Notes From The Editor

Trading the After-Hours Market

For many decades the two major markets - New York Stock Exchange and the Nasdaq - have started their trading sessions at 9:30 a.m. ET and stopped at 4:00 p.m. ET. Even though trading before and after those hours - often called "after-hours" trading - has taken place for many years, it was usually limited to wealthy individuals and professional commercial investors.

All of that changed dramatically with the emergence of online trading via Electronic Communications Networks (ECNs), which made it possible for virtually anyone to trade the after-hours markets. However before choosing to trade stocks after-hours, you will need to take the time for a bit of important education. There are significant differences between trading during regular and extended hours, and you'll find that the after-hours market carries its own set of unique risks.

If you're interesting in trading outside the normal session, the first step is to go to your broker's website and read whatever they have available on using their platform to trade after-hours. In the same way that services offered by different brokers during the regular session will vary, each broker's approach to trading in the after-hours market will also differ.

For that reason you should shop around to find the best fit for your personal trading needs. Be sure to read the fine print contained in any disclosure documents, you may discover some unexpected caveats. Despite the extra red-tape and necessary caution, I've personally found that there are times when being able to access after-hours buyers and sellers is extremely helpful.

Keep in mind that although after-hours trading offers valuable opportunities, there are inherent risks involved for anyone who wants to join in. Stay tuned, we'll have more on that in the next week-day issue of the RightLine Report.

Trade well!

Thomas Sutton, Editor

Quick List

    
Stock     05/04     05/04      Buy      Short   Trailing Stops     Gain 
Symbol    Price      +/-      Entry     Entry   Initial/Tighten   Amount 
------  --------  --------  --------  --------  ---------------  --------

BJRI      31.41     -0.30     32.35                   2.9/1.45      1.94
CRT       20.17      0.37     20.73      19.1        1.63/0.82      2.08
SDGR      30.12      0.97                                    /         0
VRNA      20.88     -0.31     21.32     19.88        1.44/0.72      1.88
TDOC      25.25     -0.47     26.11     24.36        1.75/0.88      2.18

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.

Market Summary

The major US stock indexes were lower on Thursday as persistent concerns over regional banks continue to weigh down price action. In equities, PacWest Bancorp shares fell more than 30% on the day and are now down over 70% in 2023. Treasury bond yields were also lower as investors buy into safe-haven assets. Traders have once again started to price in rate cuts by the Fed Bank, as early as September. In the meantime, one of the main consequences of the banking upheaval will be a tightening in lending standards, which will make it more difficult for both consumers and businesses to obtain loans. This will obviously stifle economic activity, but it also could marginally help ease inflationary pressures.

                        May 3, 2023            May 4, 2023    
                  --------------------   --------------------
Dow                 33,414.24  -270.29     33,127.74  -286.50
Nasdaq              12,025.33   -55.18     11,966.40   -58.93
S&P 500              4,090.75   -28.83      4,061.22   -29.53

NYSE Volume                      4.26B                  4.94B
NYSE Advancers                   1,130                    868
NYSE Decliners                   1,841                  2,108

Nasdaq Volume                     5.8B                  4.76B
Nasdaq Advancers                 2,142                  1,745
Nasdaq Decliners                 2,229                  2,662

                                 New Highs/Lows

                   04/27  04/28  05/01  05/02  05/03  05/04
                 --------------------------------------------
NYSE New Highs        37     72     83     41     79     38
NYSE New Lows         55     37     35    152    104    258
Nasdaq New Highs      53     71    103     62     78     60
Nasdaq New Lows      219    153    198    443    281    476
   

TRADER'S TIP: "Get Rich Quick"

Only an extremely tiny percentage of individuals who enter the stock market to get rich quick ever accomplish that goal. Most of them bust our rather quickly. This is due to the tendency for "get rich quick" folks to accept way too much risk - usually by putting too much of their account into one position.

The Technical Analyst

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 - 4061.22 May 4, 2023

52-Week High: 4325.28
52-Week Low: 3491.58
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 4371.05
Resistance 2: 4250.34
Resistance 1: 4209.91
Pivot: 4129.63
Support 1: 4089.20
Support 2: 4008.92
Support 3: 3888.21

NASDAQ Composite - 11966.40 May 4, 2023

52-Week High: 13181.09
52-Week Low: 10088.83
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 12942.25
Resistance 2: 12513.30
Resistance 1: 12369.94
Pivot: 12084.35
Support 1: 11940.99
Support 2: 11655.40
Support 3: 11226.45
        
Dow Industrials - 33127.74 May 4, 2023

52-Week High: 34712.28
52-Week Low: 28660.94
Daily Trend: DOWN
Weekly trend: UP
Weekly Pivot Levels
Resistance 3: 35550.27
Resistance 2: 34681.56
Resistance 1: 34389.86
Pivot: 33812.85
Support 1: 33521.15
Support 2: 32944.14
Support 3: 32075.43
 

Market Calendar

ECONOMIC REPORTS AND EVENTS (all times are Eastern):    

Friday, May 05, 2023:
05-May  8:30 am   U.S. employment report
05-May  8:30 am   U.S. unemployment rate
05-May  8:30 am   U.S. hourly wages
05-May  8:30 am   Hourly wages year over year
05-May  3:00 pm   Consumer credit


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

TRADER'S TIP: "Small Stocks & Big Moves"

Studies show that most stocks which increase in price by ten times or more are "small-cap" or "micro-cap." This is due to the relatively low number of shares available. As demand for the stock increases, the price rises dramatically. If you want big explosive moves, think small- cap.

Stocks Covered in This Issue

CONSUMER CYCLICAL SECTOR

BJ's Restaurants, Inc. (BJRI: Consumer Cyclical/Restaurants) - BULLISH BOUNCE. BJRI's positive weekly uptrend is still intact despite recent selling that has driven share prices lower. Price action on Thursday shows that traders are aware of the moving average support zone now in play, and they are ready to consider buying again. A shift up from this point will attract even more buyers. The new buying should move BJRI back in step with the bullish weekly trend, so our BUY entry trigger is set at 32.35. Once you hold a position, trail a stop of 2.9. Tighten it to 1.45 on a 1.94 gain. BJRI closed at 31.41 on Thursday. Earnings Report Date: Jul 19, 2023. Beta: 1.94. Market-Cap: 748.155M. Optionable.

ENERGY SECTOR

Cross Timbers Royalty Trust (CRT: Energy/Oil & Gas E&P) - 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 CRT's case we will enter a BUY should it reach the 20.73 level, or a SELL short trade if it drops to 19.1. As usual a trailing stop is essential, 1.63 which should be tightened to 0.82 on a 2.08 gain. CRT closed Thursday at 20.17. Earnings Report Date: N/A. Beta: 0.77. Market-Cap: 121.02M. Not Optionable.

HEALTHCARE SECTOR

Schrödinger, Inc. (SDGR: Healthcare/Health Information Services) - BULLISH BOUNCE. The charts for SDGR show that despite the downward pressure from sellers recently, the weekly uptrend is still going strong. Buyers showed up again on Thursday, resulting in the early stages of a rebound that started near moving average support. The resulting Bullish Bounce set-up offers a potential entry point for a long play. Set your trigger to BUY shares at , and follow your entry with a trailing stop of . Tighten it to when a 0 profit is reached. SDGR ended the latest session at 30.12. Earnings Report Date: May 04, 2023. Beta: 1.05. Market-Cap: 2.098B. Optionable.

Verona Pharma plc (VRNA: 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 VRNA. A move to the upside will trigger our BUY entry at 21.32, while a drop to 19.88 will trigger our SELL short entry. Follow your position with a 1.44 trailing stop. Tighten the stop to 0.72 once you have a 1.88 gain. VRNA closed Thursday at 20.88. Earnings Report Date: May 09, 2023. Beta: 0.18. Market-Cap: 1.649B. Optionable.

Teladoc Health, Inc. (TDOC: Healthcare/Health Information Services) - SQUEEZE PLAY. Trader indecision has put TDOC 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 26.11 and a SELL short entry at 24.36. Now it's up to TDOC to show us which entry will be filled. Once the trade is underway place a 1.75 trailing stop, which can be tightened to 0.88 after you achieve a 2.18 profit. TDOC closed on Thursday at 25.25. Earnings Report Date: Jul 25, 2023. Beta: 1.08. Market-Cap: 4.181B. 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.

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

NOTE: The number of stock split announcments goes up during Bull markets, 
and goes down during Bear market cycles. There are currently no upcoming 
stock splits that meet RightLine's proprietary criteria for split ratio, 
trading volume and price action.      

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.

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.

Disclaimer

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