG (ONON: Consumer Cyclical/Apparel Retail) - SQUEEZE PLAY. ONON 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 21.71 and a SELL short entry at 19.88. Once your trade is filled, enter a 1.83 trailing stop. Tighten it to 0.92 after a 3.9 gain. ONON closed on Tuesday at 20.65. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 6.495B. Optionable. Guess', Inc. (GES: Consumer Cyclical/Apparel Retail) - SQUEEZE PLAY. Traders are feeling the pressure as GES'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 21.26 and a SELL short entry at 19.73. GES's price movement will decide which entry is filled. As soon as you're in the trade, enter a 1.53 trailing stop. Tighten it to 0.77 after you get a 2.12 gain. GES closed Tuesday at 20.86. Earnings Report Date: Aug 23, 2022. Beta: 1.91. Market-Cap: 1.247B. Optionable. Urban Outfitters, Inc. (URBN: Consumer Cyclical/Apparel Retail) - SQUEEZE PLAY. Tuesday's narrow price range has created a potentially profitable setup in URBN, 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 21.73 and a SELL short entry at 20.17. Let URBN's price action determine your long or short entry. Once the order is filled, place a 1.56 trailing stop, and tighten it to 0.78 upon getting a 2.04 gain. URBN closed Tuesday at 21.05. Earnings Report Date: Aug 22, 2022. Beta: 1.43. Market-Cap: 1.988B. Optionable. TECHNOLOGY SECTOR Confluent, Inc. (CFLT: Technology/Software-Infrastructure) - SQUEEZE PLAY. A look at CFLT'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 22.33 and a SELL short trigger at 20.26. Once CFLT shows which way it's headed, place your triggered entry order. As soon as your order is filled, follow with a trailing stop of 2.07 and tighten to 1.04 on a 6.94 gain. CFLT closed Tuesday at 21.13. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 5.881B. Optionable. Confluent, Inc. (CFLT: Technology/Software-Infrastructure) - SQUEEZE PLAY. Tuesday's trading action forced CFLT'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 CFLT 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 22.33 if CFLT moves higher, and place your order to SELL short at 20.26 if price declines to that level. As usual follow your entry with a trailing stop, 2.07 should be sufficient. Reduce your stop to 1.04 on a 6.94 gain. CFLT closed Tuesday at 21.13. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 5.881B. 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/ ***********************************
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 ---------------- ------- -------- ------- ------ ------- 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/ ======================================================================
Best of luck and have a Great Week!
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