What smart money is doing at these multi-month highs

By Jani Ziedins | End of Day Analysis

Jun 02

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The S&P 500 added 1.5% Friday as it powered to ten-month highs.

May’s employment report showed the most robust hiring in four months as employers continue shrugging off persistent inflation and high interest rates.

This was one of those half-full/half-empty moments for the stock market and it was all half-full on Friday as investors embraced the economic resilience and shrugged off the prospect of future rate hikes.

Will the stock market’s indifference to inflation and interest rates last? Probably not. That’s why smart money is already locking in some profits at these multi-month highs.

As I wrote Wednesday:

Ignore both the bulls and bears. Anyone positioning for a big directional move in either direction is simply not paying attention. This is a choppy, sideways market with a slight upward bias. Money is made trading against these swings, not betting on their contuation. Until further notice, dips are buyable and rips are sellable. And just as important, take profits early and often because anyone holding a few days too long will watch their winners turn into losers.

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Bears were right for a few hours this week during our brief “sell the news” moment, but anyone that didn’t collect those profits were left holding a pile of losses a day later.

And the same will apply to bulls pressing their bets at multi-month highs. We take profits when we have them because if we don’t, the market will steal them back a day or two later.

I still like this market and the slow grind higher will continue, but anyone pressing their luck near 4,300 hasn’t been paying attention. Lock in some very worthwhile profits (7.5% in a 3x ETF over the last two sessions) and then get ready for the next trade.

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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.