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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:
The S&P 500 finished Monday at the highest levels in history and the index sits a few points shy of 4,300.
As I’ve been saying for a while, high tends to get even higher and that’s definitely the case with this market.
We will eventually reach a point that is too high (because we always do), but cynics have been calling for a top at 3,800, 3,900, 4k, 4,100, 4,200, and soon to be 4,300. Is there any reason to believe they will be right this time?
That said, this rally could very easily stall at 4,300, but there are not any signs this is going to happen. And until we see evidence in the price action that the trend is changing, we stick with what has been working.
This rally will die like all of the others that came before it, but that cannot happen as long as this bull market keeps making higher highs. Until something changes, keep giving this market the benefit of the doubt.
The FAANG stocks are finally getting their act together after lagging behind all spring. FB and GOOGL have been leading the charge with both making record highs for a while. And AAPL and AMZN are not far behind. NFLX has been the lone laggard, but even that one is showing life following its latest buyable bounce off of $500 support.
Now that the FAANG stocks are trading well again, look for these highfliers to start leading the rest of the market higher.
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By Jani Ziedins | Weekly Analysis
Free Weekly Analysis:
Seven days ago the S&P 500 was in midst of a meltdown. The index shed nearly 2% that week and Friday finished at the weekly lows. And more than that, the index crashed through 4,200 support and undercut the 50dma to put a cherry on top. Could things go into the weekend any worse?
What was this week’s follow-up act? The biggest up week since February. Funny how that works.
One week down, the next week up. That’s been the tale of the tape all year and nothing changed this time. And more than just bounce back, the index finished this Friday at the highest levels in history.
Everyone knows markets cannot go up every single day, yet these same people overreact to every bump in the road. But here’s the thing, weak markets don’t keep setting record highs. Until further notice, this is a strong market and it deserves the benefit of the doubt. Every dip is buyable until the market tells us otherwise. If the selling continued Monday, then we would have taken that more seriously. But stocks popped 1.4% Monday and the rally was fully back on.
I firmly believe in stop losses, but these are not sell-and-forget triggers. As soon as we get out, we start looking for the next entry point. And this time, if the market dumped us out last week, it gave us the go-ahead signal Monday morning and the rally was back on.
As is often the case, high tends to get even higher and this market is not letting anything hold it back. Investors are in a half-full mood and they are not allowing negative headlines to weigh them down.
We are smack dab in the middle of the summer trading doldrums. But as I have been writing for a while, boring is almost always good for stocks. Something more interesting will come along, probably later this fall, but until then, high will most likely keep getting higher a few points at a time and the psychologically significant 4,300 level is next on the list.
While I wish I could come up with more thoughtful and insightful analysis, the truth is this is a simple market and it doesn’t require complex mental gymnastics to figure out what comes next. It won’t always be this easy, but until something changes, stay the course.
Without a doubt, complacency and bullishness are off the charts, but I trade the market and right now it keeps telling me it wants to go higher. So that’s what I’m sticking with.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 popped to record levels at the open and it held those gains through the close.
Weekly unemployment claims are stabilizing at reasonable levels and investors are cheering moderation. Too high signals economic weakness and too low suggests this wave of inflation is only just getting started. Holding between these two extremes is the “just right” investors were looking for
The market’s half-full sentiment keeps getting even fuller. That’s been the theme of the year and it doesn’t look like it will change anytime soon. Owners are confidently holding for higher prices and are shrugging off all of the reasons for stocks to go lower. When owners don’t care about the negatives, supply remains tight and prices are stubbornly buoyant.
No doubt something will come along and knock us down, but until that happens, all lights are green. If this market was as fragile and vulnerable as the bears claim, it would have collapsed by now. Things will get more interesting this fall when institutional investors return from summer vacation and start positioning for year-end. But that is still months away and until then, we should expect more of the same.
Cynics claim this market is fixed/rigged/etc, but if they know that’s the case, shouldn’t they be riding along and making money instead of complaining about it? There is only one way to trade this market and that is sticking with what has been working.
The index is trading well but someone forgot to tell AMZN. But one off day doesn’t mean we should abandon a stock that has been working well for months. On the positive side, NFLX seems to be finding its footing. While this could have slipped under recent lows, that didn’t happen and it looks like dip buyers are finally warming up to these discounts. This remains a buy above $500.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Thursday turned into another choppy session for the S&P 500 with second thoughts pushing the index back to 4,200 support for the second day in a row. But just like Wednesday, this follow-on selling stalled and bounced back within hours and the index finished the day right back where it started.
Investors keep fretting over the Fed’s interest rate comments, but as has been the case all year, most owners shrugged at the news and kept holding. And Thursday’s wave of selling didn’t change many minds.
The end result is the index tested 4,200 and bounced off of it for the second time in two days. This is the behavior of a strong market, not a weak one.
That said, a third test of support won’t end as favorably. Fall back under 4,200 so soon after bouncing off of it means the ride is about to get a little bumpier. But just like all of the other dips we came across this year, this is a buying opportunity, not a reason to run for the bomb shelter.
Keep holding for higher prices with stops under 4,200. If prices dip under our stops, get out and be ready to buy the next bounce, something that could happen as soon as a few hours later.
Bitcoin popped above $40k this week after Elon said TSLA would consider taking bitcoin payments for cars again if the cryptocurrency can clean up its carbon footprint. That said, the push above $40k was short-lived and we are back in the upper $30k’s again.
At this point, $40k is the line in the sand. Get back above this key level and we are headed back to $50k. But if we keep hitting our head on $40k resistance, anticipate another retreat back to $30k support.
Anyone that bought the bounce off of $30k support should at least consider taking some partial profits near $40k. It is always easier to buy back in than it is to wish prices higher after missing a good selling opportunity.
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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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