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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 added 0.8% on Wednesday, powering to yet another record close, including a midday push to 4,999.89.
That’s as close to 5k as one can get without actually touching it. As I wrote earlier this week in a post titled, “5k, here we come”:
Friday’s reclamation of 4,900 looks like the real deal, and 5k is up next. We might not go straight there, but the odds are good that if we’ve come this far, we will close the deal soon.
I have no idea what happens after we reach 5k, but until then, this market wants to go higher, not lower.
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For all practical purposes, the index hit 5k on Wednesday. So, now it is time to figure out what comes next.
I see three possibilities: up, down, or sideways. Wow, isn’t that insightful? Ha!
But, seriously, we have these three possibilities. Sideways is likely because the October rebound stalled momentarily at 4,400, 4,600, and 4,800, so another pause at 5k fits the pattern.
As for up, nothing would hurt the bears than another short squeeze. And to be honest, the market almost never gets rejected exactly at a widely followed level. Either we stall before or after. Since we didn’t stall before 5k, that means stalling after.
And lastly, down. No matter how impressive the October rebound has been, it has to end at some point. Why not end it at something as spectacular as 5k? That’s exactly what the NASDAQ did in March 2000, peaking at 5,048 before entering into a multi-year bear market.
As for what I think will happen, the market doesn’t care what I think, and the only choice we have is to follow the market’s lead. That said, it wouldn’t surprise me to see the market have another up day or two to decisively put its stamp on 5k before falling into another sideways consolidation, as it did at prior round milestones in recent months.
As for how to trade this, we collect worthwhile profits when we have them because if we allow ourselves to get greedy, the market will take everything back. That means lifting stops and locking in some partial profits while the crowd is the most optimistic.
Markets move in waves, and it’s been a good run. But that also means it is time to start collecting profits and getting ready for the next trade. Which, at this point, could be up, down, or sideways. Only time will tell. But anyone sitting on a pile of profits on the sidelines will be in the best position possible to jump on that next trade.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
On Tuesday, the S&P 500 added 0.2% as the index finished four points shy of the all-time closing record.
So much for last week’s panicked selloff. Luckily, this week’s resilience didn’t surprise regular readers. As I wrote last week:
A market that refuses to go down will eventually go up. After a couple of failed selloffs lastlll week, it became increasingly obvious that if this market were going to fail, it would have failed by now.
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Now, I will be the first to admit that last week’s selloff dumped me out at my stops. No matter my outlook or how temporary I think a bout of selling will be, I always sell at my stops, no questions asked.
Sure, I could have held through last week’s dip, but that would have been undisciplined, and that trading strategy requires more luck than skill.
Since I don’t count on luck, I wasn’t willing to hold a violation of my stops. Good thing I’m a nimble trader and was ready and willing to buy the subsequent bounce 24 hours later.
Remember, just because our stops get hit doesn’t mean we give up on a trade. Sometimes it takes a few false starts before a trade finally works. Anyone who gave up last week missed out on a great trade.
As for what comes next, Friday’s reclimation of 4,900 looks like the real deal, and 5k is up next. We might not go straight there, but the odds are good that if we’ve come this far, we will close the deal soon.
I have no idea what happens after we reach 5k, but until then, this market wants to go higher, not lower.
Sign up for my FREE email alerts so you don’t miss the market’s next big move
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 as little as $1.28/day, receive actionable analysis and a trading plan every day during market hours
Follow Jani on Twitter @crackedmarket
By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 crashed 1.6% on Wednesday, ouch!
It was a perfect storm between “disappointing” earnings from GOOGL and MSFT and Powell telling investors the Fed doesn’t have plans to cut rates in March. None of these things were bad; in fact, GOOGL and MSFT earnings were actually good. Unfortunately, stocks have gotten so expensive that good is no longer good enough, and anything short of great leads to disappointment.
As I wrote Monday, I bought the 4,900 breakout, so this wave of selling wasn’t great for my position. Luckily, I bought it early Monday and had a nice profit cushion protecting my backside. As I wrote readers Monday evening:
I have no idea how long this rally will last, but given Monday afternoon’s nice gains, my stops have already been lifted to my entry points, turning this into a low-risk trade.
If this turns out to be a climax top and prices crash next week, no big deal. I pull the plug at my stops and follow the market in the other direction. But until that actually happens, I’m riding Monday’s wave higher.
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Sure, I will be the first to admit buying Monday’s breakout was a mistake. But since I entered that trade early and lifted my stops to my entry points, this mistake didn’t cost me anything. It’s like a free lottery ticket. If it works, great. If it doesn’t, no big deal, I get out near breakeven and try again next time.
If a person can’t handle being wrong, this is definitely the wrong game to be playing. For the rest of us, we come at this with a proactive trading plan that protects us when things don’t work out.
And to be honest, I don’t even like calling Monday’s buy a mistake because it was a good trade, and I’d do it again every chance I get. Sure, it didn’t work this time. But do it often enough, and several of those trades will bring in nice profits.
Coincidentally enough, this is exactly what I did at the 4,400, 4,600, and 4,800 breakouts. Batting 0.750 isn’t bad. If that’s what being wrong looks like, I’m happy to be wrong.
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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 as little as $1.28/day, receive actionable analysis and a trading plan every day during market hours
Follow Jani on Twitter @crackedmarket
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