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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 popped 1.1% Thursday and is up 8% in three weeks. (Trade that with a leveraged ETF and the profits are spicy!)
Three weeks ago investors were cowering from spiking Treasury yields. Now I cannot even remember the last time I saw an article mention Treasury yields. But that’s the way this always goes; buy the fear and sell the relief.
As good as this trade has been, only a greedy fool expects the index to surge another 8% by early May. I’m not suggesting people rush out and sell everything because “stocks are too high!”, but I am saying we need to be far more careful following a nice, one-direction run like this. (Everyone knows stocks move in waves.)
Keep holding for higher prices but move up our trailing stops and consider locking in some profits proactively if the index stumbles into the close on Friday or early next week.
Wednesday was an awful day for TSLA and things were only marginally better Thursday. The stock popped early Wednesday and challenged $800 resistance, but rather than chase prices higher, investors hit the sell button and the stock ultimately finished down 4%.
While I’m not going to give up on this stock because of one bad day, but this intraday fizzle was a huge warning flag. The important thing is the stock stabilized Thursday and the selling didn’t continue.
Everything is fine as long as TSLA remains above $700, but lock-in profits if this retreats under $700 because the selling won’t stop until it hits $600 support. (The most aggressive trader could short a violation of $700 with a stop just above this level.)
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 “tumbled” on Wednesday. Or at least that’s the way a 0.4% loss feels after such a pleasant climb following the 4k breakout.
This rally to the mid-4,100s has been a little too easy and as such, some near-term selling is inevitable. Nine up days over the last few weeks will most likely be evened out with several days of selling. (Everyone knows markets move in waves.)
That said, there is no reason to rush out and abandon this market simply because we’ve gone up too many days in a row. As ridiculous as this feels, nothing prevents this from getting even more ridiculous before the inevitable pullback. (Just ask all the people that sold at 3,800, 3,900, and 4,000.)
As long as this remains above our trailing stops in the mid-4k’s, keep holding for higher prices. While we might experience further near-term weakness, there is no reason to assume anything fundamentally changed and this bull market is still very much alive and well.
GME bounced back pretty hard following a long string of down-days. But until we get above $200, this is nothing more than another lower-high on our way back to $100. GME is definitely a buy above $200, but until we get there, this remains a strong short candidate.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Tuesday was another record close for the S&P 500, this time cresting 4,140 for the first time ever.
These gains mean we rallyed more than 400 points since March’s Treasury yield pullback. That’s 11% over a handful of weeks if you play the normal game and a whole lot more if you take advantage of levered ETFs (like I do).
As boring as this market seems, there have been plenty of opportunities to make good money riding this gentle glide higher.
The looming complication is sentiment typically flips after becoming too obvious. A few weeks ago, it was obvious spiking interest rates were going to kill this bull market. And now it is obvious fundamentals don’t matters and prices will continue higher forever.
As contrarian traders, we need to be ready to go against the crowd. That does NOT mean buying a falling market or selling a rising one. That is arguing with the market and no one every wins an argument wit the market. But now that prices have gone too far in one direction, we need to have A PLAN to deal with the inevitable snapback WHEN it happens (and not a moment sooner).
The easiest and most most braindead way of protecting our backside is following this rally higher with a trailing stop. The most undeniable aspect of any pullback is declining stock prices. If prices fall under our stops, we get out. Easy as that.
There are other signs the rally is running out of gas, but none of those apply to an index that keeps making fresh highs. We can dig into those warning signs when prices retreat from the highs, but until then, keep holding for higher prices and continue lifting our trailing stops.
This rally will end at some point, but this is not that point.
Bitcoin broke out above the old $60k highs and added another 5%. So far so good. Keep holding for higher prices with stops just under $60k. If this breakout fizzles and retreats back into the consolidation, demand isn’t ready yet. But as long as this cryptocurrency remain above $60k, keep holding for higher prices.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 spent most of the day ever so slightly in the red, but that 15-point dip couldn’t stick and this stubbornly bullish index finished near breakeven.
No doubt this rally cannot remain this easy and brainless for much longer, but as long as it continues trading well, there is no valid reason to argue with what is working.
Trading is hard enough and we don’t need to make it harder by arguing with the market. Keep following the index higher and lift our trailing stops. This will run out of momentum at some point, but it will go a lot higher than most people think before it does.
GME‘s latest flirtation with $200 is ending in disappointment. I was impressed with how well the stock was holding near $200 and that often indicates the stock wants to break through resistance. But there always comes a point where resting turns into stalling. As I wrote last week:
GME has clearly crossed the tipping point into stalling and things are not looking good for the stock. This is why it is so important to wait for the breakout before committing. One, it requires the stock to demonstrate its strength before we put our money at risk. And two, it creates a clear stop loss level to protect our backside.
If GME cannot arrest this fall in a real big hurry, expect the selling to accelerate and for prices to tumble under $100 in the blink of an eye.
This remains a strong short until it gets above $200.
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By Jani Ziedins | Weekly Analysis
Free Weekly Analysis:
The S&P 500 added 2.7% last week with all of those gains pushing the index even deeper into record territory.
As I’ve been saying for a while, this is a strong market and by nature, strong markets go up more than they go down. And in this case, a lot more up than down.
A little over a year ago the index bottomed at 2,190 as fear of a global lock-down climaxed. But as is usually the case, reality turned out less bad than feared. Stock prices recovered from those oversold levels and the index now finds itself 90% above those Covid lows. And not only did we bounce back, but the index is actually 22% above those pre-Covid highs!
As crazy as this sounds, Covid has been very bullish for stocks. Chalk it up to government stimulus and ridiculously low-interest rates. But as far as the economy goes, the Covid lockdowns were little more than a bump in the road, and in fact, many consumers are sitting on such large piles of money they are bidding up the prices of houses and draining auto dealer inventories. Most businesses are struggling to keep up with demand and their biggest problem is keeping inventory in stock!
Is this economy build on a house of cards? Will inflation come along and knock everything down? Maybe. But here’s the thing, as independent investors, we don’t need to predict the future. The greatest strength we have is the nimbleness of our size. We can jump in and out of the market with a few mouse clicks. What happens next week, next quarter, or even next year isn’t material to us. As soon as this bull market runs out of gas, we get out.
There will be the inevitable false alarms and we will get shaken out by a few whipsaws that undercut our stops. But as long as we are willing to get back in, no harm no foul.
I don’t need to predict what the market will do next because I am nimble enough to react to it in real-time. At this point, I’m holding for higher prices and lifting my stops to the lower 4k’s. If prices dip, I get out. If they keep going up, I continue hanging on. It really is that easy.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 finished Thursday within three points of 4,100. Not bad for an “overbought” market.
It took a couple of months to rally from 3,900 to 4k, but it only took a few days to make the next step to 4,100. But that’s the way this goes; lunge…rest…lunge again…rest again…
I don’t expect this latest breakout to go a whole lot further before falling into the next consolidation. We will hit 4,100 imminently, but it could be a while before we get to 4,200. As the saying goes, two steps forward, one step back.
That said, as long as stocks keep going up, there is only one way to trade this. Keep holding for higher prices and lifting our trailing stops to the lower 4k’s.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Wednesday was another quiet session for the S&P 500 following last week’s 4k breakout.
While most traders are addicted to drama, boring is vastly underrated. Emotional markets produce big moves, unfortunately, most of the time the big action occurs in the wrong direction. On the other hand, boring markets make far smaller moves, but most of them line up in the positive direction. And lucky for bulls, we are in the middle of a very boring market.
Headlines remain benign and stocks continue rallying on “less bad than feared”. Until something changes, stick with what has been working. Hold for higher prices and keep lifting our trailing stops.
The index finished with a small gain but someone forgot to tell TSLA. The electric car maker lost 3% in an otherwise decent day for leading growth stocks.
While we don’t want to overreact to a single day of underperformance, we need to see TSLA lead this market higher, not lag behind it.
Last week’s nice bounce off of $600 support was buyable, but if this underperformance continues, we need to pull the plug and lock-in profits while we still have them. (And if this retreats under $600, that becomes an attractive short entry.)
I’m not giving up on this stock just yet, but I have it on a short leash.
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What’s a good trade worth to you?
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Follow Jani on Twitter @crackedmarket
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