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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:
As expected, Tuesday morning’s release of the latest CPI data triggered a wave of impulsive volatility as bears and bulls argued over what these latest data points mean.
But also not a surprise, the CPI result gave both camps something to crow about, meaning this half-empty/half-full news didn’t change anyone’s mind. (i.e. bulls stayed bullish and bears stayed bearish)
When people don’t change their minds, stocks tread water, which explains Tuesday’s trivial -0.03% loss.
As I explained to readers Monday evening, I didn’t expect the CPI data to trigger a meaningful move in stock prices and that’s exactly what we got:
We get another inflation reading Tuesday. Expect volatility for the first 30 minutes as impulsive traders overreact to the headlines. But after that, the market will return to what it was doing previously, which is this choppy consolidation under 4,200 before the next push higher. Unless the inflation reading is truly shocking, don’t expect it to have a lasting impact on the market.
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While the result of Tuesday’s session was a draw, tie-breakers go to the prior trend, which was consolidating recent gains under 4,200 resistance.
The reflexive selling Tuesday morning would have triggered a bigger follow-on wave of selling if this market was overbought and vulnerable. Instead, supply dried up as most equity owners shrugged and kept holding. That tells us the ground under our feet is far more solid than most people think.
If this market was going to break down, it would have happened by now. While no one is excited about a 0.0% day, it counts as a win for bulls because it shows bears still don’t have any influence.
Keep buying the dips and selling the pops because this market is going nowhere fast. This choppiness means we need to collect profits early and often because holding a few hours too long is the difference between worthwhile profits and watching a winning trade turn into a loser.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 added 1.1% Monday, continuing Friday’s bounce and putting the index back above 4,100 support.
Headlines haven’t changed in a meaningful way and that stability is allowing the market’s half-full mood to keep prices near multi-month highs.
I expected last week’s selling to stall and bounce fairly quickly because there wasn’t any real bite to last week’s selling. Which is exactly how it played out. As I wrote in Friday’s free blog post:
Friday’s session wasn’t all that bad…While no one is bragging about a 0.2% gain, bears had the perfect setup to send stocks tumbling for the third day in a row. But rather than trigger the next wave of defensive selling, supply dried up and prices bounce. As I said Thursday evening, this was the [buyable] setup I was looking for.
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While some people scoff at a 1.1% gain, make that trade in a 3x ETF and now we’re looking at a 3.3% profit in a single session. It only takes a handful of sessions like that to have a very good year.
As for what comes next, just like there wasn’t a reason for stocks to tumble last week, there isn’t a reason for them to pop this week either. As quickly as last week’s selling stalled, expect the same to happen to this week’s rebound.
This is a choppy market and that means taking profits when we have them because holding a few hours too long is the difference between collecting worthwhile profits and watching a winning trade turn into a loser.
We get another inflation reading Tuesday. Expect volatility for the first 30 minutes as impulsive traders overreact to the headlines. But after that, the market will return to what it was doing previously, which is this choppy consolidation under 4,200 before the next push higher. Unless the inflation reading is truly shocking, don’t expect it to have a lasting impact on the market.
Buy the dips, sell the bounces, and repeat as many times as the market keeps throwing us these softball pitches.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Friday was another back-and-for session for the S&P 500.
For as bad as this week looked, Friday’s session wasn’t all that bad. While we opened the day with losses, that was as bad as it got and it was all uphill from there. The index ultimately closed in the green and near the highest levels of the day. Not bad, not bad at all.
While no one is bragging about a 0.2% gain, bears had the perfect setup to send stocks tumbling for the third day in a row. But rather than trigger the next wave of defensive selling, supply dried up and prices bounce.
As I said Thursday evening, this was the setup I was looking for:
At this stage, only fools are expecting these wobbles to trigger the next big breakdown. The rest of us realize stocks spend most of the time going up and down for no real reason at all. Without a significant fundamental driver behind Thursday’s selling means I’m looking to buy the next bounce. Maybe it arrives Friday morning. Maybe Friday afternoon, or even early next week. But a bounce is coming because it always does.
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Because I arrived Friday morning with a plan to buy the next bounce, I was ready when Friday’s early weakness failed to trigger a bigger wave of defensive selling. When bears couldn’t deliver on that perfect setup, that meant they were already out of gas and it was time to start buying. I initiated a partial position and a stop under the early lows. And when the market continued to trade well in the afternoon, I added more.
To be clear, there are no guarantees in the market and the selling could resume Monday morning. In that case, my stops will keep me safe. But buying fear is never easy and it often means making a hard trade. As easy as it is to hate this latest pullback from 4,200 resistance and violation of 4,100 support, trades that start out feeling wrong often end up being right.
I have no idea what next week holds, but I saw a great buying opportunity and I jumped on it. If I get dumped out at my stops next week, no big deal, I step to the sidelines and wait for the next bounce, most likely closer to 4k support. In fact, being wrong here would actually be a better outcome for me because the further this falls now, the more money I make when it finally bounces back.
Plan your trade and trade your plan. As cliche as that sounds, there are few things more essential to trading successfully.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
It was another two-faced session for the S&P 500 as nice opening gains turned into big closing losses.
Luckily, this didn’t surprise readers of this blog. As I’ve been saying for a while, this is a choppy market and not a directional one. That means taking profits early and often because if we wait a few hours too long, those profits escape and turn into losses.
Long gone are the days of big, multi-day moves. Instead, we are stuck with this daily chop. But that’s not a problem because it can be just as profitable if we know how to trade it. Keep taking profits early and often because today’s winning trade will turn into tomorrow’s loser.
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Well, it seems I underestimated this market because instead of waiting a day between swings, we are now getting big changes in direction within a single session.
But as I said previously, this isn’t a problem for nimble traders that are willing to lock in profits when they have them and then get ready to go in the other direction.
It is the bulls and bears getting chewed up by this back-and-forth price action because instead of taking profits when the market moves in their direction, they start bragging about how smart they are and are doubling down. Bulls were doing it yesterday. Today it’s the bears’ turn.
As bad as Thursday’s price action looks, there weren’t any significant headlines driving this selling. As entrenched as bulls and bears have gotten over recent months, it will take big and undeniable changes in the fundamentals to get people to change their outlook. We didn’t get anything remotely close to that Thursday, meaning there is no real meat to Thursday’s selling, meaning it will most likely end in another reversal on Friday or early next week.
At this stage, only fools are expecting these wobbles to trigger the next big breakout or breakdown. The rest of realize stocks spend most of the time going up and down for no real reason at all.
Without a significant fundamental driver behind Thursday’s selling means I’m looking to buy the next bounce. Maybe it arrives Friday morning. Maybe Friday afternoon, or even early next week. But a bounce is coming because it always does.
Sell when other people are confident and buy when they are scared. Repeat as many times as the market lets us.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The back and forth continues in the S&P 500 as Tuesday’s big gains turn into Wednesday’s big losses.
But this doesn’t surprise readers of this blog. As I wrote Tuesday evening:
[T]he most important thing to realize is this market doesn’t have big move potential. We get these tradable daily swings…but every step forward is followed by a step back. That means we want to take profits early and often. Hold a few hours too long and the market will steal those profits back. I really like Tuesday’s gains and I’m sitting on a pile of profits, but this is the wrong time to be getting greedy. I already lifted my stops and am planning my exit.
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Well, here we are 24 hours later and the market stole back almost all of Tuesday’s profits. If your trading plan doesn’t include taking profits, you won’t have any profits left to take.
This is the kind of market where both bulls and bears are right, at least momentarily. Yesterday bulls were beating their chest. Today it’s the bears’ turn. The problem is neither of these groups are making money. Instead of bragging about their positions, they should be taking profits. That’s why savvy traders avoid biases and labels like bullish or bearish. We trade the market and it doesn’t matter which way it is going.
As for what comes next, expect more of the same. Headlines are not changing much. That means both bulls and bears can rationalize sticking with their positions. It takes people changing their minds to move markets and until we get some dramatic and unexpected headline that comes out of nowhere, expect this mindless sideways chop to continue.
Long gone are the days of big, multi-day moves. Instead, we are stuck with this daily chop. But that’s not a problem because it can be just as profitable if we know how to trade it. Keep taking profits early and often because today’s winning trade will turn into tomorrow’s loser.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Tuesday was a whipsaw session for the S&P 500, but by the time dust settled, the index powered 1.3% higher, ending a two-day losing streak.
The day’s big headline was public comments from Jerome Powell covering the economy, recent job gains, and future rate hikes. But for all the hype and anticipation, he didn’t say anything new or unexpected. That didn’t stop impulsive day traders from lurching from one side of the boat to the other. But at the end of the day, what Powell said changed very few minds and that’s why these lurches didn’t accelerate in either direction.
More important is 4,100 support held for the second day, giving us the buying opportunity we were looking for. As I wrote Monday evening:
Big picture wise, there isn’t any meat to Friday’s headlines or this latest wave of selling. This is nothing more than a routine step back and consolidation near overhead resistance. Those dips are shallow and bounce quickly. Wait a few hours too long and you will miss the next buying opportunity.
Well, here we are a few hours later and the index now finds itself closer to 4,200 than 4,100. If you didn’t come to Tuesday’s session with a plan to buy, you missed some really easy money.
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As for what comes next, the most important thing to realize is this market doesn’t have big move potential. We get these tradable daily swings and there is more up than down, but every step forward is followed by a step back. That means we want to take profits early and often. Hold a few hours too long and the market will steal those profits back.
I really like Tuesday’s gains and I’m sitting on a pile of profits, but this is the wrong time to be getting greedy. I already lifted my stops and am planning my exit.
As easy as it is to buy back in, it makes sense to start taking partial profits as we approach 4,200 resistance. This market doesn’t have big move potential, so we don’t need to worry about getting left behind by a big breakout. Instead, we should be more worried about our profits escaping during the next step back.
Buy the bounce, sell the breakdown, and repeat as many times as the market lets us. That’s the way smart money is playing this.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 finished Monday down 0.6%, extending Friday’s employment-fueled swoon. But this continued cooling isn’t a surprise, as I wrote Friday evening:
While I don’t fear “too good”, I am aware that it’s been a good run and stepbacks are part of every move higher. I still like this market over the medium and long term, but the risk/reward has gotten away from us over the near term.
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We only make money when we sell our winners and that’s exactly what I did last week. But just because I locked in some really nice profits doesn’t mean I’m giving up on the October rebound. I actually like the economy and don’t buy into this “good news is bad news” argument. Inflation is coming down AND employment is holding up. Isn’t that the soft landing we’ve been hoping for??? I don’t understand why so many people are afraid of good economic news, but I’m not one of them.
As regular readers know, I love taking worthwhile profits when I have them. But as soon as I get out, I start looking for that next buying opportunity because it often arrives a lot quicker than most people expect.
The index bounced nicely off of 4,100 support Monday morning and I was ready to start buying again. Unfortunately, the lackadaisical afternoon session and closing in the middle of the day’s range convinced me to hold off for the moment.
I’m itching to buy the next bounce, but I would rather be a little late than a lot early. That means I’m waiting to see what happens Tuesday. If the selling continues, I will keep waiting and watching for an even better buying opportunity. But if prices bounce Tuesday morning, I will jump aboard with a small position and a stop near Monday’s lows. If that initial position works well, I will add more money. If the trade doesn’t work and prices retreat under my stops, no big deal, I pull the plug at my stops for a small loss and try again Wednesday or Thursday.
Big picture wise, there isn’t any meat to Friday’s headlines or this latest wave of selling. This is nothing more than a routine step back and consolidation near overhead resistance. Those dips are shallow and bounce quickly. Wait a few hours too long and you will miss the next buying opportunity.
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If you find these posts useful, help me out by liking and sharing them!
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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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