September 15, 2022 - The RightLine Report

                      NOTES FROM THE EDITOR

Pattern Day Trading: Demystified

Are you a day trader? While you might have your definition of what constitutes day trading, the SEC has its own regulatory definition. And that can make a big difference when it comes to the rules that dictate your trading strategy.

First off, the SEC defines a pattern day trader as someone who executes four or more round-trip (in-and-out) day trades within five consecutive business days. Day trades, for this purpose, refer to a stock you buy and sell during the same day.

If you don't remotely come close to this frequency of trading, pattern day trading rules have no direct impact on you and your account. However, if you like to frequently move in and out of the market, buying and selling stocks several times a day, here's what you need to know:

- To engage in pattern day trading, you need to maintain an account balance of at least $25,000. This must be a margin account. To make this happen, you'll obviously need to have necessary funds, but also need your brokerage to authorize you for a margin account.

- The brokerage can determine, on their own, whether or not you're likely to be a pattern day trader. This can be a result of the initial questions you answer when you apply for an account, or a result of your trading history with the brokerage.

- Remember that margin requirement? By being labeled a pattern day trader, you have access to a lot more leverage. As a pattern day trader, you have buying power up to four times your margin excess. For example, let's say you have $30,000 worth of equities in your account. That's $30,000 above your minimum margin. Based on the 4:1 rule, you'd be able to buy $120,000 worth of securities.

Note that this leverage isn't always a good thing. Without proper risk management, you can be slaughtered. Exercise extreme caution when trading on margin. We can't stress this enough!

The vast majority of RightLine set-ups are geared toward swing traders, who don't typically enter and exit the same equity during the same trading session. If you fall in this category too, it's still good to at least have an awareness of pattern day trading rules.

While pattern day traders don't make up the majority of the market's total volume, their margin buying and fast paced in-and-out trading can lead to heightened volatility. Their impact can be particularly strong in volatile stocks that tend to trade relatively large intraday ranges.

Here's to profits,

Kent Barton
Senior Analyst

                           "QUICK LIST"

Stock     09/15     09/15      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

TSE       24.98      0.24      25.7     23.83        1.87/0.94      2.36
LOVE      25.20      0.89     25.77     23.48        2.29/1.15       3.6
MRTX      82.49      0.62     85.59                  6.77/3.39      7.72
INSM      24.18      0.05     24.56     22.84        1.72/0.86      2.14
ASLE      20.89      0.27     21.31                  1.51/0.76      1.76

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 In addition,always use the RightLine Risk Calculator before entering any position. For access to the Risk Calculator, go to

To learn more about controlling risk go to the RightLine Risk Control System at

For a glossary of terms unique to The RightLine Report go to:

Questions? Send us an email using our contact form at:
                           MARKET SUMMARY

The major US stock indices were lower on Thursday as traders appear to be pricing in a 75-basis-point rate hike as the most likely outcome for next week's Fed Bank FOMC - Federal Open Market Committee - meeting. A heavy economic calendar included below par retail sales, a dip in weekly initial unemployment claims and an unexpected decline in industrial production. New York manufacturing activity improved but remains in contraction territory, while Philadelphia manufacturing surprisingly fell into contraction territory. In addition, import prices decreased by a smaller amount than predicted and business inventories increased as forecast. On the equities front, US railroad companies reached a tentative deal to avoid a strike, Humana (HUM $497) increased its full-year guidance, and Adobe Incorporated (ADBE $309) is set to acquire collaborative design platform Figma for roughly $20-billion. Oil prices and gold finished the trading session lower, the USD/dollar closed near even, and treasuries were mostly lower, lifting yields.

                       Sep 14, 2022           Sep 15, 2022   
                  --------------------   --------------------
Dow                 31,135.09    30.12     30,961.82  -173.27
Nasdaq              11,719.68    86.10     11,552.36  -167.32
S&P 500              3,946.01    13.32      3,901.35   -44.66

NYSE Volume                      4.33B                  4.48B
NYSE Advancers                   1,663                    938
NYSE Decliners                   1,526                  2,280

Nasdaq Volume                    4.89B                  4.84B
Nasdaq Advancers                 2,236                  1,943
Nasdaq Decliners                 2,331                  2,617

                                 New Highs/Lows

                   09/08  09/09  09/12  09/13  09/14  09/15
NYSE New Highs        23     36     42     17     33     18
NYSE New Lows        101     29     37    105    183    176
Nasdaq New Highs      34     48     57     37     37     25
Nasdaq New Lows      200     95     97    218    265    266

                              TRADER'S TIP:  

TRADER'S TIP: "Making Decisions Builds Confidence"

Each time we enter or exit a trade we make a decision. Every decision we make causes us to grow - IF we give our experiences the value they deserve. However, if we short-change ourselves for not always making "perfect" choices and view our experiences as "mistakes" our confidence will go down instead of up.

Just remember that trading conditions are rarely optimum, and we're always making decisions under less than ideal circumstances. Give yourself a break, knowing that only YOU can set the proper value for each experience you have. Be sure you make the right choice. Build your confidence and never value any trade or other experience as worthless.
                         THE TECHNICAL ANALYST

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:
S&P 500 - 3901.35 September 15, 2022

52-Week High: 4818.62
52-Week Low: 3636.85
Daily Trend: DOWN
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 - 11552.36 September 15, 2022 52-Week High: 16212.23 52-Week Low: 10565.14 Daily Trend: DOWN 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 - 30961.82 September 15, 2022 52-Week High: 36952.65 52-Week Low: 29653.27 Daily Trend: DOWN 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
************************** 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" at this link:
                              TRADER'S TIP: 

TRADER'S TIP: "How Do You Get To Carnegie Hall?"

We've all heard the answer to this old joke . . . "practice, practice, practice!" While it is certainly obvious that trading successfully requires plenty of it, many investors have yet to apply this ancient bit of oriental wisdom: "Practice is the best of all instructors."

                      STOCKS COVERED IN THIS ISSUE    


Trinseo PLC (TSE: Basic Materials/Specialty Chemicals) - SQUEEZE PLAY. The ticker for Thursday's session shows TSE 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 25.7 and a SELL short trigger at 23.83. When TSE 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 1.87 trailing stop. Upon reaching a 2.36 profit, resize the stop to 0.94. Earnings Report Date: Nov 03, 2022. Beta: 1.30. Market-Cap: 873.616M. Optionable.


The Lovesac Company (LOVE: Consumer Cyclical/Furnishings, Fixtures & Appliances) - SQUEEZE PLAY. Thursday's trading session left LOVE 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 25.77 and your SELL short trigger at 23.48. One of the orders will be triggered by upcoming price action. When your market order is filled, cancel the remaining trigger and enter a 2.29 trailing stop. Once you have a 3.6 profit, reduce the stop to 1.15. Earnings Report Date: Dec 06, 2022. Beta: 2.38. Market-Cap: 382.647M. Optionable.


Mirati Therapeutics, Inc. (MRTX: Healthcare/Biotechnology) - BULLISH BOUNCE. Among other strengths, the Bullish Bounce protects traders from buying a stock "at the top" of its current cycle. The entry into this setup always takes place in upward-moving stocks that have retreated a bit under normal conditions. Now sitting at 82.49, MRTX is on our radar for a BUY entry at 85.59. If you purchase shares of MRTX, be sure to also place a trailing stop of 6.77. Snug it up to 3.39 on a 7.72 gain. Earnings Report Date: Nov 07, 2022. Beta: 0.91. Market-Cap: 4.587B. Optionable.

Insmed Incorporated (INSM: Healthcare/Biotechnology) - SQUEEZE PLAY. INSM shareholders know what it feels like to be squeezed. Thursday'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. INSM closed Thursday at 24.18. The plan is to enter in the right direction by placing a BUY trigger at 24.56 and a SELL short trigger at 22.84. Once INSM establishes direction, place your triggered order. As soon as you are in the trade, place a trailing stop in the amount of 1.72. After you've collected a 2.14 profit, tighten the stop to 0.86. Earnings Report Date: Oct 26, 2022. Beta: 1.83. Market-Cap: 2.901B. Optionable.


AerSale Corporation (ASLE: Industrials/Airports & Air Services) - BULLISH BOUNCE. This trader-friendly setup turns repetitive stock behavior into real profits. Based on the tendency for up-trending stocks to drop briefly and then resume the up-trend, the Bullish Bounce places traders into excellent stocks when conditions are primed for more skyward movement. ASLE's current price action near moving average support signals a potential BUY entry at 21.31, followed by a 1.51 trailing stop which can be tightened to 0.76 upon earning 1.76. ASLE closed Thursday at 20.89. Earnings Report Date: Nov 07, 2022. Beta: 0.46. Market-Cap: 1.081B. 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.

Use "Gap Adjusted Entries" to reset the Entry Price for stocks that gap beyond recommended entry levels.

                           STOCK SPLIT SUMMARY

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

For a closer look at the different stages of a Stock Split go to:
Best of luck and have a Great Week!
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