September 13, 2022 - The RightLine Report


Notes From The Editor

Five Simple Truths About the Stock Market

The last thing most people associate with trading stocks is predictability. Nobody can say for certain which direction the market will head next, and to what degree. Unexpected news developments can throw a wrench in even the best trade set-ups. One year's top-notch stock pickers can turn into the next year's Wall Street failures. However, there are certain unchanging facts that guide the market - elements that you can count on to help guide your trading:

- The market will relentlessly take advantage of carelessness

It's inevitable: careless trading will ultimately lead to major losses. Failing to use proper position sizing - or worse yet, to not use stop- losses - is something all traders need to guard against. The reason carelessness can be so tempting is because occasionally it gets rewarded. A trader may think, "Hey, last time I left that trade open and it all worked out in the end." This may happen a few times, reinforcing the behavior. But eventually you'll encounter a stock that simply keeps heading the opposite direction. A painful loss soon follows.

- You have complete control over entries and exits

While there's no way of knowing what a stock will do once you're in a trade, you do have the luxury of waiting until the most opportune time to jump onboard the most enticing trade set-ups. Similarly, you can determine the precise moment when to exit a position. So contrary to popular belief, you are not at the whim of the market.

- Price and volume rule the roost.

When you boil it down, all the day-to-day hype, media commentary, and brokerage analysis is just hot air. Price and volume tell the real tale of the tape, showing you how the supply/demand relationship is changing. It pays to focus on what a stock is doing, rather than what people are saying about it.

- There will always be contrarians

Bull market or Bear, there's a never-ending chorus of traders and analysts calling for a move in the opposite direction. While eventually they'll be right, one should never take their word for it; let price action confirm a directional shift by waiting for a break of a key level or a violation of a trendline. Until that happens, simply take note of what the contrarians are saying and continue to follow the trend.

- Wall Street wants you to over-trade

The aforementioned hype machine makes traders fearful of missing The Next Big Move. Without this tendency, the profits reaped by the major brokerages wouldn't be quite as massive. Be selective with your money, and don't operate under the pressure of trying to catch every great trade. Rest assured that the market will have plenty of other great set-ups if you choose to wait on the sidelines.

Here's to profits!

Kent Barton
Senior Analyst

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
Stocks Covered Today    Stock Splits     

Quick List

Stock     09/13     09/13      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

JAKK      23.74     -1.79     25.23      22.9        2.33/1.17       3.1
TNK       27.40     -0.08     28.24     26.26        1.98/0.99      1.84
PFHC      20.46     -0.22     21.07     19.38        1.69/0.85      2.66
BCYC      24.42     -0.56     25.33     23.43         1.9/0.95      3.68
AFRM      24.19     -2.60               23.31        2.26/1.13      5.32

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.

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
Stocks Covered Today    Stock Splits     

Market Summary

The markets closed significantly lower on Tuesday following the release of a discouraging inflation report. The Consumer Price Index was up unexpectedly in August, and remains seriously elevated. The news arrived as traders continue to wrestle with high expectations of continued aggressive monetary policy from the Federal Reserve Bank, as this latest report likely insurating a 75-basis point rate hike at the next FOMC meeting later this month. A bit of good economic news, small business optimism is now up more than analysts predicted. In equities headlines, the price of Oracle (ORCL $76) dropped on news that the company fell short of earnings estimates, while UBS (UBS $17) shares rallied after the firm announced it will raise its quarterly dividend. The USD/dollar took off like a rocket after the CPI data hit the wires, gold and oil prices declined, treasuries were mixed.

                        Sep 12, 2022           Sep 13, 2022   
                  --------------------   --------------------
Dow                 32,381.34   229.63    31,104.97 -1,276.37
Nasdaq              12,266.41   154.10     11,633.57  -632.84
S&P 500              4,110.41    43.05      3,932.69  -177.72

NYSE Volume                      3.85B                  4.25B
NYSE Advancers                   2,430                    378
NYSE Decliners                     771                  2,894

Nasdaq Volume                    4.21B                  5.24B
Nasdaq Advancers                 2,925                    993
Nasdaq Decliners                 1,656                  3,666

                                 New Highs/Lows

                   09/06  09/07  09/08  09/09  09/12  09/13
NYSE New Highs        17     16     23     36     42     17
NYSE New Lows        222    141    101     29     37    105
Nasdaq New Highs      35     31     34     48     57     37
Nasdaq New Lows      398    291    200     95     97    218

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TRADER'S TIP: "Computer Based Trading"

Computer technology helps us trade more effectively, but only if our methodology is reliable. "Reliable" doesn't necessarily mean complex. In fact most reliable short-term trading methods are fairly simple. However, every method should include some type of technical analysis to time entries and exits, along with a risk management component to prevent account damage.

The Technical Analyst

SPX Daily Chart

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 - 3932.69 September 13, 2022

52-Week High: 4818.62
52-Week Low: 3636.85
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4390.42
Resistance 2: 4200.36
Resistance 1: 4133.86
Pivot: 4010.30
Support 1: 3943.80
Support 2: 3820.24
Support 3: 3630.18

NASDAQ Composite - 11633.57 September 13, 2022

52-Week High: 16212.23
52-Week Low: 10565.14
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 13227.83
Resistance 2: 12566.66
Resistance 1: 12339.48
Pivot: 11905.49
Support 1: 11678.31
Support 2: 11244.32
Support 3: 10583.15
Dow Industrials - 31104.97 September 13, 2022

52-Week High: 36952.65
52-Week Low: 29653.27
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 34167.86
Resistance 2: 32988.58
Resistance 1: 32570.14
Pivot: 31809.30
Support 1: 31390.86
Support 2: 30630.02
Support 3: 29450.74

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
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Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, September 12, 2022:
11 am NY Fed 3-year inflation expectations

Tuesday, September 13, 2022:
6 am NFIB small-business index  
8:30 am Consumer price index 
8:30 am Core CPI  
8:30 am CPI (year-on-year) 
8:30 am Core CPI (year-on-year) 
2 pm Federal budget 

Wednesday, September 14, 2022:
8:30 am Producer price index final demand

Thursday, September 15, 2022:
8:30 am Initial jobless claims
8:30 am Continuing jobless claims
8:30 am Retail sales	
8:30 am Retail sales excluding vehicles
8:30 am Philadelphia Fed manufacturing index
8:30 am Empire State manufacturing index	
8:30 am Import price index
9:15 am Industrial production index
9:15 am Capacity utilization
10 am	Business inventories

Friday, September 16, 2022:
10 am	UMich consumer sentiment index
10 am	UMich 5-year consumer inflation expectations

For a chart of typical Up or Down market reactions to specific major US economic reports 
go to:  Economic Indicator Effects

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
Stocks Covered Today    Stock Splits     

TRADER'S TIP: "Trader Tax Status"

"Trader tax status" is the IRS designation allowing traders to benefit from a number of positive tax rules. Quite a few of these rules are activated by "Mark-To-Market" accounting procedures. For example, Mark- To-Market converts capital losses - that can only be deducted against capital gains - into ordinary losses that can be deducted against ALL types of income. Be sure to check with your tax accountant for details.

Stocks Covered in This Issue


JAKKS Pacific, Inc. (JAKK: Consumer Cyclical/Leisure) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in JAKK'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 25.23 and a SELL order at 22.9. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.33 trailing stop. Tighten the stop to 1.17 once you have a 3.1 gain. JAKK closed Tuesday at 23.74. Earnings Report Date: Oct 25, 2022. Beta: 2.37. Market-Cap: 230.837M. Not Optionable.


Teekay Tankers Ltd. (TNK: Energy/Oil & Gas Midstream) - SQUEEZE PLAY. Trader indecision has put TNK 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 28.24 and a SELL short entry at 26.26. Now it's up to TNK to show us which entry will be filled. Once the trade is underway place a 1.98 trailing stop, which can be tightened to 0.99 after you achieve a 1.84 profit. TNK closed on Tuesday at 27.40. Earnings Report Date: Nov 02, 2022. Beta: -0.02. Market-Cap: 928.082M. Optionable.

ProFrac Holding Corp. (PFHC: Energy/Oil & Gas Equipment & Services) - SQUEEZE PLAY. Sometimes when Bulls and Bears face off in the market arena for a typical day-long battle, there is no clear winner. This is evident when the daily price range contracts to an unusually narrow state. PFHC found itself in this condition on Tuesday when neither buyers or sellers were able to push ahead. This setup provides traders a chance to hop on board the next breakout - whether it's to the upside or down - with little risk of loss. To do this place a BUY order at 21.07 and a SELL short trigger at 19.38. When PFHC moves outside of Tuesday's range, one of the orders will be filled. Once you hold a position of shares, cancel the unfilled order and place a 1.69 trailing stop. After you've got a 2.66 profit, tighten the stop to 0.85. PFHC closed at 20.46 on Tuesday. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 843.77M. Optionable.


Bicycle Therapeutics plc (BCYC: Healthcare/Biotechnology) - SQUEEZE PLAY. In certain stocks a tightly constricted price range is a sign that neither bulls nor bears are confident of winning in the near term. This often means that the side that gives up first causes a quick move in the opposite direction. In these fear dominated skirmishes, opposing traders always benefit from the retreat. In the Squeeze Play setup you can actually play both sides of the inevitable surge. BCYC traders reached this state of stand-off on Tuesday with the tightest range of the past seven days. You can take advantage of their efforts by placing a low risk BUY trigger at 25.33 and a SELL short trigger at 23.43. After one of the two orders is filled, cancel the un-triggered order and place a trailing stop at 1.9 which can be tightened to 0.95 on a 3.68 gain. BCYC closed Tuesday at 24.42. Earnings Report Date: Nov 02, 2022. Beta: 0.76. Market-Cap: 724.69M. Optionable.


Affirm Holdings, Inc. (AFRM: Technology/Software-Infrastructure) - BEARISH U-TURN. The weight of AFRM's declining weekly trend was lightened recently when shares began to move upward. However, like a swimmer against the tide AFRM encountered strong resistance on Tuesday. Price action indicates a likely return to the previous downtrend, so plan to short AFRM upon reaching our SELL trigger at 23.31. Set a 2.26 trailing stop which can be tightened to 1.13 after you have a 5.32 gain. AFRM ended the latest session at 24.19. Earnings Report Date: Nov 08, 2022. Beta: N/A. Market-Cap: 6.929B. 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.

Editorial    Quick List    Market Summary    Technical Analyst    Market Calendar   
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  
---------------- -------     --------    -------     ------  -------   
Nasdaq Inc        NDAQ       7/20/2022  8/29/2022    3-for-1   Yes
Tesla             TSLA       8/5/2022   8/25/2022    3-for-1   Yes
Palo Alto Net     PANW       8/23/22    9/14/22      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.

RightLine Risk Control Calculator 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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