December 26, 2019 - The RightLine Report 

 
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                      NOTES FROM THE EDITOR
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A RightLine subscriber asked for clarification about holding both long and short entries in the same stock ...

"I like your inputs and technical analysis. In one of your reports you mentioned that some people trade the market both ways. What I understood is that they go long and short at the same time, two accounts, I assume. Can you lead me more into a better understanding of this technique of trading? Thanks!"

Trading "both ways" in the same security - long and short - is usually done at different times. For example, you might enter a long trade in the SPY on a bounce from support. When the price rises to a known level of resistance, exit, take your profits and reverse the SPY trade to a short for the expected move downward. This is the most common way of trading "both ways," though not at the same time.

A way to trade both ways at the same time is to have one long position in a stock that is trending higher, and a short position in a different stock that is trending lower. This allows you to take advantage of strong trends in different stocks - even when the trends are counter to each other.

There are even occasions when it is wise to trade the same stock or market in both directions at the same time. Though it may seem contradictory at first, it is sometimes a good strategy to hold two opposing positions in the same stock at the same time - but NOT the same time frame.

For example, you might have a long-term position in SPY held an IRA or 401-k retirement account that you manage using weekly charts. We refer to this position as being in a "weekly time frame." At the same "time" you may hold another position in SPY, only this one is intended to take advantage of a short-term decline expected to occur over the next few days.

We would refer to this second position as being in a "daily time frame." You may hold your weekly time frame position for several months or even years, while the daily trade is normally held for less than a couple of weeks.

Bottom line: There is a huge difference between the "same time" and the "same time frame." Holding opposing positions in the same stock in the same time frame is at best a breakeven proposition. Actually, it's never as good as break even, because you have to deduct brokerage fees and related costs.

On the other hand, it is often a good strategy to hold both long and short positions in the same stock in different time frames. Just be sure that you fully understand the difference between "time" and "time frame" before you do it.

Trade well,

~Thomas Sutton, Editor 

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                           "QUICK LIST"
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Stock     12/26     12/26      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

KOP       38.98     -0.14     40.03     37.68        2.35/1.18      1.80
RCKT      23.88     -0.22     24.78     22.79        1.99/0.99      3.36
HHR       20.52     -0.05     20.95     19.40        1.55/0.78      2.62
OGS       92.53      0.50     93.74                  5.18/2.59      2.00


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 www.rightline.net/education/using-quicklist.html. In addition,always use the RightLine Risk Calculator before entering any position. For access to the Risk Calculator, go to www.RightLine.net and login to the Member's area.

To learn more about controlling risk go to the RightLine Risk Control System at http://www.rightline.net/education/riskcontrol.html

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                           MARKET SUMMARY
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Each of the major US stock averages recorded another all-time high on Thursday following the release of mixed domestic economic news. Included in the data was a drop in unemployment claims and mortgage applications, plus early results from holiday spending which showed US retail sales - minus automobiles - rose 3.4% compared to last year. In equities, Global investment firm KKR & Company (KKR $29) has agreed to acquire OverDrive, a digital reading platform for libraries and schools, from Rakuten (RKUNY $9). Financial details of the transaction have not been disclosed. KKR also announced that they've teamed up with Alberta Investment Management to buy a 65% stake in a Canadian gas pipeline from TC Energy (TRP $54). Shares of KKR traded higher. Treasury yields were mixed, the US/dollar declined, gold and oil prices advanced. 


                       Dec 25, 2019           Dec 26, 2019   
                  --------------------   --------------------
Dow                    CLOSED        0        28,621  +105.94
Nasdaq                 CLOSED        O         9,022   +69.51
S&P 500                CLOSED        0         3,240   +16.53

NYSE Volume                          0                  2.22B
NYSE Advancers                       0                   1791
NYSE Decliners                       0                   1124

Nasdaq Volume                        0                  1.66B
Nasdaq Advancers                     0                   1739
Nasdaq Decliners                     0                   1432

                                 New Highs/Lows

                   12/19  12/20  12/23  12/24  12/25  12/26
                 --------------------------------------------
NYSE New Highs       171    272    199    133      0    175
NYSE New Lows         15      9     12      5      0      7
Nasdaq New Highs     229    337    240    158      0    216
Nasdaq New Lows       44     51     45     33      0     27


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                              TRADER'S TIP:  
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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. 
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                         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: www.rightline.net/education/how_to_use_rlr_technical_analyst.html. 
S&P 500 - 3239.91 December 26, 2019

52-Week High: 3240.08
52-Week Low: 2443.96
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 3294.20
Resistance 2: 3252.18
Resistance 1: 3236.70
Pivot: 3210.16
Support 1: 3194.68
Support 2: 3168.14
Support 3: 3126.12

http://www.rightline.net/rlch/122619SPX.jpg

NASDAQ Composite - 9022.39 December 26, 2019

52-Week High: 9022.46
52-Week Low: 6336.97
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 9166.49
Resistance 2: 9024.35
Resistance 1: 8974.65
Pivot: 8882.21
Support 1: 8832.51
Support 2: 8740.07
Support 3: 8597.93

Dow Industrials - 28621.39 December 26, 2019

52-Week High: 28624.10
52-Week Low: 22267.42
Daily Trend: UP
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 29252.40
Resistance 2: 28835.43
Resistance 1: 28645.26
Pivot: 28418.46
Support 1: 28228.29
Support 2: 28001.49
Support 3: 27584.52

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                             MARKET CALENDAR
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--ECONOMIC REPORTS AND EVENTS (all times are Eastern): 
Monday, December 23, 2019:
23-Dec  8:30 am   Chicago Fed national index
23-Dec  10 am   New home sales

Tuesday, December 24, 2019:
24-Dec  8:30 am   Durable goods orders
24-Dec  8:30 am   Core capex orders
Christmas Eve - Market closed early 1:00 PM EST

Wednesday, December 25, 2019:
25-Dec None scheduled - Market closed Christmas Day

Thursday, December 26, 2019:
26-Dec  8:30 am   Weekly jobless claims

Friday, December 27, 2019:
27-Dec          None scheduled

For a chart of typical Up or Down market reactions to specific major US economic reports, go to "Economic Indicator Effects" at this link: http://www.rightline.net/education/economic.html 
 
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                              TRADER'S TIP: 
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TRADER'S TIP: "Check the Charts, Not the Chatters"

When it comes to market reversals, traders usually listen to the wrong sources. They often follow the news media when they would be much better off viewing the technical picture. Avoid the mind numbing chatter of self-appointed experts. These guys and gals are normally there to make money for themselves - not for you. 

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                      STOCKS COVERED IN THIS ISSUE    
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BASIC MATERIALS SECTOR

Koppers Holdings Inc. (KOP: Basic Materials/Specialty Chemicals) - SQUEEZE PLAY. Trader indecision has put KOP 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 40.03 and a SELL short entry at 37.68. Now it's up to KOP to show us which entry will be filled. Once the trade is underway place a 2.35 trailing stop, which can be tightened to 1.18 after you achieve a 1.80 profit. KOP closed on Thursday at 38.98. Earnings Report Date: Feb 28, 2020. Beta: 1.16. Market-Cap: 807M. Optionable.

HEALTHCARE SECTOR

Rocket Pharmaceuticals, Inc. (RCKT: 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 RCKT's case we will enter a BUY should it reach the 24.78 level, or a SELL short trade if it drops to 22.79. As usual a trailing stop is essential, 1.99 which should be tightened to 0.99 on a 3.36 gain. RCKT closed Thursday at 23.88. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1.3B. Optionable.

INDUSTRIALS SECTOR

HeadHunter Group PLC (HHR: Industrials/Staffing & Employment Services) - 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 HHR. A move to the upside will trigger our BUY entry at 20.95, while a drop to 19.40 will trigger our SELL short entry. Follow your position with a 1.55 trailing stop. Tighten the stop to 0.78 once you have a 2.62 gain. HHR closed Thursday at 20.52. Earnings Report Date: N/A. Beta: N/A. Market-Cap: 1B. Not Optionable.

UTILITIES SECTOR

ONE Gas, Inc. (OGS: Utilities/Utilities-Regulated Gas) - BULLISH BOUNCE. Up-trending stocks like OGS have a tendency to bounce their way skyward rather than travel higher in a straight line. After touching down to a moving average support level on Thursday, OGS is poised to lift off again. To take advantage of this setup, prepare to BUY shares at 93.74 if positive price action occurs. As always, follow your entry with a trailing stop. A 5.18 trailer should work well with OGS. Tighten it to 2.59 on a 2.00 gainer. Earnings Report Date: Feb 18, 2020. Beta: 0.25. Market-Cap: 4.9B. 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: http://www.rightline.net/education/riskcontrol.html

Use "Gap Adjusted Entries" to reset the Entry Price for stocks that gap beyond recommended entry levels.
Link: http://www.rightline.net/education/gap-adjusted.html 

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

Penns Woods Banc   PWOD    09/03/2019  10/01/2019   3-for-2   No
Equity Lifestyle   ELS     09/20/2019  10/16/2019   2-for-1   Yes
Middlefield Banc   MBCN    10/07/2019  11/12/2019   2-for-1   No

For a closer look at the different stages of a Stock Split go to: http://www.rightline.net/splits/index.html/#split-stages 
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