The only thing that would give me second thoughts about the SPX. Plus what’s next for FB.

By Jani Ziedins | End of Day Analysis

Jun 29

Free After-Hours Analysis: 

The S&P 500 touched 4,300 momentarily Tuesday morning before slipping back into the 4,290s in afternoon trade.

There is nothing wrong with a little give-back following a push to a psychologically significant level. While 4,300 isn’t conventional resistance in terms of being an area of prior overhead supply, it can act like resistance simply because people intuitively think in round numbers. And after a nice run like this, it is natural for people to start wondering if this has gone too far?

Initially, the market was attracted to 4,300 because it was where everyone was looking. But once we got there, it turned into a popular spot for like-minded people to start taking profits. And that’s what let the air out of our tires this afternoon. But in reality, this was nothing more than the market moving in waves; two steps forward, one step back. Don’t all yourself to read anything more into it than that.

This remains a half-full market and I don’t see anything suggesting the market’s mood is changing.

(That said, a bigger selloff Wednesday that pushes the index back to 4,250 and we need to reevaluate our outlook. Bounce off of 4,250 and everything is back to normal. Finish at the daily lows and more near-term pain is ahead. But until something fundamentally changes, every dip is a buying opportunity.)

High keeps getting higher and FB is living proof of that.

Things didn’t look so good for the company last fall given all the threats of regulation, breakups, and backlash from the way the company handled the election. But as is often the case, the market knows what the headlines will be long before they are announced. This stock bounced off the lows last winter and it’s been rallying ever since. And the cherry on top is this week a judge threw out the FCC’s antitrust lawsuit.

While a person that waited for these bullish headlines missed a whole lot of upside this year, there is little reason to think this stock has topped here. The trend is higher and we always give the benefit of the doubt to the trend.

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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.