Why smart money is betting on a trading range and not a breakout or breakdown

By Jani Ziedins | End of Day Analysis

Mar 08

Free After-Hours Analysis: 

Wednesday turned into a mixed session for the S&P 500.

The index spent most of the day trading modestly in the red as Powell continued testifying in front of Congress for a second day, but a late surge of buying pushed the index into the green, closing up a somewhat trivial 01.%.

While no one is getting excited over a 0.1% gain, on the heels of Tuesday’s 1.5% tumble, any gain, even a tenth of a percent is an accomplishment.

As I’ve been saying for a while, if this market was fragile and vulnerable, stocks would have crashed a long time ago. Sure, inflation remains a stubborn problem that the Fed is still trying to fix, but we’ve been living under these conditions for a year. At some point, no matter how bad the news, eventually it gets priced in and stops mattering. And right now, this market seems okay with stubbornly elevated inflation.

Without a doubt, stocks could fall to fresh lows, but we need the headlines to be truly shocking and unexpected, simply more of the same isn’t going to break this market. Until something changes, expect this choppy sideways trade to continue.

Both the bulls and the bears are wrong on this one. We are not racing up to the highs and we are not crashing back to the lows any time soon. I will reevaluate my outlook if prices crash under last week’s lows, but until that happens, I will continue buying every bounce and taking profits early and often because nothing in this market will 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.