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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 CMU
Free After-Hours Analysis:
The S&P 500 bounced off of 4,450 Thursday, making this the second day in a row 4,450 support held.
Headlines are a mess, which is to say, not much has changed.
Investors are slowly coming to terms with our new reality and most owners who are afraid of these things bailed out a long time ago. Running out of fearful sellers is keeping supply tight and putting a floor under stocks.
Two steps forward, one step back.
The index exploded 450 points higher from March’s oversold lows. But as expected, we have fallen into a very normal and healthy step back from those highs.
Is a 180 point pullback enough? Maybe. Maybe not. We won’t know until after it happens, which means as traders, we have to make decisions based on incomplete information.
While most people try to guess which bottom is the real bottom, I’ve been doing this for far too long to fall for such foolishness.
I realized a long time ago I can’t pick bottoms. But just because I can’t pick a bottom doesn’t mean I cannot trade bottoms. In fact, buying dips is one of my favorite ways to make money. But rather than guessing which bounce will be the real bounce, I hedge my bets by buying ALL of them.
Start small, get in early, keep a nearby stop, and only add to a position that is working.
Following those simple rules, I buy all of the bounces. Some of them work. Most of them don’t. But by starting small, getting in early, keeping a nearby stop, and only adding to a position that is working, the cost of being wrong is small.
In fact, many times I actually get in early enough to make a few bucks buying the wrong bounce. That’s because I quickly lift my stops to my entry points and then even a little higher as the bounce progresses. And when the bounce fizzles, I pull the plug at my raised stops, collect a few bucks, and wait for the next bounce.
The key is starting small and getting in early. And of course, keeping a nearby stop and only adding to a position that is working. Have I mentioned that yet?
But seriously, as nimble traders, there is no reason we have to pick and choose bottoms when we can simply buy all of them with very little risk.
I’ll let other people guess, for me, I’m sticking with the sure thing.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 continued struggling with 4,600 resistance Tuesday, but this isn’t a surprise. Last week I wrote the post: “Now that we have a mountain of profits, how to protect them“. In it I said:
Now that we’re at the highest point since the 2022 correction started and within 200 points of all-time highs, we should expect the rate of gains to stall, if not outright retrench in a very normal and healthy step-back. Retesting 4,400 wouldn’t be a surprise. In fact, that step back is far more likely than continuing to record highs above 4,800.
Well, here we are, a few days later and the market is nearly halfway back to 4,400 support. Funny how that works.
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As I’ve been saying all year, markets move in waves. That was just as applicable at the bottom of the wave, as it was back in early March, as it is following a huge, 450 rebound from those very same lows.
Stocks go up and stocks go down, that’s what they do. Yet every time it happens, people get caught off guard.
Anyway, back to Tuesday’s price action, it was awful. An early test of 4,600 resistance failed and the index closed at the intraday lows. That’s not a good sign.
While headlines remain dreadful, they are not getting worse. “Less bad than feared” was good enough to rebound from last month’s oversold levels. But now that huge wave of buying is behind us and it is getting a lot harder to convince new buyers to pay these premium prices.
Tight supply got us here, but we need new demand to keep going. And unfortunately, it’s nowhere to be found.
Maybe after the index retest 4,400 support and bounces, buyers will finally start feeling more comfortable at these levels. But until then, we continue sitting on the pile of profits we locked in last week and wait for the next bounce.
Be ready because it could come as soon as Wednesday. (Start small, get in early, keep a nearby stop, and only add to a position that’s working)
TSLA is blowing the doors off the competition, this time by announcing a huge stock split. While I don’t buy into the hype around stock splits, I love anything that is going up and TSLA definitely fits in that category. Good thing we’ve been in TSLA since it bounced off of $800 last month. Now there is nothing to do but lift our stops up near $1,050 and see where this goes.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Thursday turned into the ugliest session for the S&P 500 since early March as the index shed 1.6%. This quarter-ending blood bath was a fitting finish since it capped off the first losing quarter in two years.
As dire as that sounds, the index is only down 5% from all-time highs, so stocks are actually doing fairly well, all things considered.
There are two ways to interpret the index’s stubborn resilience. Either stocks are defiantly strong and no amount of bad news can weigh them down. Or stocks are standing on a ledge and there is a whole lot of open air underneath us.
And as usual, every bullish or bearish interpretation largely comes down to a person’s biases and outlook.
That’s why avoid all the noise and simply follow the market’s lead. If it wants to go higher, great, I jump aboard the rally. If stocks want to retreat back to 4,400 support, no big deal, I step aside and wait for the next bounce.
As for what comes next. Stocks go up and stocks go down. That’s what they do. And Thursday happened to be one of those down days.
If a person has been following this blog, they were sitting on a nice pile of profits after buying March’s spectacular rebound. But rather than get complacent by our good fortune, we were getting nervous at these towering highs and played defense by snugging our trailing stops up near 4,600.
Now that those stops have been violated and dumped us out, it is time to start looking for our next entry point. From here, I see two. Bouncing back above 4,600 resistance and resuming this week’s breakout. Or dropping back to 4,400 and bouncing off of support.
Either of those will be our buy signal. Start small, get in early, keep a nearby stop, and only add to a position that is working. Until then, I’m watching this one from the safety of the sidelines.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 slipped 29 points Wednesday in a rare giveback since the March lows.
This was only the third down day in a powerful, 450 point rally. While that shows just how huge this rebound has been, we need to be prepared for a reversion to the mean. In non-math lingo, that simply means every bit of up is followed by a bit of down.
It’s been a nice run and it’s given us a mountain of profits. But now it’s time to shift to a defensive mindset so we don’t let these profits escape.
As much fun as this has been, we only make money when we sell our biggest winners. And that time is getting close for this trade.
No one can consistently sell tops, so that means every time we sell, we are either getting out too early or holding too long.
There are advantages and disadvantages to both approaches. But rather than pick one over the other, why can’t we do both? And that’s my favorite way to play these setups.
Take a little money off the table and let the rest ride. That’s the best of both worlds. No matter what happens next, I have a pile of profits if prices fall and I’m still in the game if the rally continues a little further.
That’s a win-win in my book.
If you find these posts useful, please return the favor 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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