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.

Sep 06

This is only hard if we fall for the market’s tricks

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 tumbled 0.8% Tuesday as it undercut both the 50dma and 4,450 support in midday trade. While an afternoon bounce reclaimed 4,450, it wasn’t enough to get the index back above the 50dma.

I warned readers last Thursday something like this was coming when the crowd was busy gorging itself on stocks at the highest levels in several weeks:

[T]his is a better place to be collecting our 3x ETF profits than adding new money. By the time it looks safe, it is usually too late to buy…Now, don’t get me wrong, I’m not predicting a return to recent lows under 4,400. But everyone knows the markets move in waves, and after a nice bit of up, we need a little down.

[E]xpect a little more cooling off over the next few sessions. For the most aggressive, they can short any incremental weakness but keep positions small and profit targets close. Shorting an uptrend is one of the hardest ways to make money in the market, and it requires impeccable timing.

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Well, here we are, three sessions later, and the index is down ~50 points. While 50 points doesn’t sound like a lot, that turns into real money in a 3x ETF.

For the unfortunate masses who held the previous trade too long, they watched a big chunk of their profits escape during Wednesday’s decline. For the nimble traders that collected worthwhile profits last week and then flipped direction, that’s well over 100 points of profit for a few days’ work. Do that a couple of times a month, and now we are talking real money.

As for what comes next, the market loves symmetry. Since we didn’t rally very far from the August lows, we shouldn’t expect this subsequent step-back to be very large. Maybe Wednesday’s test of 4,450 support is all we need to reset the clock. If that’s the case, we should hold above Wednesday’s lows for the remainder of the week.

On the other hand, if we retreat under Wednesday’s lows, look for the selling to push us back near 4,400 support. At this point, I would expect that to be the last gasps of selling before bouncing. (If it’s not, the August lows are under serious threat.)

As I wrote last week, I wasn’t expecting a lot from this week’s retest of support, and that means I was already peeling off my short profits. If the bounce continues on Thursday or Friday, I’m pocketing all of those short profits and going long again. But if we can’t hold Wednesday’s lows, I’m jumping back on the short bandwagon…

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Aug 31

Successful trading isn’t rocket science

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 slipped 0.15% Thursday, ending a four-day winning streak.

After rallying 150 points over a handful of days, it shouldn’t surprise anyone the market wanted to take a breather. And as far as breathers go, -0.15% doesn’t really count, so expect prices to slip a little further over the next few sessions.

Headlines remain benign, but a rebound that didn’t need a headline to kick it off doesn’t need a headline to take a step back. Stocks go up, and stocks go down; that’s all this is.

As I told readers on Wednesday:

[T]his is a better place to be collecting our 3x ETF profits than adding new money. By the time it looks safe, it is usually too late to buy…Now, don’t get me wrong, I’m not predicting a return to recent lows under 4,400. But everyone knows the markets move in waves, and after a nice bit of up, we need a little down.

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This isn’t rocket science, but apparently, Wednesday’s tardy buyers missed the memo. But without late money, we’d have no one to sell our stocks to and give us our profits. So thank them for that.

As for what comes next, expect a little more cooling off over the next few sessions. For the most aggressive, they can short any incremental weakness but keep positions small and profit targets close. Shorting an uptrend is one of the hardest ways to make money in the market, and it requires impeccable timing.

For everyone else, wait for the dip back to 4,450 support and see what happens. If prices bounce, buy that bounce with a stop under this level. If the selling continues, wait for a bounce off of 4,400. Rinse and repeat.

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Aug 30

When good enough is good enough

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 added 0.4% on Wednesday, making it four winning sessions in a row.

Headlines haven’t changed in a meaningful way, and in fact, some weaker-than-expected economic news came out over the last few days, causing many investors to cheer because they assume the Fed is done hiking rates.

Is weaker-than-expected economic news good? I don’t buy into the bad-is-good trading philosophy, but if traders want to buy bad news, no one can stop them.

As for my personal trades, I really liked this market last week when the index was under 4,400. Now that we are above 4,500, the risk/reward flipped against us. A big chunk of the upside has been realized, and there is not a lot left in this move over the near term. On the other side, risk is a function of height, so by that measure, the index is 150 points riskier than it was last week.

Combine these two ideas, and this is a better place to be collecting our 3x ETF profits than adding new money. By the time it looks safe, it is usually too late to buy. No doubt, it won’t take long for many of Wednesday’s tardy buyers to regret that decision.

Now, don’t get me wrong, I’m not predicting a return to recent lows under 4,400. But everyone knows the markets move in waves, and after a nice bit of up, we need a little down. Anyone expecting another 150-point rally over the next few sessions doesn’t understand how markets work.

Smart traders buy when they don’t want to buy, and they sell when they don’t want to sell. This beautiful rebound above 4,500 makes it hard to pull the plug on a 3x ETF trade that is working this well. But collecting worthwhile profits is never a mistake. Remember, we only make money when we sell our favorite positions.

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Aug 29

Don’t make the same mistake bears just made

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 popped 1.5% on Tuesday as the index put the screws to the bears.

There were some minor economic headlines, but certainly nothing worthy of launching the index through the 50dma and 4,450 resistance. Instead, this was a massive short squeeze. Bears spent last week planning all of the things they were going to buy with their profits, and instead, found themselves dumped on their butts with a big pile of losses.

But that’s the way this goes. This is a volatile market, and if we are not taking worthwhile profits when we have them, we will be taking losses a few days later.

Luckily, Tuesday’s pop didn’t surprise readers of this free blog because we’ve been riding this rebound and collecting a big pile of 3x ETF profits along the way. As I wrote Monday evening:

As for what comes next, I like what I see. No one is talking about the Chinese economy anymore. If the market doesn’t care, then we don’t care. Powell’s speech last Friday couldn’t bring out the sellers either. And, we violated 4,400 support multiple times over the last two weeks without triggering another follow-on wave of defensive selling, telling us there is not much supply left under our feet.

A market that refuses to go down will eventually go up, and that’s the way this trade is coming together. Stick with what is working and keep lifting our stops.

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Now that the bears have been squeezed out, who is left to keep buying and pushing stocks higher? That’s a good question.

As good as the market looks right now, this is when smart traders are switching to defense. The market didn’t get surprised by amazing and unexpected news, so we shouldn’t expect a huge repricing of stocks. Instead, bears got their latest trade wrong, and this bounce is correcting that fairly minor mistake. Is there a reason to keep racing higher? No, probably not.

Now, don’t get me wrong. Stocks could easily continue racing back to the highs. But that’s not the most likely outcome, and we shouldn’t base our next trade on hope of the unlikely.

We collect worthwhile profits when we have them because if we hold too long, this volatile market will steal them back. Just ask the bears what that feels like.

We don’t need to dump everything, but we should lift our trailing stops to protect our profits and even consider locking in some worthwhile profits proactively. Remember, we only make money when we sell our favorite positions.

Keep holding, lifting stops, and even taking some profits off the table proactively. And once we are out, start looking for that next trade, which could include buying a continuation higher if that’s what the market wants to do.

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Aug 28

Why the path of least resistance is higher, not lower

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 added a respectable 0.6% on Monday, extending Friday’s 0.7% bounce, and the index is setting up for another run at 4,450 resistance.

Lucky for readers of this free blog, we saw this rebound coming last week when I wrote on Friday:

The market’s natural inclination is to go up, and breakdowns are breathtakingly fast. Combine those two concepts, and Friday’s rebound definitely favors the bulls. If we were going to break down, prices would have taken another tumble on Friday.

It doesn’t take much to trigger the next wave of selling, but so far, this [rebound] is acting well enough to keep giving it the benefit of the doubt. At this point, I’m cautiously optimistic [last] Thursday’s tumble was the fluke, not [September 18th’s] rebound. For the time being, I’m a buyer of Friday’s bounce, with stops not far behind.

If the bounce continues on Monday, I let those profits come to me. If the selling resumes, I get out for a minor loss and try again next time. Lots of upside and limited downside. What’s not to like about this trade?

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As expected, the index rallied on Monday, and I was able to move my stops up to my entry point, turning this into a low-risk trade. If the selling resumes on Tuesday, I get out near my entry points, no big deal. If the bounce continues, I let all of those 3x ETF profits come to me.

Low-risk/high-reward trades are what we dream of. But these setups are only possible when we have the courage to jump aboard a rebound early.

As for what comes next, I like what I see. No one is talking about the Chinese economy anymore. If the market doesn’t care, then we don’t care. Powell’s speech last Friday couldn’t bring out the sellers either. And, we violated 4,400 support multiple times over the last two weeks without triggering another follow-on wave of defensive selling, telling us there is not much supply left under our feet.

A market that refuses to go down will eventually go up, and that’s the way this trade is coming together. Stick with what is working and keep lifting our stops.

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Aug 25

Why I’m already buying Friday’s bounce

By Jani Ziedins | End of Day Analysis

Free After-hours Analysis: 

Friday’s session took the S&P 500 on another wild ride. The index opened up 20 points, then fell 40 points from those early highs, before finally rebounding and closing with a respectable +0.7% gain. Watch that price action too closely, and one is bound to get whiplash.

The big economic headline was Powell’s speech from Jackson Hole, where he stressed a cautious approach to further rate hikes. That was enough to keep the market from tumbling into another tailspin, but it wasn’t enough to get buyers to start chasing prices higher with reckless abandon. In the end, we recovered half of Thursday’s tumble, which was a fairly decent showing, all things considered.

Lucky for us, this performance is exactly what I was looking for. As I wrote Thursday evening:

As for what comes next, last Friday’s bounce is still alive, even if it is on life support. If we trade well Friday afternoon, Thursday’s selling will be nothing more than the herd getting spooked and panic selling. On the other hand, if the index falls under Friday’s lows, anything is possible.

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The index held above Friday’s lows and closed decently well, making this a buying opportunity.

The market’s natural inclination is to go up, and breakdowns are breathtakingly fast. Combine those two concepts, and Friday’s modest rebound definitely favors the bulls. If we were going to break down, prices should have taken another tumble on Friday.

We are still in the early stages, and any stability near the lows is fragile. It doesn’t take much to trigger the next wave of selling, but so far, this is acting well enough to keep giving it the benefit of the doubt.

At this point, I’m cautiously optimistic this Thursday’s tumble was a fluke, not last Friday’s rebound. For the time being, I’m a buyer of Friday’s bounce, with stops not far behind.

If the bounce continues on Monday, I let those profits come to me. If the selling resumes, I get out for a minor loss and try again next time. Lots of upside and limited downside. What’s not to like about this trade?

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What’s a good trade worth to you?
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For as little as $1.28/day, receive actionable analysis and a trading plan every day during market hours

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