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 30

CMU: The importance of having a plan to be wrong

By Jani Ziedins | Free CMU

Cracked.Market University

One of the things I learned a long time ago is that while I’m pretty good at trading, when I’m wrong, I tend to be really wrong.

I’m an optimist at heart. It’s almost a requirement to surviving the markets over the long-term because we definitely go up more than we go down and bull markets last a lot longer than bear markets. That said, when things go south, they south in a hurry.

While I tend to give the market the benefit of doubt, I always have a plan for being wrong. The most obvious example is starting every trade with a sensible stop. But beyond this tactical technique, I also need a mechanism for recognizing when my outlook is flat-out wrong. When what seems like a buyable dip is really the next good shorting opportunity. Or what looks like a great short is actually the next great buy.

The most expensive mistakes we make are when we think the market is headed one way but it is actually going in the opposite direction. This is when we need to be the most open-minded about our outlook and the quickest to changing course.

I was looking for last week’s huge bounce to fizzle in a near-term pullback. As I wrote previously, “one day up, the next day down.” While that approach worked brilliantly for the first few weeks of this selloff, it stopped working late last week. Rather than alternate daily between losses and gains, the gains started piling up day after day. Cracks that should have triggered another waterfall selloff ended up bouncing even higher instead.

I could have gotten stubborn and dug my heels in like so many other traders that were skeptical of last week’s 20% rebound. But when my initial short trade didn’t work as planned, I had to acknowledge that I could have this backward. When the market refused to collapse in a waterfall selloff Friday, that was a strong indication it wanted to go higher, not lower. When the market opened strong this morning, rather than argue with it, I saw this counter-intuitive strength as a buying signal. Rather than argue with the market and lose money, I plugged my nose and bought the strength instead.

I still expect this market to pullback very soon (maybe tomorrow is finally the day), but as long as this keeps going up, my trading plan is going to keep forcing me to buy it. And for that, I’m thankful.

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Tags: S&P 500 Nasdaq $SPY $SPX $QQQ $IWM

Mar 27

Free Weekly Analysis and Lookahead

By Jani Ziedins | Weekly Analysis

Free Weekly Analysis and Lookahead

This was one of the most volatile weeks in S&P 500 history with the highs and lows spanning more than 20%. The moves were so dramatic in fact, the index actually started a new bull market after climbing 20% from Monday’s lows! (Also making this the shortest bear market in history.)

These are strange times. I was there for the dot-com bubble. 9/11. The housing crash and financial crisis. I even have memories of 1987’s Black Monday. But few things compare to the levels of uncertainty we are feeling today. 1987 blindsided market participants and few things are as shocking as watching 9/11 unfold in real-time. But neither of those events affected Mainstreet the way Coronavirus has completely and totally shut down the global economy. Everyone was numb after 9/11, but most people resumed their lives after a few days.

Not today. Governors are instructing, if not downright ordering, citizens to stay in their homes for at least two weeks. And that is just the start. No one knows how much further this could go. Stocks rallied this week after Congress approved a $2 trillion dollar stimulus package and the Fed assured us they have “unlimited ammunition” to combat this economic slowdown. That was good enough to launch stock prices 20% above Monday’s lows. But can these things solve our problems? No…not even close.

This week’s rebound was more of a massive relief-rally and short-squeeze than a vote of confidence about our “new” outlook. While it was definitely nice to see the stock market string together a few positive days, our situation is not any better this Friday than it was last Friday. In fact, in many ways, they are worse now because this virus continues expanding at an exponential rate and this week’s shelter-in-place orders had a minimal impact on the growth curve.

As nice as it felt to see the market put together an impressive performance this week, we are far from out of the woods and should expect this historic volatility to stick around for a while. At the very least, expect prices to retest the lows over the next week or two. Maybe we find support at the prior lows. Maybe we don’t. Either way, hopefully, anyone who was savvy enough to buy this week’s rebound is also savvy enough to lock-in a big portion of those profits before they evaporate. Investors can buy these discounts for the long-haul, but traders need to be extremely nimble because today’s profits will turn into tomorrow’s losses if we allow ourselves to get greedy.

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Tags: S&P 500 Nasdaq $SPY $SPX $QQQ $IWM

Mar 26

If you’re not taking profits, then you’re taking losses.

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis

The S&P 500 produced its first three-day win-streak since early February. Congress agreed to a $2 trillion stimulus package and the Fed assured us they have “unlimited ammunition”. Those headlines were enough to launch stocks nearly 20% above Monday’s intraday lows. Looking beyond this relief rally, the bigger question is if these government interventions are enough to solve the market’s problems or if this strength is just another fleeting bounce on our way lower.

Three days ago bears were gloating over their investing prowess. Today it’s the bull’s turn. And so goes the swinging pendulum of sentiment in this violently volatile market. While it was definitely better to be a bull today than a bear, is the Coronavirus epidemic really solved? Did our politicians actually accomplish anything more meaningful than adding $2 trillion to our national debt? Ummmmm, no. We are in much of the same place we were Monday…and last Friday…and the Friday before that. Nothing has been fixed but at least some issues have been addressed…if only marginally.

These constructive headlines were at least good enough to stem the cascade of relentless selling. That said, we shouldn’t expect prices to race back to the highs anytime soon. The world is still gripped by fear of a killer virus and all the economic damage that goes along with these extreme preventative measures.

As I wrote on Monday, this market is incredibly volatile and that means huge swings in BOTH directions. One day’s gains become the next day’s losses (plus or minus a day or two). In periods like this, if swing-traders are not taking profits, then they are taking losses. Rather than gloat over the corpses of your adversaries, be savvy enough to realize that if you hang around too long, your corpse will soon be the one underfoot. While giving up on a winning trade is always hard to do, if you don’t, the market will take all those profits back.

I warned bears a few days ago and now I’m warning bulls. Lock-in those profits and be ready to go the other direction. The next big swing is just around the corner.

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What’s a good trade worth to you?
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Tags: S&P 500 Nasdaq $SPY $SPX $QQQ $IWM