Why smart traders are not trading this chop

By Jani Ziedins | End of Day Analysis

Apr 01

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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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.