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.

Mar 08

The market gives us another great, low-risk short entry

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 started Friday’s session with nice gains following a better-than-expected monthly employment report. Unfortunately, those gains were short-lived, and the index finished the session -0.6% in the red.

As I’ve written many times, the market is in a choppy phase, and that means lots of back-and-forth. And so far, the market continues living up to that reputation.

I had no idea Friday afternoon’s fizzle was coming, but I’ve been doing this long enough to know chasing that early strength was a risky trade, so I was happy to let that wave of buying pass me by. And the afternoon selling shows why.

In fact, Friday’s early push to record highs that subsequently tumbled into the red gave us a great shorting opportunity. Rather than buy Friday morning’s good news and keep pushing prices even higher, big investors were taking profits. That intraday reversal is never a good sign, especially when the index starts the session at record highs.

The savvy trade was shorting the dip into the red with a stop above the intraday highs. While shorting an uptrend is a risky trade, keeping a sensible stop nearby limits the risk to a very manageable level. And with all of the air underneath us, the potential upside is multiples greater than the risk. A risk/reward that skewed in our favor is hard not to take.

And now that the market already moved half a percent in our direction, we can lower our stops to our entry points, lowering our risk even further. These are the setups savvy traders dream of.

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Mar 05

Why Tuesday’s retreat wasn’t a surprise

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Well, that didn’t take long. Friday’s break above 5,100 is already history, as the rally stalled and retreated 1% on Tuesday.

Easy come, easy go. As I told readers previously, I bought Friday’s rally above 5,100, not because I thought stocks were going to take off, but because I could enter that trade in a low-risk way:

By acting early and decisively [on Friday], I was able to buy not long after the market retook 5,100, and I could place a stop just under this level. When the rally kept going, I was able to lift my stops to my entry points, creating yet another low-risk/high-reward trade.

Maybe this latest buy gets stopped out at breakeven in a few days. No harm, no foul. But if the buying keeps pushing the index toward 5,200, then I will let those profits roll in. It’s like a free lottery ticket. Only a fool would turn his nose up at it.

Well, as luck would have it, I got stopped out early Tuesday morning for breakeven, and I watched the rest of the day’s carnage from the safety of the sidelines.

While this breakout trade didn’t work, it didn’t cost me anything, so can we really call this trade a mistake? If it worked, I made money, if it didn’t, I got all of my money back. If only all of my bad trades could be this painless.

As for what comes next, this market remains stuck in a choppy, sideways consolidation near 5,100. Until further notice, expect these dips to bounce and for the bounces to dip. One day’s up becomes the next day’s down. Anyone predicting Tuesday is the start of the next big selloff will soon find himself just as disappointed as last week’s breakout buyers.

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If you find these posts useful, help me out by liking and sharing them!

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What’s a good trade worth to you?
How about avoiding a loss?
For as little as $1.28/day, receive actionable analysis and a trading plan every day during market hours

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