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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Thursday turned into another choppy session for the S&P 500 with second thoughts pushing the index back to 4,200 support for the second day in a row. But just like Wednesday, this follow-on selling stalled and bounced back within hours and the index finished the day right back where it started.
Investors keep fretting over the Fed’s interest rate comments, but as has been the case all year, most owners shrugged at the news and kept holding. And Thursday’s wave of selling didn’t change many minds.
The end result is the index tested 4,200 and bounced off of it for the second time in two days. This is the behavior of a strong market, not a weak one.
That said, a third test of support won’t end as favorably. Fall back under 4,200 so soon after bouncing off of it means the ride is about to get a little bumpier. But just like all of the other dips we came across this year, this is a buying opportunity, not a reason to run for the bomb shelter.
Keep holding for higher prices with stops under 4,200. If prices dip under our stops, get out and be ready to buy the next bounce, something that could happen as soon as a few hours later.
Bitcoin popped above $40k this week after Elon said TSLA would consider taking bitcoin payments for cars again if the cryptocurrency can clean up its carbon footprint. That said, the push above $40k was short-lived and we are back in the upper $30k’s again.
At this point, $40k is the line in the sand. Get back above this key level and we are headed back to $50k. But if we keep hitting our head on $40k resistance, anticipate another retreat back to $30k support.
Anyone that bought the bounce off of $30k support should at least consider taking some partial profits near $40k. It is always easier to buy back in than it is to wish prices higher after missing a good selling opportunity.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Wednesday was a choppy session for the S&P 500 as the Fed spooked investors with suggestions of higher interest rates by late 2023.
This accelerated the timeline a bit and convinced some people to hit the “sell everything” button. But as has been the case all year, the selling proved to be fleeting and the index bounced off the midday lows.
Should we be worried about higher interest rates 30 months from now? No, probably not. And that’s why the market’s reaction was fairly subdued.
Maybe we are the lobster and the Fed is slowly raising the temperature on us. Or maybe the Fed is the lobster and the economy is slowly raising the temperature on them. Either way, these things are still a long way off, and as nimble traders, we respond to what is directly in front of us.
While I don’t think any of this really matters over the near term. The market has never once cared what I thought. So I erase “what should” from my mind and replace it with “what is”.
If traders shrug off these headlines on Thursday, everything is already forgiven and forgotten and higher we go. But if the selling continues and knocks us under 4,200 support, few things shatter confidence like screens filled with red.
While I don’t expect anything from Wednesday’s headlines, I sure would love to see this turn into full-on panic selling because that creates a far more interesting (and profitable) trade. Unfortunately, I don’t think we’ll get that lucky.
Until further notice, I’m holding for higher prices. A market that refuses to go down will eventually go up…..
The ex-darling ZM has been staging a stealth comeback over the last several weeks. I have been telling premium subscribers to keep an eye on this bounce since reclaiming $300 support and now the stock finds itself 20% higher. And this doesn’t look like this is the end of the run either. Expect this thing to keep chugging back to $400.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Tuesday was another “do-nothing” session for the S&P 500. The index slipped 0.2% and this continues the trend of inconsequential tenth-of-a-percent moves near record highs.
Two steps forward, one step back. This is a very boring market, but lucky for us, boring is almost always bullish. As long as we keep getting more up than down, everything is going according to plan.
There have been countless economic data points released over the last few months and the market is taking a half-full attitude toward all of them. Fear-mongering is not spooking investors and as long as the government’s free money keeps flowing, expect stocks to continue grinding away at record highs.
While many of these issues (namely inflation) might come back to haunt us, we trade the price action and as long as the market doesn’t care about these things, then we don’t care about them. If something changes, it will show up in the price action and that is when we will reevaluate our outlook. Until then, ignore the chatter.
Complacency often proceeds the fall. The problem with trading this way is periods of complacency last a long, long time. Anyone who sold the absurd complacency at 3,600, 3,800, or 4k is no doubt kicking themselves for being too hasty.
Savvy traders take their cues from the market, not their intuition. While the cynics might eventually be right, they will be wrong for a long, long time before that happens.
High tends to get even higher and that is exactly what is going on here. Keep holding for higher prices until the market gives us a reason not to.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 brushed off early weakness Monday and closed in the green, making this the fourth positive day out of the last five trading sessions. While it takes a magnifying glass to see these 0.1% and 0.2% gains, the most important thing is we keep making higher highs.
As the well-worn market truism tells us, stocks take the stairs up and the elevator down. As trivial as these individual gains seem, a pile of them turns into some really nice profits and that’s exactly why this market keeps setting record high after record high.
There are plenty of reasons to dislike stocks at these prices, but most investors have heard all of these recycled criticisms and they still don’t care. When the market doesn’t care about the headlines, then neither should we.
Without a doubt, this bull market will die like all of the others that came before it. But it will hit 4,300 and probably even 4,400 before that happens.
Stick with what has been working and that is holding for higher prices. Trading is rarely this easy. But when it is, the last thing we should fight it. Shut up and take the free money.
While the index added a modest 0.18%, the FAANG stocks popped 1% and 2%!!! This outperformance is absolutely noteworthy. For months these supposed best-of-the-best stocks have been lagging behind and their underperformance has been holding the entire market back.
While one day doesn’t make a new trend, we’ve been seeing pockets of strength bubbling to the surface. GOOG has been trading well for a while. FB is back at the highs. Even AAPL and NFLX have been getting their mojo back. And the laggard of the group, NFLX, has been carving out what looks like it could be a base if the stock holds above $500 support.
The indexes struggled this spring without the FAANG leadership. But if the tide is changing, these stocks could start pushing the entire market higher. If the indexes and the FAANG stocks start rowing together again, it will be a very good summer for everyone that didn’t sell in May.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 popped 0.5% Thursday even though inflation came in at the highest level in modern history. But anyone who’s been to the grocery store knew this was coming, so this report didn’t catch anyone off guard.
Inflation is turning into one of those Goldilocks things. Too high and it would have threatened further fiscal and monetary stimulus. Too low and it shows economic stagnation. Instead, the economy threaded the needle between these extremes and investors cheered the “just right” news.
As has been the case all year, this remains a half-full market and most investors continue finding the positives in every headline. While this cannot last forever, the market’s mood doesn’t look like it will change anytime soon.
Cynics believe they’re smarter than everyone else, but those that want to make money have been following the market’s lead. Telling people to embrace a long-established rally sounds like the most brain-dead and uninteresting thing ever, but hey, if it works, who cares?
We are so far into this rally, it is getting hard for me to think of anything new and interesting to say that I haven’t already said. Lucky for you, what’s hard for me has been good for readers that stuck with this rally.
Everything is still on track for a run to 4,300 over the next week or two. From there, 4,400 is easily within reach.
Until the market gives me a reason not to, stick with what has been working.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Wednesday was another quiet session for the S&P 500. The index finished in the red, but it is hard to read much into a minuscule, 0.18% dip. More important than red or green is the index remains within a whisper of all-time highs.
Nothing much is going on in the financial headlines and that is allowing the market to do what it wants to do, which is to rally to record highs. Sentiment remains half-full and stock owners are not letting any fear-mongering get in their way.
While this bull market will die like all of the others that came before it, this is not that time. We’ve been stuck near 4,200 for a couple of months and it is getting ready for the next leg higher. A market that refuses to go down will eventually go up.
This slow grind higher is boring, but that’s the way most successful trades go. While it is fun to ride a bolt of lightning, we only get a few of those per year. The rest of the time we are stuck with these slow-motion moves. That said, I’d rather be bored while making money than excited and losing money.
Maybe something more interesting will happen tomorrow, but probably not. That said, don’t take this calm for granted. One day soon we will be looking back at these calm days longingly. Until then, lookout above.
Nothing makes sense about GME and AMC, but it doesn’t have to. As I’ve been saying for weeks, stupid is prone to getting even stupider and that is the case here.
It would be foolishly reckless to rush into these trades now, but for those that were paying attention and bought the early breakout, we can keep holding for higher prices. That said, stay close to the exits. As quickly as these things rallied, they will fall even faster.
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