When a half-full market becomes half-empty, plus why TSLA is on the naughty list

By Jani Ziedins | End of Day Analysis

Dec 17

Free After-Hours Analysis: 

On Friday the S&P 500 tested and bounced off of 4,600 support for the second time this week.

Between the exploding number of breakthrough Omicron cases and the Fed accelerating taper and rate hikes plans, it was a busy week for financial newsrooms. But for as dire as the headlines seem, the market was surprisingly resilient and remains steady near all-time highs.

Sure, the index finished the week down nearly 2%. But last Friday was an all-time closing high and having traded through 2013’s Taper Tantrum, the market “only” falling 2% after the Fed penciled in three rate hikes next year is actually quite impressive.

If this market was truly overbought and fragile, these headlines could have knocked us down 5% or more in the blink of an eye. The fact it took five whole days to shed a measly two percent is fairly impressive.

The counter point to the above half-full argument is the index is hovering just above recent lows. Fall a little further and that violation of support could unleash a big wave of stop-loss driven selling.

So, the question is if we should be focused on the half-full side of the market or the half-empty?

Well, surprisingly enough, the answer is pretty easy. Above 4,600 is half-full territory and anything under 4,600 puts us in the half-empty side of the glass. Trade accordingly.

While I’m giving the S&P 500 the benefit of the doubt, TSLA’s violation of $1k support this week puts the stock on my naughty list.

I still like this company and stock, but I’m a trader and that means I sell things that are going down. I’m happy to buy this when it bounces, but until it gets back above $1k, I don’t have any interest. And in fact, I actually hope it falls back to $800 support because that gives me even more opportunity to profit from the rebound.

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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.