Menu
By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Monday proved to be a wild ride for the S&P 500 with the index traversing more than 150-points intraday.
While it felt like the world was ending in the first two hours of the session, as is often the case when the crowd gives up hope, stocks found a bottom and it was all uphill from there. In fact, this decisive rebound carried us so far we nearly erased all of those early losses.
Bears tried to break the market and they were broken instead. This price action is as bullish as it gets. Bears threw everything they had at the market and all of it bounced off.
While this won’t end our near-term volatility, it did go a long way toward shaking out most of the weak hands and with them gone, there are a lot fewer people left to sell the next bout of weakness. Every selloff eventually runs out of sellers and that is the exact moment when the gettin’ gets good!
Hopefully most readers honored their trailing stops last week and locked in a pile of profits before this morning’s blood bath took place. At most, we should have carried a small partial position through the weekend, and even that would have been dumped not long after Monday’s poor open.
But like every nimble trader, as soon as we are in cash, the first thing we do is start looking for the next buying opportunity. And wow, was that bounce off of 4,600 was a thing of beauty. Entry points don’t get much better than that!
Now that our early buys have 70-points of profit margin in them and our follow-on purcahses are doing nearly as well, it is simply a matter of holding and seeing where this goes. This has already gotten to the point where we can lift our stops to our entry points, giving us in effect, a nearly free trade.
Huge upside and nearly zero downside, gotta love that risk/reward. These are the kinds of trades we dream about. Hopefully you didn’t miss it.
But as is always the case, the market is anything but predictable and that’s what our stops are for. But as long as this reams above Monday’s lows, this bounce is alive and there is nothing to do but keep holding and adding.
Bitcoin went through a similar whipsaw Monday morning when it undercut $40k support. While this felt horrible for anyone that’s been holding since the $60k’s, for those of us that used trailing stops and locked in really nice profits months ago, this bounce off of $40k support is a great entry point.
Buy the bounce with a stop underneath $40k and see where this goes. I don’t particularly care for bitcoin’s long-term prospects as an investment, but I know a good trade when I see one. While there is a good chance this bounce could fail, this is a clearly defined entry point with a sensible nearby stop. Low risk, high reward. Even with a lower probability of success, that’s still a great trade and very much worth making.
If you find these posts useful, please return the favor by liking and sharing them!
Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.
What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours
Follow Jani on Twitter @crackedmarket
By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 is traded mostly flat following Wednesday’s 1.9% blood bath, finishing Thursday down a modest 0.1%
Half-full or half-empty? Both sides have good arguments here.
Not extending the selloff is a bullish sign. Collapses are breathtakingly quick. Stop to ask questions and you are already too late. So holding at these levels for a full day is definitely helpful and is the first step in a recovery.
But on the bearish side, there was little dip-buying Thursday. Prices bounce hard and quick from oversold levels, meaning we might not be oversold yet.
So which is it? While both bulls and bears will tell you they know for certain what is going to happen next, the simple truth is no one knows and only time will tell.
In reality, both sides will probably be right. Prices will fall further, initially proving bears right. But inevitably, every selloff finds a bottom and prices bounce, proving bulls right.
What should traders do during turbulent times like these? Leave our biases at the door, stay nimble, and only trade what is happening right in front of us.
Ideally, most of my readers were using sensible stops and bailed out Wednesday afternoon when the index undercut our stops. Now that we’re safely in cash, the first thing we start doing is looking for the next entry point.
Thursday morning gave us an interesting buying opportunity. Unfortunately, the opening bounce failed not long after it got started. But if we were disciplined and started small, got in early, and kept a nearby stop, any slippage from buying that early would have been trivially small.
Small risk, large potential reward, those are the trades we wait months for. Just because it didn’t work this time doesn’t mean it was a mistake. Give me a low-risk/high-reward trade like that and I will take it every time!
The market bounced again off of those mid-morning lows. Again, giving us another invitation to buy a partial position when it got above the opening levels. Again, start small, place a stop under the intraday lows, and wait to see what happens next.
While it would have been nice to see prices rally strongly into Thursday’s close, the market gave us an ambiguous close, deferring its next move to Friday. No big deal. These things happen.
Should we have held that small position overnight or pulled the plug? That’s entirely up to you. If you like this bounce and are willing to let a small position ride. Go for it. A little uneasy, no problem, pull the plug and try again Friday. There are no wrong answers here.
And if a person feels like they missed a bounce, don’t sweat a few points here or there. Getting in 20 points late won’t matter much when the real bounce rallies another 200. More important is we get in even if that means missing the lows by a few hours. The timing isn’t nearly as important as most people make it out to be.
And if this isn’t the real bounce and we get dumped out again? No big deal. Trading small positions limits our losses and we simply wait for the next bounce.
Remember, periods like this is when we make our money. If this was easy, everyone would do it. But the payoff will be there as long as we stick with it and don’t give up.
GME popped as much as 30% in after-hours trade following reports it was getting into NFTs. If you don’t know what NFTs are, don’t worry, no one else does either. All you need to know is NFTs are the newest buzz term and companies embracing it is the equivalent of adding “.com” to a business’s name back in the 2000s. It’s good for some temporary hype, but real investors want to see the money and so far NFTs have been more hype than substance.
Even with this big pop, GME only reclaimed a few weeks’ worth of losses. This stock is in a strong downtrend and unfortunately a no TLA*, no matter how buzzy, is going to bring its momentum back. (*three-letter acronym)
If you find these posts useful, please return the favor by liking and sharing them!
Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.
What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours
Follow Jani on Twitter @crackedmarket
By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
A modest midday slump in the S&P 500 devolved into a late blood-bath after the Fed’s meeting minutes suggested interest rate hikes could be coming a whole lot sooner than many investors expected. That’s all it took to rain on the bull’s parade and send previously confident owners scrambling for the exits.
As I wrote yesterday evening, I was comfortable with the market’s recent price action. That even carried over to this morning’s modest slump. Everyone knows we cannot go up every single day and red days are a normal and healthy part of every move higher.
But that changed Wednesday afternoon when normal and healthy took a sharp turn into panic. While I was comfortable a few hours earlier, when conditions change, my outlook changes along with it. Only stubborn traders dig in and ignore the evidence in smacking them in the face. And luckily, I’m not one of them.
I came into Wednesday with sensible trailing stops spread across the lower to mid 4,700s to protect my profits “just in case”, but I was already pulling the plug on some of those positions long before those stops got hit. As easy as it is to buy back in, there is no reason to stick around when the tide so obviously starts turning against us. When the panic selling hits, I want to be one of the first to get out, not one of the last. And that means acting early and decisively.
Does Wednesday’s dip stand any better chance of succeeding than all of the other aborted selloffs the market shrugged off last year? Probably not. But as nimble traders, why do we need to pick sides? As easy as it is to jump out and get back in, why would anyone want to ride through a near-term dip if they didn’t have to?
Sell and see what happens from the safety of the sidelines is how I’m approaching this. If prices bounce Thursday, great, I’m getting back in. No harm, no foul. But if the selloff continues, even better, I wait for the next bounce and buy at even lower prices. That’s a win-win in my book.
Wednesday’s bloodletting extended to Bitcoin as cryptocurrency proves to be a follower and is nothing close to the alternative asset class proponents claimed it would be. If equities continue selling off Thursday and Friday, expect the carnage to take Bitcoin down with it.
But none of this should surprise readers. As I’ve been saying for a while, Bitcoin isn’t buyable until either it bounces off of $40k support or gets above $50k resistance. Until then, it is a no-touch.
If you find these posts useful, please return the favor by liking and sharing them!
Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.
What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours
Follow Jani on Twitter @crackedmarket
By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Tuesday was a mixed session for the S&P 500 as an early push to record highs fizzled and retreated into the red. While a bearish intraday reversal is never a welcome sight, the index bounced off of those afternoon lows and closed pretty much where Monday left off.
Ties go to the trend and even though the index is struggling with 4,800 resistance, the fact we keep holding near record highs is a win for bulls. Stocks fall from overbought levels fairly quickly and trading at these levels for over a week tells us most owners are fairly comfortable with these prices and few are rushing to lock in profits.
As I often say, a market that refuses to go down will eventually go up. At this point, it is only a matter of time.
Bitcoin is stuck in the mud. $50k’s been a ceiling since early December and this cryptocurrency keeps finding itself falling back to the mid-$40k’s. In a mirror of the equity index’s analysis above, the longer this hold near recent lows, the more likely it is to make new lows.
This was a sell as it fell through $60k support in November and December’s $50k violation was yet another reason to abandon ship. At this rate, we will be saying the same thing about $40k as this trades in the $30k’s.
Remember, only fools hold all the way down. Use trailing stops to protect your profits. It is far easier to buy back in after a bounce than it is to wish something higher after a big pullback.
If you find these posts useful, please return the favor by liking and sharing them!
Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.
What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours
Follow Jani on Twitter @crackedmarket
By Jani Ziedins | End of Day Analysis
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.
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.
If you find these posts useful, please return the favor by liking and sharing them!
Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.
What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours
Follow Jani on Twitter @crackedmarket
You must be logged in to post a comment.