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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:
Wednesday was another quiet session for the S&P 500 with the index declining a quarter of a percent.
While counting profits on up days is more fun, healthy rallies need periodic stepbacks like this to stay healthy and sustainable.
Only the biggest of bears are making a big deal about this 0.26% loss. But in reality, if this is the best the naysayers can muster, the rest of us don’t have anything to worry about.
Last week’s dip and bounce continues to be our line in the sand. Hold above last week’s lows and the bounce is alive and well. Fall under this key level and we need to get defensive. It doesn’t get much more straightforward than that.
Keep holding with stops spread across the mid-4,600s and see where this goes.
TSLA’s bounce off of $1k support is developing nicely. It was on the edge there for a couple of days, but we knew it was going to take a lot more than a few tweets to kill the phenomenal bullish sentiment in this stock. Keep holding with stops under $1k and see where this goes.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Monday was a do-nothing session for the S&P 500 as it finished exactly where it left off Friday. (The index closed down 0.001%, technically making this a red day, but that is splitting some pretty fine hairs.)
The thing to remember is boring is bullish. Fragile and weak markets tumble quickly, they don’t defy gravity by holding near the highs for weeks. If this market was truly overbought, last week’s crack was more than enough to trigger a larger wave of reactionary selling. Instead, supply dried up and prices bounce.
Now, I count myself as one of the skeptics. It definitely felt like prices got a little too high a little too fast since the October lows. But never forget we trade the market, not our opinions. That’s why I bought back the positions I sold defensively last week.
There is nothing wrong with taking worthwhile profits following a nice run, especially when the market is flashing warning signs. But when the expected pullback doesn’t happen, that in of itself is a bullish signal and we need to get back in. (A market that refuses to go down will eventually go up.)
Now, maybe Friday’s bounce was a false bottom and stocks are still headed lower after a little delay. But for that to happen, prices first need to undercut last week’s lows. Until that happens, this latest bounce remains alive and well.
Continue holding with stops spread across the mid-4,600s and see where this goes. If we get dumped out again, no big deal, sell at our stops and be ready to buy the next bounce, even if it happens a few hours later.
TSLA is on a wild ride. Live by Elon, die by Elon. But long-term owners know this and this stock hasn’t always been an easy hold. But as I said last week, as long as this remains above $1k, the latest bounce remains holdable. Fail to hold $1k support and it is time to lock in profits and wait to buy the next bounce.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Wednesday was another disappointing session for the S&P 500 with the index losing 0.8%, adding to Tuesday’s 0.3% decline.
While this 1% slip from record highs isn’t a big deal by itself, the bigger worry is this is the start of something even larger.
The size and speed of gains since October’s lows was shocking to say the least. As I often write, markets love symmetry and something that goes up too much tends to fall too far in the subsequent pullback. It is only fair to ask if we are on the verge of that next pullback.
Only time will tell, but that’s the problem, we won’t know until after it happens. All too often, traders wait until the market moves against them before selling. But what’s the point in selling after a big chunk of our profits have already evaporated? Why not sell before the pain of regret forces us out?
That’s why I like trading with trailing stops so much. They take these decisions out of my hands and I don’t have to worry about “what if?” When my trading plan tells me it is time to get out, I sell. Easy as that. And guess what, if prices bounce an hour later, it isn’t hard to buy back in.
Only inexperienced traders try to pick tops. Unfortunately, that approach leads to an emotional attachment to that position because no one likes admitting they are wrong. But guess what? Trading is hard and we are wrong a lot, like a lot.
Those of us that have been doing this for a while are more than happy to sit back and simply follow the market’s lead. I don’t care if this goes up or down. All I care about is that I’m in the right place at the right time.
There is nothing wrong with locking in some very healthy profits following such a big run. We only make money when we sell our winners and this is as good of a time as any to harvest some of those well-earned gains. Sometimes all it takes is a little profit in our pockets to help us look at the market more clearly and sleep better at night.
And that’s exactly what I did. I started locking in profits Tuesday and Wednesday when prices started retreating. I still have some money in the market and will be ready to jump back in with what I sold if prices find a bottom and bounce. But if the selling continues, I’m out and waiting for the next bounce.
Odds are good I sold unnecessarily the index will be back at the highs soon enough, but I don’t mind. The inconvenience is cheap insurance against holding through a much larger decline.
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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