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May 7, 2022 - The RightLine Report
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NOTES FROM THE EDITOR
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In 2000 a writer named Malcolm Gladwell released a popular book called "The Tipping Point." After hearing about its insights for all these years, I finally decided to give it a read.
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"QUICK LIST"
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Stock 05/06 05/06 Buy Short Trailing Stops Gain
Symbol Price +/- Entry Entry Initial/Tighten Amount
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TIGO 21.26 -0.54 21.74 20.36 1.38/0.69 1.36
TIGO 21.26 -0.54 21.74 20.36 1.38/0.69 1.36
NEX 11.11 0.38 11.42 1.07/0.54 1.44
TBBK 20.45 -0.22 21.14 19.4 1.74/0.87 1.9
FTAI 20.26 0.75 20.65 18.83 1.82/0.91 1.96
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" 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 US stock indices were lower on Friday as traders debated with whether or not the Fed Bank can bring about a soft economic landing with its monetary policy tightening campaign. In economic news, consumer credit surged, job growth beat forecasts, yet labor force participation declined unexpectedly. Equities headlines included an surprise loss from Under Armour (UAA $11), and Zillow Group (ZG $37) issued much weaker revenue guidance than analysts predicted. The USD/dollar dropped slightly, gold and oil moved higher, treasuries were mixed. Friday On The Week
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Dow 32,899.37 -98.60 -77.84 -0.24%
Nasdaq 12,144.66 -173.03 -189.98 -1.54%
S&P 500 4,123.34 -23.53 -8.59 -0.21%
NYSE Volume 5.11B
NYSE Advancers 1,006
NYSE Decliners 2,297
Nasdaq Volume 5.29B
Nasdaq Advancers 1,179
Nasdaq Decliners 3,521
New Highs/Lows
04/29 05/02 05/03 05/04 05/05 05/06
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NYSE New Highs 24 13 27 53 53 28
NYSE New Lows 332 628 279 332 379 616
Nasdaq New Highs 35 28 37 40 21 24
Nasdaq New Lows 538 736 288 501 645 1,098
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TRADER'S TIP:
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TRADER'S TIP: "Measuring Opinion" The largely unpredictable nature of the market is due to the ever-changing consensus of opinion among investors and traders. Every trader should have some specific means of determining when it is likely that the consensus of opinion has changed within their chosen time frame. Technical Analysis can be very helpful in this area. **************************
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 - 4123.34 May 6, 2022 52-Week High: 4818.62 52-Week Low: 4056.88 Daily Trend: UP Weekly trend: DOWN Weekly Pivot Levels Resistance 3: 4654.80 Resistance 2: 4409.65 Resistance 1: 4266.49 Pivot: 4164.50 Support 1: 4021.34 Support 2: 3919.35 Support 3: 3674.20 https://www.prorightline.com/rlch/050622SPX.jpg--ECONOMIC REPORTS AND EVENTS (all times are Eastern): Monday, May 09, 2022: 09-May 10 am Wholesale inventories (revision) 09-May 11 am Consumer 1-year inflation expecations 09-May 11 am Consumer 3-year inflation expecations Tuesday, May 10, 2022: 10-May 6 am NFIB small-business index 10-May 11 am Real household debt (SAAR) Wednesday, May 11, 2022: 11-May 8:30 am Consumer price index 11-May 8:30 am Core CPI 11-May 8:30 am CPI (year-over-year) 11-May 8:30 am Core CPI (year-over-year) 11-May 2 pm Federal budget Thursday, May 12, 2022: 12-May 8:30 am Initial jobless claims 12-May 8:30 am Continuing jobless claims 12-May 8:30 am Producer price index (final demand) Friday, May 13, 2022: 13-May 8:30 am Import price index 13-May 10 am UMich consumer sentiment index (preliminary) 13-May 10 am UMich 5-year inflation expectations 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: "More on Bases and Consolidations" Rule of thumb - the longer the sideways action, the bigger the move when price does finally break out in one direction or the other. ***********************************
STOCKS COVERED IN THIS ISSUE
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COMMUNICATION SERVICES SECTOR Millicom International Cellular S.A. (TIGO: Communication Services/Telecom Services) - SQUEEZE PLAY. Friday's trading session left TIGO 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 21.74 and your SELL short trigger at 20.36. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 1.38 trailing stop. Once you have a 1.36 profit, reduce the stop to 0.69. Earnings Report Date: Jul 28, 2022. Beta: 0.80. Market-Cap: 2.136B. Not Optionable. Millicom International Cellular S.A. (TIGO: Communication Services/Telecom Services) - SQUEEZE PLAY. TIGO 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 21.74 and a SELL short entry at 20.36. Once your trade is filled, enter a 1.38 trailing stop. Tighten it to 0.69 after a 1.36 gain. TIGO closed on Friday at 21.26. Earnings Report Date: Jul 28, 2022. Beta: 0.80. Market-Cap: 2.136B. Not Optionable. ENERGY SECTOR NexTier Oilfield Solutions Inc. (NEX: Energy/Oil & Gas Equipment & Services) - BULLISH BOUNCE. Looking a bit frayed after sliding downhill in recent sessions, on Friday NEX seemed intent on initiating a rebound. With moving average support nearby, NEX is at a logical place for Bulls to regroup and extend the familiar uptrend that shareholders have become accustomed to. On continued buying, plan on taking long entries with a BUY at 11.42. Manage risk with a 1.07 stop. Tighten your stop to 0.54 when you have a 1.44 profit. NEX ended the day at 11.11. Earnings Report Date: Aug 02, 2022. Beta: 2.43. Market-Cap: 2.711B. Optionable. FINANCIAL SERVICES SECTOR The Bancorp, Inc. (TBBK: Financial Services/Banks-Regional) - SQUEEZE PLAY. TBBK shareholders know what it feels like to be squeezed. Friday's slim price range reveals uncertainty on both sides of the table, a situation which often resolves itself by either Bears or Bulls quickly gaining a clear advantage. The question is "who will win?" Near-term market action tell us whether we should sell short or we should buy shares instead. TBBK closed Friday at 20.45. The plan is to enter in the right direction by placing a BUY trigger at 21.14 and a SELL short trigger at 19.4. Once TBBK establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.74. After you've collected a 1.9 profit, tighten the stop to 0.87. Earnings Report Date: Jul 27, 2022. Beta: 1.32. Market-Cap: 1.169B. Optionable. INDUSTRIALS SECTOR Fortress Transportation and Infrastructure Investors LLC (FTAI: Industrials/Rental & Leasing Services) - SQUEEZE PLAY. The ticker for Friday's session shows FTAI is now stuck in a tight price band. With the cyclical contraction and expansion nature of volatility in force, we should see a new period of price expansion in the days ahead. To improve the odds of catching the next directional wave, place a BUY trigger at 20.65 and a SELL short trigger at 18.83. When FTAI starts moving out of its narrow range, your order will be triggered. Once you're in the trade, cancel the opposing trigger and set a 1.82 trailing stop. Upon reaching a 1.96 profit, resize the stop to 0.91. Earnings Report Date: Jul 26, 2022. Beta: 1.94. Market-Cap: 2.01B. 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 ---------------- ------- -------- ------- ------ ------- 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/ **********************************
TRADER'S CORNER
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"Two-Way Trading" Several years ago I attended a trading seminar that featured a simulated trading contest. There were approximately thirty traders who participated, with experience ranging from beginner to top professional. The larger group was randomly divided into seven or eight smaller groups, and each team competed for the top prize. A daily stock chart with several weeks of data was displayed on the screen at the front of the room. The chart had no symbol or date - only price, volume, and a MACD histogram. There was no way to tell how old the chart was or what time period it covered. The contest rules were simple. Everyone was given a few minutes to review and discuss the chart in their small group, then write down whether they would go long, short, or stand aside. Each team had to give the specific setup for their entry - such as "if price rises to 20, then buy shares and place a 1-point trailing stop" or perhaps "if price drops down to the 50 day moving average, then rises to close above the high of that same bar, enter a buy order .25 above the close and place a 2-point trailing stop. About a dozen charts were reviewed, each team's criteria were applied, and the results were calculated. There were various degrees of success, but one team's performance went well beyond the rest. Oddly, the top team was made up of three beginners who had absolutely no experience trading, and one veteran trader who had been in the business for many years. It was obvious that the three "rookies" didn't come up with the winning strategy, so later that day I asked the veteran trader if we could get together and talk about the different aspects of his approach and why it was so effective. What I learned during that meeting and in follow up conversations had a huge positive impact on my personal trading. When it comes to evaluating trade setups, it doesn't always have to be one way or the other. Actually, in many cases you are much better off if you let the market decide whether you should go long, or go short, or stand aside. This is what I call "two-way trading." To begin, you have to look at trade setups in a different light. Instead of trying to pre-determine which way price will move, assume that it could go in either direction and plan for both. This requires us to set aside our directional expectations. When you look at a price pattern you probably see it as either a long or a short, but the odds are good that it will work in either direction. The only problem is that we don't know which way it will go, so the solution is to let the price action tell us. Here is how it works. The best price patterns usually contain two distinct support and resistance levels, or what some traders call pivot points. "Two-Way Trading" considers both of these levels when setting triggers for trade execution. For example, a buy entry is triggered if prices move up and break through resistance, while a short sale is triggered if prices move down and break below support. By selecting setups where the support and resistance levels are clearly defined, the trade can be entered with very little risk. The low risk comes from the fact that should the initial move fail, price doesn't have to move very far back to confirm that it's time to get out. The support and resistance levels can be either horizontal or trending - both work very well. Some of the best setups occur when prices are squeezed within a narrowing range of support and resistance, such as in a triangle formation. These sorts of trending Support and Resistance levels aren't as obvious to the untrained eye, but they can provide excellent opportunities that most traders miss. The potential up-moves and down-moves for each Two-Way Trade contain different reward/risk ratios, and in most cases a move in one direction offers considerably more profit potential than the other. I sometimes come across setups where one side appears to have a superior chance of being triggered but there is very little reward potential, while a move in the opposite direction appears unlikely but would be a huge winner if it did take place. Two-Way Trading makes a trader's job easier because each pattern offers two potential trades. Though this method is very powerful, it isn't overly complicated. You locate price patterns with clear support and resistance levels that offer reasonable risk and solid reward potential in either direction, then set your entry triggers and stops near the Support and Resistance levels - simple as that! ~ Thomas Sutton ======================================================================
Best of luck and have a Great Week!
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