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 earned a B.S. in Mechanical Engineering from the Colorado School of Mines and an MBA and M.S. Marketing 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.

Feb 14

Weekly Review and Look Ahead

By Jani Ziedins | Weekly Analysis

Free Weekly Review and Look Ahead:

It was a good week for the S&P 500 as it put Coronavirus fears out of its mind, gained 1.5%, closed at record highs. While this health epidemic is far from over, previous contagions didn’t have a lasting impact on stocks and traders are assuming the same will happen this time too.

The problem with this optimistic outlook is it already prices in a favorable outcome. With stocks selling at record highs, buyers are not being compensated for holding this risk. While the market will most likely be correct in this assumption, why would anyone want to own the risk if they are not getting paid for it in terms of buying stocks at a discount?

The market’s ambivalence skews the risk/reward against us. With stocks at record highs, the upside is already priced in there is a fair amount of air underneath us. This is skew is even more pronounced ahead of a three day weekend. If things go well over the next three days, that is what the market expects and stocks will rise a modest amount. If something goes wrong, there is a lot of room to fall.

Now don’t get me wrong, I’m not a bear in any shape or form. I actually like this market a lot. The problem is I don’t like paying full price for stocks. I prefer waiting for nervous sellers to give me free money.

The correct time to buy was two weeks ago when fear and uncertainty were peaking. Now that calm and complacency returned, this is the time to be taking profits. Rather than pay premium prices, we should be the ones selling them and that is exactly what I’m doing. This market likes to pause at the round 100-point levels and given the nearly 200-point rebound since the Coronavirus lows, 3,400 is a good place for the market to slow down and catch its breath.

I’m taking some profits off the table proactively and moving the trailing stops up on my remaining positions. We only make money when we sell our winners and for me, this is a good time. While I might be getting out a little early, if the market trades well next week, I can always buy back in.

Enjoy the long weekend.

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

Feb 13

CMU: The easiest thing you can do to improve your trading right now

By Jani Ziedins | Free CMU

Cracked.Market University

We come to the market with different experience levels, expectations, and needs. But the one thing all of us have in common is the desire to improve our trading. It doesn’t matter if we are struggling or already pretty good at this, everyone wants to be even more successful than they are now.

The quickest and simplest way to improve our trading is to adjust the way we approach the market. Rather than torment yourself and overthink every decision, ask yourself, “What would a savvy trader do here?”

All too often we fall prey to our impulses and emotions. We love the feeling of a winning trade and don’t want to give up on it. But often that means holding too long and watching those profits evaporate. Or we enter into an online argument that makes us even more stubborn and reluctant to admit our mistake. Or we ignore a loss because regret keeps us hoping the rebound is just around the corner.

All of those common mistakes would have been avoided if a person pictured themself as a savvy trader and then made the same decisions a savvy trader would make.

Does a savvy trader brag about his winnings?

Does a savvy trader lock-in worthwhile profits or does he try to squeeze out every last dime?

Does a savvy trader check overnight futures at 3 am because he is worried about his positions?

Does a savvy trader hold losing positions, hoping they will come back?

Does a savvy trader chase the crowd or does he lead the crowd?

Does a savvy trader stay calm and rational no matter what is going on around him?

Does a savvy trader allow a poor trade to affect his mood outside of the market?

Does a savvy trader get discouraged following a loss or does he realize losses are inevitable and calmly move on to the next opportunity?

If you look back at all of your biggest losses, chances are you didn’t do what a savvy trader would have done in that situation. This simple exercise could have saved you a lot of money and heartache. While you cannot do anything about your previous mistakes, it is never too late to use this technique to improve all of your future trading decisions.

None of us are perfect, but it helps us if we aspire to be that perfect trader. Every time you find yourself faced with an important trading decision, ask yourself “What would a savvy trader do here?” Chances are, that is the move you should make.

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

Feb 12

Is it finally safe to buy NFLX?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis

Is it finally safe to buy NFLX?

Short answer:
Ummmm……No……..

Long answer:
If anyone finds themself asking this question, where have you been the last four months???

Without a doubt, NFLX looks good right now and is finally climbing out of the hole it put itself in last summer. But if a person is only noticing this now, they are a day late and a dollar short……or make that five months and $120 short.

NFLX disappointed investors last summer when its quarterly earnings report fell flat, triggering a long and bloody slide that shaved more than 25% off the stock.  But as is often the case, the market overreacted. After two months of relentless selling, long-time bulls finally reached their breaking point last September and unloaded the stock in the biggest three-day selloff since the initial earnings disappointment.

But rather than signal the start of the next leg lower, that frenzied selling represented the capitulation bottom. This is when things finally got “so bad they were good”. And that is exactly what I told subscribers when it happened.

As bad as NFLX looked back then, we should never lose sight of the fact risk is a function of height. The lower a stock falls, the less room it has left to fall. While we cannot use this logic on dying companies and obsolete industries, it works really well when we believe in the underlying fundamentals.

A person with a lot of courage and a sensible stop just under the lows could have bought NFLX last September when everyone else was selling it. The first good sign was when prices refused to undercut the lows and bounced. That was our signal to add more to our initial position. Then, a few weeks later, the company announced earnings in October. But rather than fear another earnings disappointment, savvy investors knew the latest selloff lowered expectations so much that this time around the bar would be far easier to clear. And as expected, the stock popped following earnings.

Unfortunately, nothing is ever easy in the market and regretful owners who bought at much higher prices used that post-earnings strength to finally get out. But as is usually the case, the crowd gets it wrong and that happened again here. Rather than fear another tumble lower, opportunistic investors should have been buying the stock. The worst was already behind it and sentiment had finally turned. From that point on, NFLX has done nothing but climb and today it is within a few points of making all-time highs.

Those that had the courage to go against the crowd are counting their profits. Those that listened to the herd are left wondering what happened. While I still like NFLX at these levels, buying now is definitely late in the game. While the stock will almost certainly continue higher, the easy money is long gone.

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

Feb 11

Is AMZN the next TSLA?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

By now everyone is familiar with the wild ride TSLA took investors on and without a doubt, that story is far from over, but I will save that analysis for another day.  Today I want to write about AMZN and the hints of similarity its recent price action has with TSLA’s explosive move.

AMZN reported better than expected earnings two weeks ago and the stock popped 10% the next morning. That opening surge put the stock back near all-time highs and it spent a few days consolidating those gains. The initial risk was a conventional retreat that closes the gap, as is typical following big moves. But AMZN bulls are a stubborn bunch and resisted the temptation to take profits. Instead, after a few days, the stock started climbing again. And more than just climb, the last three sessions it started racing higher.

While AMZN has been on my radar for a long time and I told subscriber before earnings that a strong result would push the stock into record territory, this sharp acceleration the last few days really stands out. While I would be suspicious of something like this during more normal times, that buying frenzy in TSLA shows just how extreme buyers are willing to take things.

Now, I need to preface this by saying this is still a remote possibility and I am not predicting this is what will happen. I am simply saying this could happen. And if it does happen, we need to remember AMZN is 10x the size of TSLA and there is no way AMZN can climb 50% in two days. That said, AMZN stock owners are nearly as “cultish” as TSLA owners and this type of fanatical ownership group can lead to some extreme moves. Could we be on the verge of one of these extreme moves? This is really starting to feel like it.

First, there is no way I would want to be short AMZN at these levels. Without a doubt, a lot of TSLA’s lift came at the expense of short-sellers getting squeezed out at steep losses. And we could see a similar phenomenon in AMZN. If you are short AMZN, do something to protect yourself. If you are contemplating shorting AMZN don’t!

Second, if someone wants to get on this ride, remember, this is an extremely risky and low probability trade so adjust your position size accordingly. Start small and only add after it starts working. And not only that, keep a hard stop loss. Probably starting with something near $2050 and then move your stop up as the stock climbs.

And third, this is a quick trade. If this takes off, please don’t fall in love with it. Take profits quickly and don’t feel bad if you sell too early. People who ride these moves all the way to the top inevitably ride them all the way back down. Don’t be that guy.

How high could this go? I have no idea. But if a person has a huge appetite for risk, this could be an entertaining ride. Just be sure to keep your head screwed on tight and don’t fall for the hype if it works out.

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What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, have actionable analysis and a trading plan delivered to your inbox every day during market hours

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

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