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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 skidded 0.8% Friday, making this the fourth loss out of the last five sessions.
Nothing much changed in the headlines. Inflation remains higher than the Fed wants, but the economy is stubbornly resilient in the face of rising interest rates. A few months ago, investors were obsessed with the half-empty portion of the glass. Now all they see is half-full.
But with a massive amount of buying in the rearview mirror, we need to find new buyers to keep pushing prices even higher, which is getting increasingly difficult. That doesn’t mean it can’t happen, just that the odds of a near-term cooling off are growing with each passing day.
The rally paused this week, and the index remains stuck under 4,400 resistance. Get back above this key psychological level and it is full steam ahead. But until that happens, the smart move is trading this cooling off.
As I explained in Tuesday’s Free Analysis: “Why Tuesday’s step back still has room to run”
At this point, this violation of 4,400 is guilty until proven innocent. If we can’t get back above 4,400 Wednesday, position yourself for more selling. The most aggressive can keep holding their shorts with stops near [last] Friday’s close. For everyone else, keep waiting and watching for the real bounce because Tuesday afternoon probably wasn’t it.
No one knows what the future holds. The best we can do is trade what’s directly in front of us, and right now, that means trading this latest cool-down. We rallied hundreds of points over the last few weeks, and it takes more than 50 points and a few days to reset the clock.
Shorts can keep holding their shorts and those that want to buy the dip need to sit on their hands a little longer because this dip still has a ways to go before it is done.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 added 0.4% Thursday, ending a three-day skid that pulled the index off of 52-week highs.
We didn’t need bullish headlines to rally up to 4,400, and that means we don’t need bearish headlines to pull back from those highs either.
Stocks go up and stocks go down, that’s what they do. As much as people want to believe every headline matters and every movement is based on some fundamental driver, the simple truth is the market is like a toddler with ants in his pants and most of the time it moves enthusiastically for no reason at all.
That said, these reasonless moves are not random. Trends are more likely to continue than reverse, but eventually, every bit of up is followed by a bit of down.
Currently, the market finds itself at one of those tipping points where either momentum keeps pushing the indexes higher, or we’ve come far enough that it is time to start going in the other direction.
It’s been a great run from the March lows, but that also means we are getting close to the next down wave. While Thursday’s modest gains were a relief for bulls, the truth is, this 0.4% gain was anything but a decisive rebound.
Everyone knows stocks don’t move in straight lines and declines are littered with green days. The odds are good Thursday’s gains was nothing more than a little bounce on our way lower.
Now to be clear, I’m not a bear and I’m definitely not calling for a crash, but rallying 200 points from the start of June and 600 points in four months means the time for rest is close, if it is not already upon us.
I started shorting this market Friday and my stops have already been moved past my entry points, turning this into a low-risk/high-reward trade. There isn’t anything else do other than relax and let the profits come to me.
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If you find these posts useful, help me out by liking and sharing them!
Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.
What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours
Follow Jani on Twitter @crackedmarket
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