Wednesday was another do-nothing session for the S&P 500.
As dramatic as last week felt, it didn’t change anything and we are still stuck in the dog days of summer. Big money is on vacation and they are the only ones with enough firepower to move markets in a meaningful and sustainable way. The rest of these summer peanut-shooters expend all of their capital in a matter of hours and is why price moves bounce back so quickly.
As I wrote previously, it’s been a very nice, nearly 5% run this summer and a sideways consolidation is long overdue. Expect the market to grind sideways into the fall and that is when things will get more interesting. But until then, keep expectations low.
And remember, sideways includes lots of up and down that doesn’t go anywhere. Avoid the temptation to read too much into any and every gyration because most will fizzle and reverse not long after they get started.
The only thing that would change my mind is a sustained move above 4,400 or a dip under 4,250. Until then, the next few weeks is nothing more than a boring grind sideways.
Bitcoin’s pop back to $40k resistance this week has been impressive. And just as meaningful is holding those gains the last few days. Unsustainable moves tend to retreat under their own weight fairly quickly and staying at these levels tells us the market believes in this price. That said, I would be quick to lock in profits if this retreats back under $40k. Above $40k, this is a buyable breakout. Under $40k, it is stuck in a $30k to $40k trading range and we want to be sellers at the top of the range.
Which is this? Smart traders follow the market’s lead and we will have our answer soon enough.
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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.