Only fools give up on something that is working, plus TSLA answered our prayers

By Jani Ziedins | End of Day Analysis

Jan 03

Free After-Hours Analysis: 

The S&P 500 added 0.6% on the first trading session of 2022 is flirting with 4,800 again.

The calendar rolls over and we get more of the same. But this was largely expected. Nothing meaningful changed over the weekend and the market started right where it left off.

Without a doubt, something will change this year and 2022 won’t be as easy or generous as 2021 was, but these things take time to develop and it will come on gradually, to the point we won’t even realize something changed until after it is already well underway. But that’s the way this usually works. All too often people trade what worked in the past, not what is happening in front of them.

But rather than try to get ahead of the market, as independent traders, we are nimble enough to simply follow the market’s lead. If this wants to rally through January. Fine, we stick it. If it keeps going through February and March, even better. But when it finally noses over, we get out and look for the next opportunity. Until then, stick with what has been working.

No matter what we think the market should be doing, it is acting well and that means we stick with it. Weak and vulnerable markets don’t keep setting record highs. This rally will die like all of the others that came before it, but this is not that time. Until prices actually start to decline, we continue giving it the benefit of doubt.

Our stops are in the lower to mid 4,700s and until something changes, we keep doing what has been working.

Look at that, TSLA is back at $1,200. Funny how that works.

People always pray for their favorite stocks to pull back so they can add more. But every time the market answers their prayers, most people lose their nerve and instead of buying more, they impulsively sell what they have for a discount.

And wouldn’t you know it, as soon as these people bail out, prices bounce back to the highs. But that’s the way this game works. Always has, always will.

Profits come to proactive traders that move before everyone else. Everyone else gives all of their money to these savvy traders. It’s time to stop following and start leading.

As I wrote a few weeks ago:

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.

TSLA only fell to $900, but that was still plenty of profit opportunity for the people those of us that were acting instead of reacting.

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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.