Is the worst already behind us?

By Jani Ziedins | End of Day Analysis

Mar 20

Free After-Hours Analysis: 

The S&P 500 finished Monday 0.9% higher as the half-full outlook makes a comeback. While the banking crisis is far from being resolved, it isn’t spiraling out of control and this weekend’s less-bad-than-feared is enough to keep the sellers at bay.

More than simply cheering the helping hand being given to struggling banks, some investors are actually embracing this banking crisis as “bad news is good news”. This new wrinkle puts a tremendous amount of pressure on the Fed to slow rate hikes or risk turning this into a real crisis.

That said, this remains a choppy market and one day’s up is followed by the next day’s down. Monday’s bounce is a lot better than tumbling to fresh lows, but the coast is not clear and we need to remain cautious. While we might be avoiding the worst, we are awfully close to the edge and it won’t take much of a slip to send us flying off of the cliff.

Governments and big banks are propping up their struggling peers. While that has slowed the deposit withdrawals, is it enough to end this crisis of confidence? While it looks promising, only time will tell and we need to put a few more days of stability behind us. The problem with waiting for the all-clear is the good discounts will be gone by then.

I’m not happy buying this uncertainty, but the hardest trades often turn into our best trades. I’m nowhere near ready to start celebrating Monday’s small bounce, but it is working. I remain cautious and will be taking profits early and often, but I’m willing to give this bounce the benefit of doubt until it proves me wrong.

Start small, get in early, keep a nearby stop, and only add to a trade that’s working. And take those worthwhile profits when we have them because they won’t last long!

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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.