Stuck in trading range

By Jani Ziedins | Intraday Analysis

Jun 15

Sorry about missing Wednesday’s and Thrusday’s posts, I’m down in Mexico and I mistakenly assumed it would be easier to get on line than it has been.  I’ll be back home and back to a regular schedule by Monday.

The indexes continue trading in a range of 1306 to 1335; up, down, and back up again.  We’ll see how the market trades today as Thursday’s price action pushed up to the upper end of this range and the futures are pointing to a slightly higher open.  Could this be the day we break through resistance and trigger all those stoplosses?  Or will the swing traders use the technical resistance at these levels to push us back down?  As I shared earlier, there is just too much fertile trading due to stop-losses above 1335 for the market not to at least poke its head above to trigger all those comissions for the market makers.  But regardless of these minor moves, I continue expecting the market will nose over shortly after breaking resistance.  There is simply too much headline risk at this time to expect we could rally without looking back.  Not that it will be bad news that causes us to head lower, it is simply that the bulls pushed us as high as they could, and the market will turn over because of a lack of buying.  No doubt there will be a headline that triggers the move lower, but remember, every day there is a plethora of both good and bad news, it is simply that the market choses to obsess about sone side and ignore the other depending on sentiment and buying power.  So in that regard, the news doesn’t drive the markets nearly as much as it provides and excuse or justification for the market to move in a way it is predisposed to move.

LULU is having a tough run lately, dropping to the 200dma.  Is this simply another shakeout like we had last year, or the end of the run?  It will be interesting to see how well it holds up.  Often I find stocks that are heavily shorted are overvalued, but the trap mose traders who trade on valuation fall into is they most often get in too early.  So I have little doubt LULU will imploed at some point just like KROC did, it is simply a matter of when.  TTypically the way it works is when everyone is talking about how overvalued it is, the stock defies gravity and heads higher.  It is only aafter all the shorts have been demoralized and given up that the stock finally noses over.  It will be interesting to see if LULU has reached that point since I so little mention of it in the market coverage anymore.

One last comment, no doubt this post is riddled with errors, please forgive me because I amm doing this on an iPad and it isn’t easy to edit these posts.

 

Stay safe.

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About the Author

Jani Ziedins (pronounced Ya-nee) is a full-time investor and writer who has successfully traded stocks and options for more than a decade. He earned a B.S. in Mechanical Engineering from the Colorado School of Mines and an MBA and M.S. Marketing from the University of Colorado Denver. His prior professional experience includes manufacturing engineering at Fortune 500 companies, structural engineering, small business consultant, collegiate instructor, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two young children.