All Posts by Jani Ziedins

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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.

Apr 03

What to expect next week

By Jani Ziedins | Weekly Analysis

Free Weekly Analysis and Lookahead

It definitely felt like another rough week for the S&P 500 as the market retreated from last week’s rebound, especially Wednesday when the market shed 4.4% in a single session. That said, if you stand back and look at the weekly chart, it doesn’t seem so bad. For the week, we only gave back 2% of last week’s 10% rebound. I’d actually go so far as to call that resilience a win.

Stocks tumble from unsustainable levels quickly and the market had plenty of invitations to unleash bigger waves of defensive selling. Yet, most of the weak daily opens were met with buying, not follow-on selling. At least to this point, investors seem more interested in buying these discounts than selling them.

How much longer this can last is anyone’s guess, but the longer this goes, the more solid the ground is under our feet becomes. Calm and rational trade is almost always bullish and the longer we hold off another waterfall selloff, the better our prognosis becomes.

That said, the best case is falling into a trading range near the lows. Just because we don’t tumble doesn’t mean we are ready to race back to the highs. Expect prices to settle into a range between 2,300 and 2,600 for a while. As long as we remain inside that spread, everything is under control. Just make sure you remember this includes dipping back to 2,300. While everyone else is scared out of their minds, we will know better. (If the crowd didn’t think a dip was real, no one would sell and prices wouldn’t dip!) As long as we recognize what is going on, then we will be in a far better position to profit from it.

Chances are good the market tests 2,300 support next week and until further notice, we treat that as a dip-buying opportunity. That said, our greatest asset is our nimbleness. If prices tumble under the lows, we close our longs and go short. If prices bounce back, we close the short and go long. Moving proactively and keeping a nearby stop minimizes the cost of these whipsaws. More important is we ensure we are in the best possible position to profit from the next move no matter which direction it goes.

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Tags: S&P 500 Nasdaq $SPY $SPX $QQQ $IWM

Apr 02

The only way to figure out where this market is headed next

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis

In a bit of a mixed day, the S&P 500 recovered a big chunk of yesterday’s selloff. Initial unemployment claims surged past 6 million, easily shattering last week’s record and the economy continues screeching to a halt at an unprecedented rate. That said, the stock market is already coming to terms with this staggering uncertainty. As dramatic as the crash seems, we are only down about 25% from February’s highs. While it felt like we fell off a cliff, stocks are actually holding up fairly well all things considered.

As usual, there are two ways to interpret this. Bulls are impressed by the market’s reluctance to continue falling. If we already chased off most of the fearful sellers, supply will dry up and prices stabilize. Remember, headlines don’t move markets, only people actually buying and selling stocks do that. Quite simply, when owners stop selling the headlines, the headlines stop mattering. The bear’s counterpoint to this resilience is it is little more than a pause on our way lower and we are in the middle of a dead-cat bounce.

Who’s right? That’s a hard question and people are desperately searching for answers in many different places. Some are consulting charts, moving averages, and ratios. Others are looking to fundamental data. Some are even consulting the stars or reading tea leaves. At this point, one approach isn’t any better than the other. This scenario has never happened before and nothing based on historical data is of any use in figuring out what comes next.

The effectiveness of these social-distancing campaigns and lock-downs can’t be found in stock charts, ratios and moving averages that are based on past price data. The only thing that matters is if this epidemic continues spiraling out of control, or if the fever finally breaks and we start getting a handle on it. No moving average or ratio that can predict what happens next so quit looking for one. Trade this market by looking ahead, not behind. Watch what the market does next and then react to it. If prices keep falling, get out and go short. If they find support and bounce, buy it and hang on. Quit looking for the easy answer. There isn’t one. This is a very tradable market, we just need to cut out the noise and focus on what matters. Follow the market’s lead and the rest will take care of itself.

Over the next couple of weeks, expect prices to retest 2,300. While dipping back to those levels will feel scary, as long as they hold, this situation is getting better, not worse and we should be buying this dip, not selling it. But if prices slice through 2,300 and the selling accelerates, short the weakness and see where it goes. One of the greatest strengths we have as independent traders is our nimbleness. We don’t need to predict the future if we are nimble enough to follow the market’s lead.

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Tags: S&P 500 Nasdaq $SPY $SPX $QQQ $IWM

Apr 01

What to make of today’s 4.4% selloff

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis

The S&P 500 tumbled nearly 5% in what would normally be classified as one of the worst days in stock market history. Today, it seemed like just another routine midweek dip. As callous as it sounds, 5% crashes don’t feel all that dramatic after experiencing -7%, -10%, and -12% plunges over the last few weeks. It’s almost gotten to the point where we could find ourselves saying, stocks “only” fell 5% today.

The financial press claims today’s selloff was in response to Trump’s new estimates of 100,000 to 240,000 American deaths from Covid-19. While that excuse sounds plausible enough to satisfy newspaper editors, the simple truth is today was little more than a natural snap-back from last week’s towering 20% rebound. These 100k and 200k estimates have been floating around for days and are actually far less draconian than the 2 million fatalities that were initially projected. Trump’s update didn’t surprise anyone who is paying attention and it sure didn’t catch the market off guard. The truth is today’s move was nothing more than the natural ebb and flow of supply and demand. But rather than take place over 1%, 2%, or 3% increments, we are seeing 5%, 10%, and even 20% swings. This is routine stuff, just super-sized.

As for what comes next, expect more of the same. Last week’s towering rebound consumed a truckload of demand and now it is time for the sellers to take control. Unless we see these social-distancing efforts have a dramatic impact on infection rates over the next few days, expect the market to slip back to the lows. Whether we bounce above, at, or under the prior lows has yet to be seen, but we should expect more down than up over the next handful of trading sessions.

That said, this is still an incredibly volatile market and that means big moves in BOTH directions. Just because we will retest the prior lows at some point doesn’t mean it will be a straight line getting there. Expect volatility to remain off the charts and the best trading plan includes taking profits early and often. Hold a few hours too long and today’s profits turn into tomorrow’s losses.

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Tags: S&P 500 Nasdaq $SPY $SPX $QQQ $IWM

Mar 31

Is anyone still interested in TSLA?

By Jani Ziedins | End of Day Analysis

Free After-Hours Update

It’s been a historic few weeks with this viral pandemic sweeping across the globe and grinding the world’s economy to a halt. While those headlines dominate the financial press, it’s easy to forget about the other things going on in the market. It seems like forever ago, but TSLA was the hottest trade less than two months ago. While the world has largely moved on to bigger things, this trade matters for the people still holding it, so let’s take a look.

Along with everything else, TSLA’s stock plunged in late February. But as is often the case, the higher they go, the harder they fall. At one point, TSLA was down nearly 65% from those heady highs. While it seemed inevitable this stock would tumble from those unsustainable levels near $1,000, no one could have predicted the tsunami that was coming. This was an unprecedented global catastrophe that pummeled all stocks, not just the highfliers. But that still doesn’t justify someone holding this thing as it shed nearly 2/3 of its value.

While I was skeptical of the frenzied buying that propelled this stock up nearly 100% in just a few weeks, it was obvious to most this was too good to last. If it wasn’t a global pandemic, it would have been something else. That’s why it was critical to protect our profits by following this up with a trailing stop. Not long after the stock bumped up against $1k, it tumbled back under $800. That would have been a good place to lock in some profits. The stock did a good job clawing back above $800 over the next few weeks, but that second violation of $800 was definitely our signal to get out.

Rather than “hold and pray”, we should have locked-in profits and waited to see what comes next. As individual investors, our greatest strength is the nimbleness of our size. We can jump in and out of full positions with a few mouse clicks. If we don’t take advantage of this ajility, we give up one of the few advantages we have over the larger institutions.

That said, hindsight is 20/20 and the horse is long gone. What owners really want to know is what comes next. While I like these big discounts in the other high-flying FAANG stocks, it is hard to feel the same way about TSLA’s future prospects. Without a doubt, this was a momentum story and the momentum has clearly been broken. The giddy buyers are long gone and won’t be back anytime soon. While I could see the FAANG stocks returning to their all-time highs over the next several months, it is hard to see TSLA getting back near its highs for a long, long time.

Now don’t get me wrong. This is still a great company with a great story. The stock will do well, but well is a relative term. While we will most likely return to the pre-bubble highs near $600 over the next few weeks, I wouldn’t count on anything above that for a good long while. There are a lot of people who have lost a lot of money in this stock and it will take them a while to admit defeat and get out. Until then, expect this to remain rangebound between $400 support and $600 resistance. Once these retakes and holds $600, we can revisit it as a buying opportunity.

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Tags: S&P 500 Nasdaq $SPY $SPX $QQQ $IWM $TSLA

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