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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.
By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Thursday was a good session for the S&P 500 with the index adding 0.4% and pushing back near record highs.
But that was then and this is now. In after-hours trade, the indexes are tumbling on continued Asian weakness and U.S. futures down more than half a percent.
Is this finally the start of the long-predicted stock crash? Bears are definitely dreaming about that tonight.
But if bears have been wrong all year, what are the chances they finally get it right this time? Ummmm, yeah…..
While there is an entire night for this situation to develop, I don’t put a lot of weight in overnight futures. This is an incredibly thin market and easily swayed by small and impulsive night owls. Big money trades during the day and they couldn’t care less about what a bunch of guys in their pajamas think.
Occasionally other parts of the world lead our market, but those episodes are few and far between. Our current bull market is fueled by a huge resurgence in the U.S. economy and what’s going on in the rest of the world doesn’t matter. In fact, things are so good here foreign investors are flooding into our markets because this is where the party is happening.
No doubt Asia and Europe still have their problems, but they are not a concern for U.S. investors. If these weak futures cause our indexes to gap lower Friday morning, that gives us an excellent entry point. Wait for the early bounce and buy with a stop under those initial lows. This is an easy, low-risk trade. If the selling resumes, no big deal, we get out and buy the next bounce.
HOOD got slammed on its first day of trading, but that usually happens to most over-hyped IPOs. Expect the selling to continue for a few weeks and even months. But this will eventually bottom like it always does. And that is when investors who believe in this stock should be taking advantage of those discounts. No doubt a good trade in this stock is coming, we just need to be patient and wait for it to come to us.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Wednesday was another do-nothing session for the S&P 500.
As dramatic as last week felt, it didn’t change anything and we are still stuck in the dog days of summer. Big money is on vacation and they are the only ones with enough firepower to move markets in a meaningful and sustainable way. The rest of these summer peanut-shooters expend all of their capital in a matter of hours and is why price moves bounce back so quickly.
As I wrote previously, it’s been a very nice, nearly 5% run this summer and a sideways consolidation is long overdue. Expect the market to grind sideways into the fall and that is when things will get more interesting. But until then, keep expectations low.
And remember, sideways includes lots of up and down that doesn’t go anywhere. Avoid the temptation to read too much into any and every gyration because most will fizzle and reverse not long after they get started.
The only thing that would change my mind is a sustained move above 4,400 or a dip under 4,250. Until then, the next few weeks is nothing more than a boring grind sideways.
Bitcoin’s pop back to $40k resistance this week has been impressive. And just as meaningful is holding those gains the last few days. Unsustainable moves tend to retreat under their own weight fairly quickly and staying at these levels tells us the market believes in this price. That said, I would be quick to lock in profits if this retreats back under $40k. Above $40k, this is a buyable breakout. Under $40k, it is stuck in a $30k to $40k trading range and we want to be sellers at the top of the range.
Which is this? Smart traders follow the market’s lead and we will have our answer soon enough.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Tuesday was a mixed session for the S&P 500. The index opened with losses and the one-way selling knocked stocks down more than 50-points in midday trade.
The CDC reversed its guidance and now these alleged experts tell us vaccinated people should resume wearing masks in most of the country due to the pervasive Delta variant.
While this is a flip-flop from previous guidance and wearing masks is most definitely uncomfortable, this announcement was not an economic development. As we have seen over the last 12 months, mask-wearing is not a meaningful economic deterrent. The stock market rallied nearly 100% from the Covid lows while everyone was wearing masks and a return of those policies won’t make a difference to the stock market. Consumers (and investors) still have money burning a hole in their pockets and they will continue spending it regardless of their mask status.
And unsurprisingly, it didn’t take long for cooler heads in the market to prevail and the index bounced decisively off of those midday lows. Prices still closed in the red but they recovered more than half of those early losses and that resilience is considered a win for the bulls.
As I’ve been writing over the last few weeks, this remains a strong market and owners remain stubbornly confident. That is keeping a floor under prices and decisively rebutting things like last week’s selloff. But at the same time, we’ve come a long way and some sideways consolidation is long overdue.
The most important thing to remember about sideways consolidations, all of the ups and downs inside the consolidation are totally meaningless!!! Things will get more interesting this fall when big money managers return from summer vacation and start adjusting their portfolios ahead of year-end. Until then, these daily gyrations don’t matter.
The lone exception to the above analysis is if the index falls under last week’s lows. Slip under 4,250 and all bets are off. Until then, “this ain’t nothin’ but a thang.”
If you find these posts useful, please return the favor by liking and sharing them!
Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.
What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours
Follow Jani on Twitter @crackedmarket
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