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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:
Another day, another finish short of 4,200. As well as the index has been trading, it sure is having a heck of a time getting above this psychologically significant level.
As I wrote subscribers earlier today:
Stalling before the fall? Or pause before the next rally?
While both scenarios could easily play out, until proven otherwise, we continue giving the benefit of the doubt to the rally. Holding near the highs is a sign of strength, not weakness. While I would get concerned if we cannot get above 4,200 over the next few weeks, pausing at these levels for a handful of days is a very normal and healthy thing to do.
More important than the lack of follow-on buying is the absence of contageous herd selling every time stocks dip. The market is acting well and the path of least resistance remains higher.
GME smashed through $200 resistance Tuesday afternoon and that surge of buying continued Wednesday. This breakout is very much buyable, but a person has to have an iron stomach, be incredibly nimble, and view this as a very short-term trade. Take profits early and often because they won’t last long.
As I wrote previously:
Tuesday was that day and now we’re sitting on 20% profits. Not bad for a few hours of “work”. But don’t get complacent, this thing falls even faster than it climbs. Be ready to take profits at the first hints of trouble and no matter what, do NOT let this trade slip into the red. This could be the last time this stock gets to these levels.
Profit from the hysteria, but don’t fall for the hype.
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By Jani Ziedins | End of Day Analysis
The S&P 500 slipped a modest 0.2% Tuesday and while that size of a decline seems fairly trivial, it is notable this was the second day in a row the index failed to hold early gains above 4,200.
This counts as one of those half-full, half-empty kinds of days. On the positive side, the index remains within a handful of points of all-time highs. Not bad given how unnerved traders felt a couple of weeks ago when inflation worries dominated the headlines. On the other side of the coin, the previous two pullbacks started with rejections by 4,200 resistance. Are we witnessing the start of the third pullback?
Is this just another insignificant hiccup on our way to record highs? Or are we on the verge of the next test of 4k support?
To be honest, I could see either outcome playing out. While bulls and bears are busy arguing why their analysis and outlook is superior to the other side’s, I’m over here crafting a trading plan that accounts for both scenarios. Why pick one or the other when we can have both!
At the moment, I’m riding this wave higher with stops in the mid-4,100s. Buying last week’s dip early gave me entry points at much lower levels and that affords me the flexibility of riding this out with a “free” trade. If this goes higher, great, I collect those profits. If this dips back to 4k support, I get out at my entry points (making this a “free” trade) and I buy the next bounce at even lower levels. Either way, I win. (In fact, a bigger decline here gives me even more profit opportunity buying the next rebound.)
The key to surviving and even thriving during periods like this is trading proactively and decisively. By getting in early, we have a whole lot more options.
NFLX reclaimed $500, making this a buyable bounce. But the subsequent price action has been fairly lethargic. Fall back under $500 and not only does it make sense to close the long, but this turned back into an attractive shorting opportunity. Hang out near the lows long enough and inevitably, we start making even lower-lows.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Monday was a good session for the S&P 500 as it added 1% and pushed up against 4,200 resistance.
The index has been flirting with this key level since April and up to this point, it has been unable to hold above it for any length of time. Monday was no exception with a midday push to 4,209 slipping back to 4,197 by the close.
Should we be worried about the market’s inability to close the deal and put 4,200 in the rearview mirror?
Everyone knows markets move in waves and this is especially true following big directional moves. The index broke through 4k for the first time on April 1st and then it sprinted to 4,200. A 5% surge in two weeks is downright impressive and a little sideways consolidation was the most obvious next step. And that is exactly what the index has done since mid-April.
So I ask again, should we be worried about the market’s inability to close the deal and put 4,200 in the rearview mirror? No, of course not.
This sideways consolidation is very normal and healthy behavior following a big and fast move. In fact, I would be far more concerned about the sustainability of the bull market if that 5% move continued to 10% without taking a break.
Resting here is the right call and it sets a solid foundation for the next leg higher.
As I often write, something that refuses to go down will eventually go up and that is the case here. As hard as bears are trying to break this market, they cannot get the job done. Their failure becomes our gain.
Keep holding for higher prices and lift our stops once the index gets above 4,200.
Monday was a good day for the FAANG stocks, especially FB and GOOG. These are the biggest and most important stocks in the market and their underperformance has been weighing on the entire market. If their recent outperformance continues, expect these stocks to lift the entire market. If their underperformance resumes, expect them to drag all stocks down.
These highflying stocks are the canary in the coalmine and if they start struggling again, all investors need to be paying attention. Let’s hope it doesn’t get to that.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 slipped for a second week in a row. But for as ominous as things appeared Wednesday morning, the 0.43% weekly loss seems fairly benign.
This was the second week in a row bears tried to break this bull and the second week in a row they failed to get the job done. Dips in the first half of the week bounced decisively in the second half. And here we stand, within 2% of all-time highs following two weeks of robust selling. As I often write, a market that refuses to go down will eventually go up.
That said, there are no guarantees the second bounce is the end of this volatility and we could easily experience another test of 4k support next week. But if the first two attempts couldn’t close the deal, odds don’t look good for a third attempt. (Often the 3rd bounce is the charm!)
As has been the case all along, keep holding for higher prices, pulling the plug at our stops, and being ready to jump back in when the dip proves to be yet another false alarm. While trading through these whipsaws is inconvenient, it sure beats holding blindly through a much bigger correction. While the next dip will most likely bounce like all of the others that came before it, there are no guarantees and I certainly don’t feel like betting my trading account on it.
And in fact, I’d rather be wrong and see the index fall significantly further. The lower this goes now, the more money I make buying the next bounce.
I normally like to mix up these individual analysis pieces and spread them across different stocks, but Bitcoin is just too juicy to ignore. Thursday’s bounce above $40k support failed and this is back in the mid-$30k’s. If BTC cannot get back above $40k soon, we could very easily see prints that start with a $2#,###.
As I’ve been writing all along, with something this volatile, we need to have a stop and we need to stick to it. $60k was a sensible level to lock in profits. So was $50k and more recently $40k. And now there is a good chance people will be kicking themselves for not selling at $30k.
I’m not giving up on Bitcoin, but this has a nasty habit of falling 80% and that means this might not bottom until $12k! While this also has a habit of bouncing back, don’t forget last major selloff took three years to get back to the old highs. Just think about that when deciding if you want to hold through the dip.
Even the most bullish of bulls can see the value of selling $60k and buying back in at $12k.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Thursday was a good session for the S&P 500 as it extended Wednesday’s rebound off of recent lows.
So what is this, a bull market breaking down or a rally getting ready to make new highs? Depending on the hour, you are likely to find widely differing opinions.
As I’ve been saying for a while, until given a compelling reason to change our outlook, we continue giving this bull market the benefit of the doubt. This bull market started in March 2020 and every wobble since then has been a false alarm. While the cynic will claim the end is coming (and he will be right…eventually), this rally bounced more than a dozen times and is up nearly 100% from the Covid lows. Anyone who pulled the plug early has missed out on a lot of easy money.
That said, I’m never one to blindly hold “no matter what”. I’m in the market when it is going up and I step to the side when it slips under my trailing stops. When the dip turns out to be a false alarm, I get back in and do it all over again.
Will this week’s rebound stick? Maybe. Or maybe it fizzles and retests recent lows. Either way, I’m ready for what comes next. I bought back in yesterday and by acting early, I am already lifting my stops up to my reentry points. Few things are better than free trades.
I still like this bull market, but if this week’s bounce fizzles, I will get out at my stops and try again next week. No harm, no foul.
Bitcoin finds itself at a critical juncture. Buy the bounce above $40k and short the break underneath it. As much as people want to debate the fundamentals, this is nothing more than a sentiment trade and either prices bounce or they don’t. Plan your next trade accordingly.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
It’s been a bumpy couple of weeks and that theme continued Wednesday morning as the S&P 500 retested mid-4k support. But the other important theme also continued, and that’s every scary dip finds a bottom and bounces within days, if not hours.
Taken together, this week’s tumble combined with Wednesday’s strong recovery gave both bulls and bears something to crow about.
While the market thus far appears inclined to bounce off of 4,050, odds are that level won’t withstand another test.
Do we fall under 4,050 support? At this point, chances are pretty good. But most likely that 3rd dip will turn out to be the charm and the resulting bounce will be the real one.
But can I say that with 100% conviction? No, of course not. And that means I include flexibility in my trading plan.
I’m buying these bounces, but I’m also ready to pull the plug if they don’t work out. Just because the first or second bounce doesn’t work doesn’t mean I will give up. As I said, often these things don’t work until the third time.
And if the third time doesn’t work, no big deal, I get out and try again.
Selling the dip early and buying the bounce early is the best way to stay ahead of this volatility. Unfortunately, most people get their ass handed to them because they get out late and get in late.
Trade proactively, not reactively and you will come to enjoy this volatility, not fear it.
The wild ride continues in Bitcoin. But if a person was savvy and had stops near $60k, or even $50k, today’s huge collapse to $30k would have been a fantastic buying opportunity, not a reason to panic.
Plan your trade and trade your plan. Life becomes so much more pleasant once you learn to trade this, p way.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Tuesday started off well enough for the S&P 500 with the index hovering near Monday’s close. The index bounced back decisively from last week’s tumble and everything looked great. Unfortunately, the situation deteriorated Tuesday afternoon as the index tumbled 0.76% in a waterfall selloff into the close.
While I was quite pleased with how resilient the market was acting all the way up until lunchtime, this late selloff is a big red flag. As I often write, it isn’t how we start but how we finish that matters most. This rebound gave way to second thoughts and maybe last week’s selloff isn’t done.
It all comes down to Wednesday. With emotion and volatility ramping up, the market is going to make a big move, we just don’t know which direction yet.
I’m fine with a gap lower at the open, as long as the selling stalls and prices bounce not long after regular trade starts. Dipping at the open and closing in the green would be another big win for bulls and confirms this is a resilient market, not a weak one.
But no matter where we open (up, down, or flat), if the selling resumes Wednesday morning and continues into the afternoon, last week’s lows are vulnerable and at risk of being undercut.
We cannot count the bull market out just yet, but we need Tuesday’s weak close to bounce on Wednesday. Any continuation of the late selling will quickly spiral out of control.
As for how to trade this:
If a person has cash, a weak open that bounces is buyable.
Any open that devolves into another wave of selling is shortable with a stop just above those early highs.
For a person with existing positions and nearby stops, don’t automatically sell a weak open. Wait 10 to 15 minutes before pulling the plug to see if that early weakness turns around. If the market bounces, those early lows then become our new stops.
Once we get past 15 minutes, any dip that undercuts our stops is a clear signal to get out and reassess.
Remember, it is far easier to buy back in than it is to wish the market higher if we hold too long.
Bitcoin is at a critical juncture. Either prices bounce off of this $40k test of support. Or the selling violates support and this cryptocurrency gets hit by another big wave of selling.
Right or wrong, this is a sentiment trade it doesn’t really matter what the future holds, only what the crowd thinks will happen. Bitcoin is prone to large swings and this 30% tumble from the highs could early turn into 60% in the blink of an eye.
While a lot of people wish they took profits at $60k, there is a good chance people could be wishing they took profits at $40k. Don’t be one of them. Pick a stop-loss and stick to it.
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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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