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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:
This is quickly turning into a do-nothing week for the S&P 500 with each day amounting to little more than a tenth of a percent swing in either direction.
As anti-climatic as this benign trade feels, stability is not a bad thing. Remember, boring markets are bullish markets. Free from outside pressures, almost all stock owners would prefer holding for higher prices and that is exactly what they are doing here.
While this feels like watching paint dry, it could be worse. And in fact, it will get worse soon enough. Enjoy these easy days while they last because increased volatility is just around the corner. We don’t know what will cause the next drop or when it will happen, but it always comes eventually, often when we least expect it.
Until then, a market that refuses to go down will eventually go up. While the going is slow, as long as we keep getting more up than down, everything is going according to plan.
Don’t fight what is working. Keep holding for higher prices as long as the market remains above our stops.
FB and GOOGL are riding the wave of aggressive ad buying higher. As bad as this economy looked 12 months ago, businesses are confident and in fact, the biggest problem most them have is making enough product to satisfy demand. These industry-leading ad platforms are near all-time highs and expect high to keep getting even higher.
And if the FAANG stocks get their mojo back, expect them to lead the entire market higher.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Tuesday was another sideways session for the S&P 500. But for a market as “overpriced” as this one, anything that’s not down is actually constructive.
High and keeps getting higher; that’s the theme since the November elections. While everyone knows this cannot last forever, a trend is far more likely to continue than reverse.
While I’ve been cautious since the 4k breakout, last week’s dip was the perfect bearish setup. If this market was fragile and vulnerable to a collapse, there was more than enough to send stocks into a tailspin. Instead, most owners kept holding for higher prices and the selling stalled nearly as soon as it got started.
Conventional wisdom tells us to fear complacent markets. What most prognosticators leave out is periods of complacency last a long, long time. No doubt the cynics will be right…eventually, but they will be wrong for a long time before that happens.
This market is trading well and there is no reason to fight what is working. Keep holding for higher prices with stops spread across the lower 4,100s. The market will tell us when it is getting ready to pull back, and this is not that time.
TSLA posted all kinds of records in its latest earnings report. But in a stock whose P/E includes a comma, new records are not good enough. Investors were disappointed and the stock skidded more than 4%, resting just above the critically important $700 level.
Bounce off of $700 and all is the good times keep rolling. Fall under $700 and that risks triggering a larger wave of profit-taking.
With as much air as there is underneath this stock, it could get ugly if momentum escaping. Violate support and I’d much rather lock in my profits than hold this one all the way down.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 finished Monday modestly higher and it eeked out another record close.
The index got within a few points of the psychologically significant 4,200 level. We long since passed meaningful resistance levels because virtually everyone holding stocks is sitting on a pile of profits. That means we don’t have conventional overhead supply coming from regretful sellers looking to get out at breakeven.
Instead, we are stuck with hesitant buyers who regret not buying at lower levels. Chase or be left behind is the torment of anyone sitting in cash. But so far, most buyers are keeping their cool and not chasing prices higher with reckless abandon. That more thoughtful approach is leading to this methodical grind higher.
As long as bearish headlines cannot take us down, the only direction left is up. While this rally cannot last forever, or even much longer for that matter, it is acting well enough right now to earn our continued support.
Maybe the rally will stall after cresting 4,200, but so far it isn’t giving any warning signs. We will evaluate the market’s behavior after the 4,200 breakout when (if) it happens.
This rally will run out of steam at some point, but this is not that point. Until then, stick with what has been working and that is holding for higher prices. (And following this rally higher with a trailing stop.)
TSLA is consolidating above $700 support/resistance.
This is turning into one of those half-full or half-empty situations depending on your outlook. Either this is resting before the next push higher, or it is stalling before the next leg lower.
Fortunately, as opportunistic traders, we don’t come to this with an agenda we need to justify and instead are trading this based on what the stock does next.
Ignore the rabid fandom and buy the bounce or short the breakdown. It doesn’t get any more straightforward than that. $700 is the line in the sand. The stock is ownable above this level and it is shortable under it.
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By Jani Ziedins | End of Day Analysis
Free Weekly Analysis:
The S&P 500 finished last week in the red, snapping a four-week winning streak.
That said, retreating a barely noticeable 0.13% doesn’t count as a meaningful loss. In fact, this dip ended up being highly constructive for the index.
Everyone knows stocks cannot go up every single day and periodic down days (and weeks) are inevitable. As is usually the case, how we finish counts a lot more than how we start. Stocks slipped on Monday and Wednesday’s mid-week bounce fizzled and retreated. But when it mattered, the index rallied decisively on Friday and closed within a whisper of all-time highs.
This strong close turned a weekly loss into a very bullish development. As I often write, something that refuses to go down will eventually go up. If the bears couldn’t kill the bull market this week with the wind at their back, chances are good they won’t be any more successful next week.
Stick with what has been working, which is holding for higher prices with stops under the weekly lows near 4,120.
Far less constructive was COIN‘s post-IPO trading. After last week’s eye-popping initial pricing, the stock has retreated six of the last seven trading sessions and finds itself down 32% from the frenzied IPO highs.
But that’s the way this usually goes. The more hyped the IPO is, the bigger bust it turns out to be. (I will dig into the psychology behind this phenomenon another time. That said, it is fairly intuitive if you think about it.)
That said, COIN might be getting so bad it is starting to looking good. Now, this is nothing more than a short-term trade, but this stock is on the verge of bouncing hard. If not Monday, then over the next few days. Buy the bounce with a stop under the lows and be ready to take profits quickly.
As for investing in this stock, if a person is patient and waits a few more weeks, prices will get even more attractive.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Thursday was a dramatic session for the S&P 500. The day started off well enough when a small opening dip bounced back to breakeven. But not long after, the flood gates opened the index tumbled nearly 60 points in an hour.
If you believe the headlines, traders were blindsided by reports Biden plans on doubling the capital gains tax. Right or wrong, that was enough to trigger a cascade of reflexive selling. But as ugly as things looked midday, the weekly lows near 4,120 provided rock-solid support.
Will 4,120 support continue holding on Friday? While there are no guarantees, there is a good chance this knee-jerk selling already came and went.
If anyone is surprised a Democratic president is going to raise taxes on the rich, I have a bridge to sell them. This is old news and anyone that feared president Biden’s tax agenda sold way back in November. Investors still holding stocks under a Democrat-controlled Washington D.C. are clearly not worried about these things.
While today’s reflexive selling put on a good show, don’t expect it to add up to much because higher taxes is old news. This bull market got to these levels because of the unprecedented money printing. As long as nothing threatens the flow of stimulus, then the rally is still on.
That said, never underestimate a spooked herd of selling fools. If prices undercut 4,120 on Friday, step out of the way and let the knee-jerk continue. But someone else’s loss can turn into our gain if we are willing to step in a few hours later and buy the bounce. And that’s only if we get lucky enough for the panic selling to continue Friday morning. Most likely, the worst has already passed.
Hold above 4,120. Sell if prices retreat under 4,120 and be ready to buy the bounce even if it is only hours later.
It’s been a rough few days for Bitcoin. The cryptocurrency is down more than 20% from last week’s record highs. While the initial $60k breakout was buyable, this subsequent fizzle was a clear signal to get out. As I wrote earlier:
While it seems obvious now, everyone had the opportunity to sell when this fell back to $60k. While fortune favors the bold, that doesn’t include holding speculative investments all the way down. Remember, it is far easier to buy back in following a false alarm than it is to plead a stubborn trade higher. (Selling at a higher level is always better than wishing you sold at a higher level.)
As for what comes next, Bitcoin is in no man’s land between $40k support and $60k resistance. A bounce back above $60k is buyable as is a bounce off of $40k support. But in between these two trading signals, this is a wait-and-see.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Following two days of selling, the S&P 500 came roaring back Wednesday and added 0.9%.
Not bad, not bad at all. As overpriced as this market seems, dip buyers cannot help themselves.
As I wrote Tuesday, there were two ways to trade Wednesday based on the resulting price action:
Dip buyers took control not long after the open and this pullback disappeared even quicker than it came. But that’s the way this usually goes. Either dips bounce shockingly quickly or the selloff goes a whole lot further than anyone expected.
At this point, this looks like just another shockingly quick bounce.
As I described on Tuesday, Wednesday’s bounce was buyable with a stop under the dip’s lows. As long as the index remains above this level, the bounce is alive and well.
But if prices fall under 4,120, the selling isn’t done yet and an aggressive trader can even try their hand at a quick short.
While the index trade worked nicely, NFLX did the one thing I least expected, hold steady following a large gap lower.
Normally, big moves either accelerate or they reverse. Almost never does the pre-market get it exactly right and put the stock right where it should be. That’s like flipping a quarter and having it land on the edge. But almost never is not the same as impossible and occasionally these things happen.
That said, I don’t expect this stability to last for long. Either the selling picks up steam or the dip buyers come rushing in. It didn’t happen Wednesday, but the same trade is still valid for Thursday.
Buy the bounce in NFLX or short the breakdown. This stock is going to make a big move in one direction or the other, we just need to wait for the market to tell us which way it wants to go. (Not bouncing Wednesday suggests dip buyers are scarce and that gives the edge to NFLX bears.)
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Tuesday was another bad session for the S&P 500. The index lost 0.7%, adding to Monday’s 0.5% loss and making this give-back the biggest in a month.
Let’s be honest, things must be pretty good if the biggest thing we are worried about is a two-day, 1.3% decline. That said, every big selloff starts off small.
So which is it? An insignficant wobble on our way higher? Or the start of the next downturn?
Since both of these outcomes start the same way, looking backward won’t give us the answer. Instead, we have to look toward what comes next, most importantly, what happens Wednesday. If prices slump at the open and the selling accelerates, this dip isn’t done and we still have a ways to go. On the other hand, open weak, bounce off of those early lows, and close well above those lows, the worst is already behind us.
This divergence on Wednesday forms the basis for our next trade. Bounce and close well, that is a buy signal with a stop under the intraday lows. If Wednesday’s selling cannot find a bottom, lock-in profits in our existing positions and agressive traders can short a violation of 4,100 with a stop just above this level.
Most likely this is nothing more than a minor wobble on our way higher. But we are due for a down wave and if it is getting started, we don’t want to be caught on the wrong side of it.
NFLX reported disappointing subscriber growth after the close and got smacked in after-hours trade. There are only two ways this plays out. Either this is a lot of nothing and the stock will continue higher. Or this is the start of the next big pullback. In a stock with such a sky-high valuation, there no room inbetween.
Much like the above index trade, it all comes down to how NFLX closes Wednesday afternoon. Bounce from the early lows and this is buyable with a stop under the midday lows. On the other hand, close near the lows and this turns into a short..
Let the market tell us what direction this stock is deaded and then hang on for a quick buck.
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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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