The S&P 500 popped Tuesday, adding another 1.3% to Monday’s nice gains.
As bad as the headlines seem, the best buying opportunities arrive when everyone is the most scared. As is often the case, the latest banking scare’s selling capitulated last week when headlines were their most dire and prices are now rebounding on less-bad-than-feared. We haven’t had another domino fall and investors are breathing a sigh of relief.
Will this relief last? No, probably not. That’s why savvy bounce buyers are standing near the exits and even locking in some worthwhile profits proactively as we challenge 4k resistance.
Remember, we only make money when we sell our winners and this remains a choppy market. As I’ve been saying for a while, if we are not taking profits when we have them, then we will be taking losses a few days later.
Bears that didn’t lock in short profits last week are taking losses this week and we will be saying the same thing about bulls that hold too long next week.
No doubt I will be taking profits too early, but that sure beats holding too long. Buying back in is far easier than convincing the market to go back to the levels you wish you sold at.
The Fed is meeting this week and we will have our next rate decision Wedensday’s afternoon. If the news is good, there will be plenty of time to buy back in and ride the next big wave higher. But until then, I’m happy locking in what I’ve got.
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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.