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.

Dec 14

What to expect headed into the holidays

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 opened Monday morning with solid gains after the U.S. began distributing the first Covid vaccine this weekend. Unfortunately, investor enthusiasm was short-lived and the index skidded into the red by the close.

The Covid vaccine rollout quickly turned into a “buy the rumor, sell the news” event, but this shouldn’t surprise anyone. The U.K. approved the vaccine last week and drug trial headlines have been pointing to this result for months. Any investor that wanted to buy a successful vaccine launch did so weeks ago and very few people were holding out for the confirmation this weekend.

Failing to go up on good news is always a concern because it often signals exhaustion. That said, I’m not overly worried about not rallying on something as obvious and telegraphed as these vaccine headlines. This approval has been coming for a while and to the forward-looking equity market, it already priced this in weeks ago.

Thus far, November’s post-election surge is running out of momentum in December. But at the same time, downside vulnerability seems equally muted with most dips bouncing within hours.

By this point, most investors are content with their existing positions headed into year-end. If they wanted to buy or sell the election or Covid, they made those portfolio adjustments weeks ago. Maybe stocks float a little higher over the next few weeks or maybe they drift back to near-term support. Either way, I’m not expecting anything dramatic or meaningful until the calendar rolls over to 2021.

Sideways chop is one of the most frustrating things to trade. Directional moves are easy to grab ahold of and ride higher or lower with trailing stops. These grinding periods are far more likely to trigger our stops prematurely.

But that’s the way this goes. Sometimes it is easy to make money. Other times we are left twiddling our thumbs. But as long as our gains are larger than our give-backs (and that should have been really easy to do this year), then everything is going according to plan.

I don’t see a lot of potential in either direction and most likely the next great trading opportunity won’t come until after the holidays.

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Dec 11

Weekly Analysis: Is this the best bears can do?

By Jani Ziedins | Weekly Analysis

Free Weekly Analysis: 

It was a relatively quiet week for the S&P 500 as the index slipped a modest 1% over the last five trading sessions. What’s even more noteworthy is the minuscule size of the decline when you consider four of the last five sessions finished in the red.

These almost inconsequential down-days tells us there is very little selling pressure in the market. Given the size of the run from the November lows, quite predictably, we exhausted a huge chunk of demand. But on the flip side, very few owners are interested in locking in profits at these all-time highs.

This continues to be a very complacent market. Most equity owners are holding for higher prices and that keeps supply tight. While we always hear warnings about complacent markets, the thing the critics fail to mention is complacency can last a very, very long time before the fall.

No doubt this rally will end like all of the other rallies that came before it. But given how weak the selling pressure has been lately, this is clearly not that time.

The index very easily could slip and test 3,600 support or even 3,500. But until something dramatic changes investor sentiment, expect any dip to be modest and bounce quickly.

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Dec 10

Should we be worried about this rally?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 slipped for the second day in a row. But rather than devolve into a mad dash for the exits like we would expect from a fragile and grossly overbought market, supply dried up within minutes and prices bounced back near breakeven. So much for this selloff, we barely got to know ya.

Of course, this stubborn resilience shouldn’t surprise anyone. This is how every down-day since the November lows ended. (And almost every down-day since the March lows.)

While it sounds sophisticated to argue against a strong trend because only sheep jump aboard something this easy and obvious, the truth is, a trend is far more likely to continue than reverse.

There have been 190ish trading sessions since the March lows. And in those 190 days, exactly zero have been the start of the next big pullback. But hey, maybe the 191st time is the charm and bears will finally get what they’ve been calling for. But…probably not.

I’m not suggesting we hold blindly. Every savvy trader has been following this rebound with a trailing stop. But until something changes, we keep giving this bull market the benefit of doubt. Maybe the index slips back to 3,600 support. Or maybe even 3,500. But until further notice, we treat every dip as a buying opportunity.

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Dec 09

ZM owners better look out below

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

I wrote about ZM last week when the stock tumbled 15% after announcing 367% revenue growth last quarter. As well as the company is doing, investors were hoping for even more.

Last week’s post-earnings selling stalled just above $400 support. Unfortunately, that resilience only delayed the inevitable and today the stock finally retreated under $400. But this latest violation shouldn’t surprise anyone. As I wrote last week:

There are few things more worrying than a stock that falls on good news. That signals unrealistic expectations and once the selling starts, it usually doesn’t stop. The market loves symmetry and rallies that go too high are almost always followed by pullbacks that go too low.

While nothing is ever certain in the stock market, this chart looks as bad as it gets. Fall under November’s lows and we could see another wave of defensive selling push this stock back to $300 or even lower. As bad as a 35% retreat from all-time highs feels, this still has room to get a lot worse.

This stock is giving us a great short entry under $400 with a stop just above this level. But who knows, maybe this thing turns around and bounces back. It’s possible and it happens occasionally. But if ZM is going to return to the highs, the first thing it needs to do is retake $400. Until that happens, this stock is untouchable.

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Dec 08

A simple trading plan going into year-end

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 slipped into the red Tuesday morning, but rather than accelerate lower, the index turned around and finished the day up a quarter percent.

Equity owners are “fat, dumb, and happy” and ignoring every reason to sell. When stubborn owners refuse to sell, it doesn’t matter what the “experts” think the market should be doing.

Sentiment continues to be half-full and every dip bounces within hours. We are quickly approaching the final weeks of the year. If institutional money managers wanted to make major portfolio adjustments based on last month’s election or the latest Covid flareup, they have already done it. With all of those big trades behind us, we are setting up for a fairly quiet coast into year-end.

If equities were grossly overbought and set up for a collapse, there have been more than enough bearish headlines to trigger that collapse. The simple fact we are still standing near the highs confirms this is a strong market, not a weak one.

While it is easy to criticize this strength, the harder trade is usually the right trade. Everyone knows stocks should not be trading at record highs in the middle of a pandemic, but that’s exactly what they are doing. Rather than fight this strength, I’m riding this wave and only fools are fighting it.

Keep following this bounce higher with a trailing stop and see where it takes us.

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Dec 07

What’s going on with NFLX?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

There was some interesting price-action in NFLX Monday. This was the third bounce off of $475(ish) support since this summer. (Or the fourth or fifth bounce, depending on you choose to count it.)

This resilience is all the more impressive since NFLX had two disappointing earnings reports during this period and the stock tumbled -6.5% and -6.9% the day after each earnings report. Yet here we stand, still within 10% of all-time highs.

Bad news and a resilient stock? That’s a textbook case for a stock that wants to go higher.

Anything that refuses to go down will eventually go up. And right now, NFLX is acting like it wants to go back to the highs. And if it gets back to the highs, expect it to keep on going.

This is buyable with a stop under $500. If it keeps rallying, great, move our stops up and see where this move takes us. If it stalls and retreats for the 4th time, no big deal, we sell at our stop and try again next time.

As always, start small, get in early, keep a nearby stop, and only add to a trade that is working.

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Dec 04

Weekly Analysis: Why this market is doing so well

By Jani Ziedins | Weekly Analysis

Weekly Analysis: 

It was another positive week for the S&P 500 with the index climbing 0.8% over the last five sessions. While no one is excited by a sub-1% week, given where we could be, this resilience is actually a noteworthy accomplishment.

Covid infection and hospitalization rates are off the charts and setting new records nearly every day. November hiring also tumbled dramatically from October’s levels due to expanding Covid restrictions. Either of these headlines could have triggered a stock crash, yet neither one did. Instead, stocks closed the week at record highs. Funny how that works.

This is another data point confirming this is a half-full market. Rather than sell the disappointing employment headlines, traders bought the increasing prospects of additional stimulus.

We don’t trade the news, we trade the market’s reaction to the news. At this point, there is nothing to do but go along with the trend and keep moving our stops up. Maybe this house of cards will come crashing down at some point, but we are not at that point yet. If this market was vulnerable to a collapse, it would have happened by now. Instead, most investors continue looking toward the future with optimism and that’s the way we need to trade this.

But none of this should surprise anyone who’s been reading this blog for a while. We know better than to trade what we think should happen. Instead, we always focus on what the market is doing. And right now, it is ignoring all of the bearish headlines. As traders, if the market doesn’t care about the headlines, then neither should we.

As with any bearish event, there always comes a point where the stock market has fully priced it in and it starts looking toward what is coming next. Everyone knows how bad this latest Covid flareup is and understands what it is doing to the economy. Yet these same investors keep holding because they know we are getting closer to the end of this mess.

I’m still concerned about the lingering collateral damage affecting the economy next year. But as long as investors are fixated on the recovery, that’s the only thing that matters and so far the recovery is progressing nicely. Once we get past Covid, investors might take a more critical eye of lingering unemployment and damage to corporate balance sheets. But as long as the stock market is not concerning itself over these things, then neither should we.

Stick with what has been working, which is owning this rebound and following it higher with a trailing stop. While we are vulnerable to a pullback at any time, at this point, it seems like most investors want to keep holding for higher prices. As long as this remains a half-full market, expect any weakness to be fleeting and to bounce back quickly.

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