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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:
Tuesday was a mixed session for the S&P 500 as an early push to record highs fizzled and retreated into the red. While a bearish intraday reversal is never a welcome sight, the index bounced off of those afternoon lows and closed pretty much where Monday left off.
Ties go to the trend and even though the index is struggling with 4,800 resistance, the fact we keep holding near record highs is a win for bulls. Stocks fall from overbought levels fairly quickly and trading at these levels for over a week tells us most owners are fairly comfortable with these prices and few are rushing to lock in profits.
As I often say, a market that refuses to go down will eventually go up. At this point, it is only a matter of time.
Bitcoin is stuck in the mud. $50k’s been a ceiling since early December and this cryptocurrency keeps finding itself falling back to the mid-$40k’s. In a mirror of the equity index’s analysis above, the longer this hold near recent lows, the more likely it is to make new lows.
This was a sell as it fell through $60k support in November and December’s $50k violation was yet another reason to abandon ship. At this rate, we will be saying the same thing about $40k as this trades in the $30k’s.
Remember, only fools hold all the way down. Use trailing stops to protect your profits. It is far easier to buy back in after a bounce than it is to wish something higher after a big pullback.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 added 0.6% on the first trading session of 2022 is flirting with 4,800 again.
The calendar rolls over and we get more of the same. But this was largely expected. Nothing meaningful changed over the weekend and the market started right where it left off.
Without a doubt, something will change this year and 2022 won’t be as easy or generous as 2021 was, but these things take time to develop and it will come on gradually, to the point we won’t even realize something changed until after it is already well underway. But that’s the way this usually works. All too often people trade what worked in the past, not what is happening in front of them.
But rather than try to get ahead of the market, as independent traders, we are nimble enough to simply follow the market’s lead. If this wants to rally through January. Fine, we stick it. If it keeps going through February and March, even better. But when it finally noses over, we get out and look for the next opportunity. Until then, stick with what has been working.
No matter what we think the market should be doing, it is acting well and that means we stick with it. Weak and vulnerable markets don’t keep setting record highs. This rally will die like all of the others that came before it, but this is not that time. Until prices actually start to decline, we continue giving it the benefit of doubt.
Our stops are in the lower to mid 4,700s and until something changes, we keep doing what has been working.
Look at that, TSLA is back at $1,200. Funny how that works.
People always pray for their favorite stocks to pull back so they can add more. But every time the market answers their prayers, most people lose their nerve and instead of buying more, they impulsively sell what they have for a discount.
And wouldn’t you know it, as soon as these people bail out, prices bounce back to the highs. But that’s the way this game works. Always has, always will.
Profits come to proactive traders that move before everyone else. Everyone else gives all of their money to these savvy traders. It’s time to stop following and start leading.
I still like this company and stock, but I’m a trader and that means I sell things that are going down. I’m happy to buy this when it bounces, but until it gets back above $1k, I don’t have any interest. And in fact, I actually hope it falls back to $800 support because that gives me even more opportunity to profit from the rebound.
TSLA only fell to $900, but that was still plenty of profit opportunity for the people those of us that were acting instead of reacting.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 tumbled 1.1% on Monday and gained 1.8% on Tuesday. So much for all the fear-mongering and panicked selling.
But this outcome was largely expected. As I wrote Monday evening:
The final weeks of the year are vulnerable to increased volatility because big money’s steadying hand already left for vacation. That puts retail traders in control through New Year’s. But lucky for us, these impulsive traders don’t have much money and they run out of ammunition quickly. While they can drive dramatic swings like Monday’s open, they struggle to sustain these moves and they tend to bounce back fairly quickly.
Barely twenty-four hours later and the market already erased all of Monday’s losses. After impulsive retail traders ran out of things to sell, prices bounced. Funny how that works.
As for how I’m trading this, as I wrote last week, I sold a good portion of my trading positions when the first wave of selling undercut my trailing stops. But as soon as I’m out, the first thing I’m doing is looking to get back in. Again, from Monday evening’s post:
Like any good trader, I don’t know when to give up. When the index bounced above Monday’s opening levels and again when it closed fairly robustly, I went ahead and bought more partial positions. And if stocks open well Tuesday morning, I’ll add even more.
Trading around these whipsaws can feel like a waste of time, but it is dirt cheap insurance protecting us against a much larger selloff. While I was fairly certain this latest dip would bounce, I’m not willing to bet my trading account on it. Selling and buying back in is so easy, there is no reason not to do it. Sometimes I even manage to pocket a few bucks buying back in at lower levels.
No one is getting rich arbitraging a handful of points like this, but protection against a larger selloff and actually making a few bucks in the process? It’s hard to beat that risk/reward.
Bitcoin has been mirroring the equity market and this cryptocurrency rallied nicely on Tuesday too. But as I’ve been saying for a while, I’m not interested in this until it gets back above $50k support.
For those that have been reading these posts for a while remember I was saying the exact same thing about $60k back in November. Now that we’re $10k lower, traders that heeded that advice are glad they did.
As I often say, it is better to be a little late than a lot early. Bitcoin will probably get above $50k. But it might need to go through the $30k’s first. There is no reason to ride through that dip if we don’t have to.
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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