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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 added a tenth of a percent on Wednesday, ending a two-session skid as the index continues testing 5,200 support.
The index opened Wednesday’s session with modest losses, but within minutes, supply dried up, and dip buyers rushed in, shoving the index into the green. It remained there for most of the session, but a bout of momentary second-guessing knocked it into the red in the final hour of the day. But that momentary selling was the best bears could do, and the index bounced into the green in the final minutes of the session.
While not overly bullish, Wednesday’s session was constructive and shows most owners are comfortable at these prices and are not rushing for the exits. If prices were overbought and vulnerable to a collapse, it would have happened by now. Yet, every time the market slips into the red, supply dries up, and prices bounce. That’s not how a weak market behaves.
Without a doubt, this market is not in a hurry to go anywhere, but anyone betting on a collapse is going to be disappointed. There have been countless excuses and opportunities for stocks to tumble, yet every time, stock owners shrug and keep holding. This situation can’t last forever, but it will take something new and unexpected to convince these confident owners to sell. As we’ve seen over the last couple of sessions, undercutting 5,200 isn’t going to do it.
Stocks can fall at any time for any reason, but right now, they are not interested in falling for no reason at all. Until something forces bulls to reconsider their outlook, expect all of these dips to continue bouncing within days, if not hours.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 skidded over 1% Tuesday morning as gas prices and interest rates continue climbing. But rather than trigger a bigger wave of follow-on selling after the index undercut 5,200 support, most owners shrugged and kept holding. The absense of reflexive selling put a floor under prices, and the market recovered nearly half of those early losses by the close.
If stocks were grossly overbought and vulnerable to a collapse, prices would have tumbled a long time ago. The market rarely gives us this long to sell the top, so odds are good this is not the top.
While a few hours of constructive trade Tuesday afternoon was great to see, by itself, that doesn’t kill the selloff. That makes Wedensday’s early trade is critical. If we survive that, the bears are in trouble.
Unless Wednesday morning turns into a dramatic waterfall selloff, this is simply another buyable dip on our way higher. That’s the way I’m trading it. I bought a partial long position Tuesday afternoon with a stop under the early lows.
If the rebound continues Wednesday afternoon, I add more and lift my initial stops up to my entry points. If the selloff resumes, I get out of my partial position at my stops for a small loss, no big deal.
To be honest, part of me hopes this selloff continues even though I’m holding a partial position. The lower this goes now, the bigger the profit opportunity the market will be giving us. Unfortunatly, I don’t think I will be that lucky and most likely, Tuesday’s selloff won’t amount to much. That’s why I’m already buying.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 shed 0.2% on Monday as this sideways snooze-fest continues.
The index rallied in the second half of last week, meaning it was time for the pendulum to swing in the other direction. This simple reversal explains most of Monday’s trivial losses: One day’s ups become the next day’s downs.
Nothing meaningful is changing in the financial headlines, which is why the price action is so benign. Bulls are staying bullish, and Bears are staying bearish. This will inevitably change at some point, but we need a big and unexpected headline to shake things up and get the market moving. Until then, expect this slow, choppy grind with a slight upward bias to continue. Better trading opportunities are coming, but they are not here yet.
I will let the day traders fight over these nickels and dimes while I wait for better profit opportunities. Maybe that will happen later this week, or maybe it will take a week or two. But the next trade is coming because it always does, and it will be here when we least expect it. Until then, my goal is to avoid losing money overtrading this meaningless chop and that means sitting on my hands.
Remember, long-term success in the markets doesn’t come from our winning trades but from not giving those profits back in our follow-up trades. Often, the best trade is not trading.
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