How long until the S&P 500 finally leaves 4,200 behind. Plus, a sensible strategy for trading Bitcoin’s latest dip.

By Jani Ziedins | End of Day Analysis

May 28

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The S&P 500 finished Thursday 0.88 points above the psychologically significant 4,200. Friday it bested this key level by 4.11.

As trivial as these gains seem, the most important thing is we continue holding near record highs. Markets collapse from unsustainable levels quickly. Holding here all week confirms there is meaningful demand at these levels. As I often write, a market that refuses to go down will eventually go up.

While counting profits as the index races higher is more fun, sideways grinds are a normal and healthy part of every sustainable rally. And you know what, so are dips. Nothing ever goes straight up and that includes this stubbornly resilient bull market.

Looking back at recent history, it took us three months to go from 3,600 to clearing 3,800. There was another three months between 3,800 and the 4k breakout. And counting back from today, we are about two months into the current 4k breakout. If history repeats itself a third time, we should be prepared to wait for another month before finally leaving 4,200 behind.

The index is acting well, but we need to keep our expectations in check and that means being patient a little longer.

Bitcoin slipped back into the mid-$30k’s after flirting with $40k resistance over the last few days. It’s been a rough few weeks as the cryptocurrency shed nearly 50% of its value after Elon Musk renigged on his promise to accept bitcoin at TSLA.

While the $30k bounce was buyable, we really need to see this reclaim $40k support to help put investors at ease. If we cannot get there, a test of $20k support becomes increasingly likely.

If a person bought the $30k bounce, you can keep holding. But if a person is still in cash, wait for a second bounce off of $30k or hold off on buying until this reclaims $40k. Buying anything in the mid-$30k’s is no man’s land and leaves us vulnerable to near-term losses. And if this falls under $30k all bets are off and it is time to abandon ship because this could fall another 30% before finding support at $20k.

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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.