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.

Mar 24

A strategy to protect $SPX profits and beating the $GME horse

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Wednesday was another rocky session for the S&P 500 and the index lost half a percent. That makes four down days out of the last five sessions.

Interest rate headlines continue dominating the financial press. That said, the reactionary selling has been relatively constrained and the index is only marginally below last week’s record highs.

The thing to remember about stock market crashes is they are breathtakingly quick. In comparison, we’ve been dealing with bond yield headlines all month, yet here we are within 2% of all-time highs. That hardly qualifies as panic selling.

But while the rally still appears to be in good shape, we always need to have our line in the sand. While this dip will most likely bounce like all of the other dips that came before it, there are no guarantees in the market.

The greatest advantage we have as independent traders is the nimbleness of our size. There is no reason to hold a position all the way down given how effortless it is for us to sell and buy back in.

While picking stops is never easy, spreading stops across a range helps minimize indecision and second-guessing. Pick a high point, a low point, and something in between. This way you are locking in some profits quickly and you are giving other positions a little extra room to avoid a routine shakeout.

If prices bounce quickly, only a small portion of your position was shaken out. If prices fall further, you got out at higher levels and can actually take advantage of buying the bigger discounts.

The most important thing is as soon as you get dumped out, start looking for the next buying opportunity to get back in. Many times the pullback proves to be a false alarm and the bounce can be within days if not hours.

While riding through whipsaws is annoying, I’d much rather deal with that minor inconvenience than suffer a large loss by stubbornly holding a larger dip that doesn’t bounce.

It was another brutal session for GME. The stock lost 1/3 of its value and odds are it will never get back above $200 ever again.

As much as the cheerleaders are willing this to go higher, it seems everyone who wants to pay $200 for a $20 stock has already bought it and there are no other fools left to keep pushing prices higher.

Volatility will remain off the chart for a while but expect every dip make a lower-low and every bounce to make a lower-high.

If a person didn’t sell this latest echo, they have no one to blame but themselves and their greedy impulses.

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Mar 23

Tales of a stubborn bull market and a warning for $GME owners

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 lost 0.8% Tuesday in the second-largest give-back over the last few weeks. Yet even when combined with last week’s -1.5% down day, the index remains within 1.6% of its all-time closing high. Hardly bearish material.

That said, you have to give the bears credit for their persistence. But so far they have been unable to crack this resilient bull market. No matter what is thrown at this rally, it just keeps shrugging off the bad news. While the cynics have been wrong 100 times up to this point, they insist this time they are finally right. Could they be right? Sure. But will they be right? No, probably not.

Successful trading is a game of probabilities and right now odds favor a continuation. This is a stubbornly resilient market and rather than fight the stubborn strength, we should be going along for the ride.

I’d love it if this market cracked wide open and panicked sellers started giving away stocks at huge discounts. Unfortunately, I don’t see that happening. We need to get cautious if Tuesday’s dip continues under Friday’s intraday lows. But until then, stick with what has been working, which is holding for higher prices.

GME reported earnings after the close and they missed pretty big on both the top and bottom lines. That didn’t stop after-hours traders from bidding up the stock right after the earnings release. Unfortunately, that initial strength was short-lived and the stock ultimately closed down 15% by the end of the after-hours session.

I’ve been skeptical of the sustainability of this latest “echo” and it seems the bounce’s momentum is quickly petering out. As I’ve been telling Premium subscribers for over a week, once this thing falls under $200, it ain’t coming back. There are only so many fools willing to pay $200 for a $20 stock and it looks like we finally ran out of them.

This was a momentum trade and now that the momentum’s gone, there is no reason to own this. Hopefully, regretful buyers from the first runup were able to get their money back during this impressive echo. But if they didn’t, they have no one to blame but themselves.

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Mar 22

Why the $SPX’s bull market isn’t dead yet and a trading plan for $TSLA

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The week started well for the S&P 500 as it continued Friday’s bounce off of 3,900 support. Treasury yields moderated modestly and slipped under 1.7%. While not a big pullback, the decrease was enough to put stock traders in a dip-buying mood and the index is back within 1% of last week’s record close.

While the stock market is trading well and this resilience would be a big green light to start buying more under more conventional circumstances, I have a lot less confidence the worst is over in the bond market. In fact, I fully expect Treasuries to challenge 2% over the next few weeks.

Bond investors are human beings and prone to the same emotional mood swings as stock investors. That means these large moves tend to go way too far before eventually moderating. And in this instance, 2% seems to be the next target.

But as long as that move to 2% is relatively measured and turns into capitulation before retreating back to a more manageable 1.5%, this rise in yields shouldn’t threaten the bull market. Instead, this will simply be another bump on the stock market’s way higher.

That said, all bets are off if the bond selling intensifies and yields shoot past 2% and keep going. That’s the worst-case scenario. And as is usually the case with the worst-case scenario, the likelihood is of this outcome is slim. Most of the time reality turns out less-bad than feared. But that doesn’t mean equity investors won’t overreact to the risks over the near-term.

I really like the way the S&P 500 bounced off of 3,900 support and this move is buyable as long as the index remains above 3,900. Tumble under 3,900 on Tuesday and we need to pull the plug and reevaluate.

TSLA is struggling to add to March’s bounce off of $600 support and the rebound appears stalled under $700. The bounce is still holdable with a stop near $600, but if prices fall under $600, get out and even consider shorting the weakness. If $600 support doesn’t hold, the next obvious support level is $400. IMO, there is no reason to sit through a 33% pullback if we don’t have to. And if the stock bounces back above $600, it is easy enough to buy back in.

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Mar 11

Why bears got the interest rate trade wrong and what’s coming up for TSLA

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Thursday was a good day for the S&P 500 with the index notching yet another record close. That’s miles from last week’s apprehension over the looming stock market collapse.

It’s been a few weeks since the last record high, but more important is this rebound extends the trend of higher-highs. As much as the cynics try to bash this market, fragile markets don’t keep making new highs. That confirms this a strong market, not a weak one.

The other nice thing to see Thursday was was a modest decoupling between bonds and stocks. Previously, stocks were rising and falling at the mercy of the bond market’s whims. Thursday, the bond market was mostly flat while stocks staged this nice rally to record highs.

But this shouldn’t be a surprise. As I wrote last week, stock investors are not afraid of these historically low 1.5% interest rates. They were worried this surge would continue to 3% and beyond. But so far, yields are settling in around a very reasonable 1.5% and that level seems good enough for the equity market.

Every pullback feels real. By rule, it has to. That’s because if it didn’t feel real, no one would sell and prices wouldn’t drop. Buying last week’s bounce was hard, but so far it looks to be the right call.

The thing to remember is risk is a function of height. The higher we are, the further we have to fall. And the opposite is true. The more the indexes pullback, the closer we are to the next bounce.

It is hard to buy when everyone else is predicting a collapse, but that is often the safest time to be buying. If a trader waited until today’s “conformation”, they would be getting in at record highs. The trader that took a chance on last week’s bounce already has a nice profit cushion protecting their trade.

Start small, get in early, keep a nearby stop, and only add to a trade that is working. That’s how we keep ourselves out of trouble.

TSLA is riding on the coattails of the index’s rebound and has bounced hard off of Monday’s lows. Was this capitulation and enough to end the 40% collapse from the highs?

That’s a good question we cannot answer it right now. It’s been a long time since this stock followed anything remotely close to fundamental analysis. That means this is a momentum trade and either momentum is still behind this stock or it’s not. With a PE measured in the thousands, there is no option other than another race higher or a spectacular collapse.

TSLA’s bounce is buyable above $600. On the other hand, this turns into a strong short if this rebound fizzles and the stock retreats back under $600.

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Mar 10

Why the S&P 500 is headed higher and the latest warning for GME owners

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 finished Wednesday up as the relative calm in the bond market continues.

Bond investors are not fundamentally any different than stock investors. They are humans that feel the same tugs of greed and fear and are equally prone to overreacting to a selloff.

Chances are good a big portion of this latest runup in bond yields was triggered by a wave of contagious herd selling that got carried away. And that is the way equity investors are treating this as they buy last week’s dip.

The thing to remember in both stocks and bonds is most owners would rather keep holding than sell what they have. These episodes of runaway selling are triggered by fear. But after several days of calm, that fear dissipates and investors are able to make more rational trading decisions. And those rational decisions almost always include continuing to hold.

For the time being, the S&P 500 is acting well and there is only one way to trade this. Keep holding for higher prices with stops in the lower 3,800s. The advantage of buying the dip early is now we have a profit margin to protect us if the selloff resumes. Move your stops up to your entry points and see where this goes.

Silliness is returning to GME and the stock was up $100 Wednesday afternoon. That was until it fell $175 in a few short minutes. The size of the collapse was spectacular and shows just how thin the buying is in this stock. While most GME owners are “holding with diamond hands”, there are not many fools left willing to pay $300 for a $20 stock. All it takes is a few owners to start locking in their profits and this will get real ugly, real quick.

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