What to expect headed into the holidays

By Jani Ziedins | End of Day Analysis

Nov 17

Free After-Hours Analysis: 

The S&P 500 slipped modestly Tuesday, but this shouldn’t surprise anyone. The index rallied 11% in November alone and we’re barely two weeks into the month! Anyone holding out for more gains is getting a tad greedy.

Two steps forward, one step back. That’s the way this works. Always has, always will.

Without a doubt, momentum is higher and we could coast up to, and even though, last week’s intraday highs (3,646), but we shouldn’t count on stocks going a lot higher. This is definitely a better place to be taking short-term profits than adding new money. Novices chase prices after an 11% runup. Savvy traders are the ones taking their money.

Stocks consolidate gains one of two ways. The far more predicted way is stepping back to support. But far less appreciated is the sideways grind. Stepbacks are quick and great for swing trading. Sideways moves bore us to tears. Unfortunately, we don’t get to choose what the market gives us.

Heading into the year-end holiday season, we should dial back our expectations. Most of the big buying has already happened and institutional money managers are either going skiing or flying south for the holidays. That means little guys are taking control. And while little guys make absurd trading decisions, they don’t have a lot of money and cannot drive the market very far. That means choppy moves that don’t go very far before reversing.

Expect stocks to trade sideways into year-end. Maybe we grind up to 3,650 resistance. Maybe we dip back to 3,500 support. Either way, plan on stocks bouncing back from these support and resistance levels, not extending into a much larger move.

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About the Author

Jani Ziedins (pronounced Ya-nee) is a full-time investor and financial analyst that has successfully traded stocks and options for nearly three decades. He has an undergraduate engineering degree from the Colorado School of Mines and two graduate business degrees from the University of Colorado Denver. His prior professional experience includes engineering at Fortune 500 companies, small business consulting, 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 children.