September 20, 2022 - The RightLine Report


Notes From The Editor

You may have heard about the three mountain bikers who were air lifted to safety in a rescue helicopter after getting lost in the San Bernardino National Forest. The next day they decided to go back into the woods and get their bicycles. Unfortunately, the three young men got lost and had to be rescued ... again!

Although this sort of behavior may seem bizarre, it's quite common among traders and investors. No, we rarely get lost in the woods twice in two days. On the other hand many of us continue to repeat the same mistakes over and over again. When it comes to trading the markets, losing money rarely results from what others do to us. It comes from what we do to ourselves.

We all have blind spots in our trading field of vision - things that we just don't see because of our psychological filters. For example, most new traders ignore the fact they have little or no training in the markets, yet still expect to be successful without any intelligent guidance. Their blind spot may be obvious to you, but it certainly isn't obvious to them.

Similarly, many experienced traders know that rules for trading are important, so they set rules, and then they break them. Strange? Yes, but that process is a common trading behavior.

The reasons for these types of blind-spot behaviors are embedded deep in our brains. Today's actions are largely the result of early childhood conditioning that established habits and other aspects of our personality long before we knew what a habit was. Ever break any rules when you were a kid? Yep, me too.

As young children we were unaware to how silly we probably looked to others when we used our blind spots to avoid taking responsibility for our actions.

"But I couldn't help it!"

Denial always seemed like a good idea at the time, now we know that it wasn't. In the same way, blind-spot trading behaviors always seem like the right thing to do at the time we do them.

Saying "Oh, the market did that to me" is just a way to deny the fact that a loss ocurred because of decisions we made and actions we took.

Have you ever noticed how most investors are reluctant to admit that they are responsible for their losses, yet they seem proud of their gains? Truth is we are responsible for both profits and losses. Once we accept that simple truth, we can limit losses and increase profits.

"Practice, practice, practice."

We do this by drafting basic trading plans and then executing them over and over until we can trust our ability to respond appropriately to any trading situation.

At first glance it seems natural to be ashamed of our mistakes and proud of our accomplishments. However, our blunders usually teach us much more than our achievements - if we are willing to learn from them. The only truly bad mistakes are the ones that we deny. It takes courage to own up and accept them as valuable learning experiences to be embraced.

The good news is that we can change outdated habits and beliefs by taking responsibility - even when it hurts. A trading mistake can cost quite a bit in terms of cash, so it's always wise to get at least the same amount of value in usable experience. Mistakes become assets when you remember that bad judgment leads to experience, and experience leads to good judgment.

- Thomas Sutton, Editor

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

Quick List

Stock     09/20     09/20      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

CRT       20.90      0.53     21.19     19.63        1.56/0.78      3.34
UPST      23.03     -0.43     24.14     21.94          2.2/1.1      4.24
TMCI      23.55      0.60     24.06                  2.52/1.26      2.24
MRUS      20.09     -0.23     20.59     18.69         1.9/0.95      2.38
HLVX      20.29     -0.33     20.61     19.39        1.22/0.61      2.34

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 major US stock indices were lower on Tuesday as the market looked ahead to the highly anticipated monetary policy decision from the Federal Reserve on Wednesday. Another 75-basis point rate hike is expected, as traders also wrestle with the possibility of a 100-basis point hike following last week's consumer price inflation report. In economic news, housing starts rose much more than expected, yet building permits declined by more than analysts predicted. On the equities front, UnitedHealth Group (UNH $523) was granted permission from a federal judge to proceed with its acquisition of Change Healthcare, which the US Department of Justice has attempted to stop. Ford Motor Company (F $13) reported that inflation and parts shortages will increase their costs by $1-billion, but the automaker still reaffirmed its full year outlook. The USD/dollar and treasury yields were up, oil prices and gold ended the session lower.

                        Sep 19, 2022           Sep 20, 2022   
                  --------------------   --------------------
Dow                 31,019.68   197.26     30,706.23  -313.45
Nasdaq              11,535.02    86.62     11,425.05  -109.97
S&P 500              3,899.89    26.56      3,855.93   -43.96

NYSE Volume                      3.82B                  4.09B
NYSE Advancers                   1,865                    567
NYSE Decliners                   1,344                  2,682

Nasdaq Volume                     4.2B                  4.07B
Nasdaq Advancers                 2,157                  1,266
Nasdaq Decliners                 2,489                  3,366

                                 New Highs/Lows

                   09/13  09/14  09/15  09/16  09/19  09/20
NYSE New Highs        17     33     18     13     15     13
NYSE New Lows        105    183    176    362    229    395
Nasdaq New Highs      37     37     25     26     42     29
Nasdaq New Lows      218    265    266    477    490    558

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

TRADER'S TIP: "Paper Trading"

"The purpose of rehearsal is to create the habit of the objective."

~ William H. Macy, actor

Paper trading is helpful because it allows newcomers to learn and develop a certain degree of skill without putting real money into the market. However, this type of "virtual" experience is limited because it doesn't produce genuine emotional involvement.

In fact there is a huge difference between the safety of imagined risk and the raw challenge of having to put cash - your cash - at risk. In the real world, emotional challenges due to routine losses usually influence a trader's attitude and decision-making process to a larger degree than ever expected.

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 - 3855.93 September 20, 2022

52-Week High: 4818.62
52-Week Low: 3636.85
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 4507.62
Resistance 2: 4225.42
Resistance 1: 4049.37
Pivot: 3943.22
Support 1: 3767.17
Support 2: 3661.03
Support 3: 3378.83

NASDAQ Composite - 11425.05 September 20, 2022

52-Week High: 16212.23
52-Week Low: 10565.14
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 13585.04
Resistance 2: 12631.77
Resistance 1: 12040.08
Pivot: 11678.50
Support 1: 11086.81
Support 2: 10725.23
Support 3: 9771.96
Dow Industrials - 30706.23 September 20, 2022

52-Week High: 36952.65
52-Week Low: 29653.27
Daily Trend: DOWN
Weekly trend: DOWN
Weekly Pivot Levels
Resistance 3: 35200.10
Resistance 2: 33246.14
Resistance 1: 32034.28
Pivot: 31292.18
Support 1: 30080.32
Support 2: 29338.22
Support 3: 27384.26

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

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Monday, September 19, 2022:

Tuesday, September 20, 2022:

Wednesday, September 21, 2022:

Thursday, September 22, 2022:

Friday, September 23, 2022:

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: "Using The Market Map"

While Charting and Technical Analysis gives us a map of the market by revealing the price levels where trading decisions need to be made, it doesn't make those decisions for us. It's our job as traders to pilot the journey by entering positions and taking the right exits along the way!

Stocks Covered in This Issue


Cross Timbers Royalty Trust (CRT: Energy/Oil & Gas E&P) - SQUEEZE PLAY. Trader indecision has put CRT 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 21.19 and a SELL short entry at 19.63. Now it's up to CRT to show us which entry will be filled. Once the trade is underway place a 1.56 trailing stop, which can be tightened to 0.78 after you achieve a 3.34 profit. CRT closed on Tuesday at 20.90. Earnings Report Date: N/A. Beta: 0.65. Market-Cap: 125.4M. Not Optionable.


Upstart Holdings, Inc. (UPST: Financial Services/Credit Services) - SQUEEZE PLAY. The struggle between buyers and sellers has resulted in UPST'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 24.14 and a SELL order at 21.94. Regardless of which order is triggered, cancel the other one and follow your entry with a 2.2 trailing stop. Tighten the stop to 1.1 once you have a 4.24 gain. UPST closed Tuesday at 23.03. Earnings Report Date: Nov 07, 2022. Beta: N/A. Market-Cap: 1.873B. Optionable.


Treace Medical Concepts, Inc. (TMCI: Healthcare/Medical Devices) - BULLISH BOUNCE. Entering a position in the early stages of a bounce is great way to get on board an up-trending stock. The "Bullish Bounce" setup identifies probable candidates by evaluating the trading action that takes place near support levels. TMCI's behavior on Tuesday could very well be a sign that a new bounce is underway. Place a BUY trigger at 24.06. In the event your trigger is met, also place a 2.52 trailing stop which can be trimmed down to 1.26 when you have a 2.24 profit. TMCI closed Tuesday at 23.55. Earnings Report Date: Nov 02, 2022. Beta: N/A. Market-Cap: 1.305B. Optionable.

Merus N.V. (MRUS: 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 MRUS. A move to the upside will trigger our BUY entry at 20.59, while a drop to 18.69 will trigger our SELL short entry. Follow your position with a 1.9 trailing stop. Tighten the stop to 0.95 once you have a 2.38 gain. MRUS closed Tuesday at 20.09. Earnings Report Date: Oct 31, 2022. Beta: 0.89. Market-Cap: 921.693M. Optionable.

HilleVax, Inc. (HLVX: Healthcare/Biotechnology) - 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 HLVX's case we will enter a BUY should it reach the 20.61 level, or a SELL short trade if it drops to 19.39. As usual a trailing stop is essential, 1.22 which should be tightened to 0.61 on a 2.34 gain. HLVX closed Tuesday at 20.29. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 678.238M. Not 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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