Wednesday was another quiet session for the S&P 500 following last week’s 4k breakout.
While most traders are addicted to drama, boring is vastly underrated. Emotional markets produce big moves, unfortunately, most of the time the big action occurs in the wrong direction. On the other hand, boring markets make far smaller moves, but most of them line up in the positive direction. And lucky for bulls, we are in the middle of a very boring market.
Headlines remain benign and stocks continue rallying on “less bad than feared”. Until something changes, stick with what has been working. Hold for higher prices and keep lifting our trailing stops.
The index finished with a small gain but someone forgot to tell TSLA. The electric car maker lost 3% in an otherwise decent day for leading growth stocks.
While we don’t want to overreact to a single day of underperformance, we need to see TSLA lead this market higher, not lag behind it.
Last week’s nice bounce off of $600 support was buyable, but if this underperformance continues, we need to pull the plug and lock-in profits while we still have them. (And if this retreats under $600, that becomes an attractive short entry.)
I’m not giving up on this stock just yet, but I have it on a short leash.
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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.