All Posts by Jani Ziedins

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About the Author

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.

Oct 05

The market answered our prayers, did you miss it?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Meltdown, bounce back, meltdown, bounce back; the S&P 500 continues wrestling with what it wants to do next.

Following Monday’s meltdown, it felt like we were standing on a trapdoor, waiting for that next leg lower. Almost on cue, Tuesday bounced back, recovering nearly all of Monday’s losses. And so swings the pendulum of sentiment.

While it definitely feels like a bruising few weeks for bulls, they actually haven’t been doing too poorly since September 19th’s sharp down day. While the market probed and even violated those initial intraday lows, the selling keeps stalling and bounced not long after.

I could delve into all of the fundamental and technical reasons the market is doing what is it doing, but does it really matter? As speculators, all we want to know is how to trade this volatility. Lucky for readers I spelled it out Monday evening:

The simplest way of trading a volatile market is following its lead. If the selling continues Tuesday, we step aside and let it do its thing. If prices bounce Tuesday, we buy the bounce.

Guess what, Tuesday morning brought good news and the bounce is back on! For those of us that acted early, we got in at nice levels and were even able to lift our stops to our purchase price in the afternoon, more or less giving ourselves a free trade.

If this bounce keeps going, great, I collect all of those profits. If the bounce fizzles and retreats again, no big deal, I get out near my entry point and try again next time.

People beg for low-risk, high-reward trades. Well, guess what, the market just answered our prayers. Did you jump on the opportunity?

Now we wait to see what Wednesday brings….

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Oct 04

Collapse or big bounce, how to prepare for what’s coming next

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis 

The S&P 500 remains near multi-week lows as it processes the recent selloff.

Higher or lower, that is the question. And right now the S&P 500 is standing on the trapdoor.

The encouraging news is we violated recent lows multiple times over the last few sessions without triggering a larger tidal wave of defensive selling. Dip buyers often leave stop-losses under the lows and any violation triggers waves of reflexive selling. But so far, we slipped under the lows from two weeks ago and these subsequent violations failed to trigger follow-on waves of selling.

This is good for the market because it means most owners are holding steady and are not letting some arbitrary level determine their next trading decision. The bad news is the longer we hold near the lows, the more likely it is we violate them and few things shatter confidence like screens filled with red.

While we have inflation, debt ceiling, and Evergrande headlines swirling around us, that is largely a distraction from what is really driving this volatility, sentiment. Traders ignored headlines all year and there is no reason this latest round of headlines is any more significant. Instead, many traders realize it’s been a nice run and they fear the “inevitable” pullback more than anything in the press. These people are not selling because they fear inflation or Evergrande, they are selling because they want to get out before other people start selling. It is simple as that.

And so the answer to the question of what comes next comes down to how many people are confidently waiting for the bounce versus how many are on the verge of abandoning ship.

While lots of people are speculating over what comes next and it’s been a long time since I heard this many people predict a stock market crash, only time will tell what comes next. If there was a reliable indicator, everyone would use it. And since people promote a million different indicators, we know most of them don’t work. Because if one worked, we wouldn’t need the million other indicators.

Anyway, the simplest way of trading a volatile market is following its lead. If the selling continues Tuesday, we step aside and let it do its thing. If prices bounce Tuesday afternoon, we buy the bounce again. And if we get an inconclusive indication (not a bounce and not a further collapse), we simply push this decision to Wednesday.

And as always, start small, get in early, keep a nearby stop, and only add to a trade that is working. While buying Friday’s bounce didn’t work, if we are sensible about the way we enter a position, the risks are small and the potential rewards of getting it right are large.

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Sep 30

How to prepare when the market is standing on the edge (and it isn’t what you think)

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Thursday was an ugly session for the S&P 500 with the index giving up early gains and closing deep in the red.

This bearish intraday reversal tells us dip-buyers are still MIA and that is not a good thing for a selloff struggling to find a bottom.

While it is easy to point these things out AFTER the market has fallen 5%, it is a whole other thing to see it coming while there is still time to act.

Lucky for readers, this is what I wrote back on September 9th when the index closed just under 4,500.

It’s been a rough week for the S&P 500 as Thursday’s 0.5% loss makes this four down days in a row.

Monday was Labor Day, making this unofficial start of the fall trading season. It’s been a nice and easy summer and a trend is far more likely to continue than reverse, but if the market’s mood is going to change, this transition in seasons is a good time for it to happen.

There isn’t a quantifiable reason to claim this rally is running out of gas and this week’s dip is different than all of the other failed dips this year. But just knowing where we are and where we’ve come from, it feels like this time could be different.

As I often write, how we finish is far more important than how we start and by that measure, Thursday’s was an ugly day. Early gains evaporated and the index crashed through 4,510 and 4,500 support on its way to closing near Wednesday’s lows.

I don’t mind red days that finish well above the early lows. In most instances those are bullish signals. But there was nothing bullish about Thursday’s retreat and close at the daily lows.

I had my stops spread across the upper 4,400s and lower 4,500s and Thursday’s pathetic price action squeezed me out. Most likely this week’s stumble will turn out to be nothing more than yet another buyable dip. But for me, it’s been a nice run and that makes this a good time to lock-in some profits.

If the index bounces back above 4,500 on Friday or sometime next week, I’m more than happy to get back in. But as long as it remains under 4,500, I’m more than content watching this from the sidelines.

But that was then and this is now. Those holding stocks are left wondering if there is still time to get out before this gets worse. Unfortunately, a big portion of the selloff has already happened and pondering a sale now is waaay late in the game.

Remember, the best sells tend to be when we don’t want to sell and the best buys tend to be when we don’t want to buy. Following that logic, this is a much better place to be thinking about buying than selling.

Now to be clear, I’m not suggesting people rush out and buy this selloff, but it is definitely time to start looking for that next bounce.

Thursday’s close was dreadful and we should expect the selling to smash through 4,300 resistance Friday or early next week. But after that, be on the lookout a capitulation bottom and bounce. While this might not be the ultimate bottom, we won’t know that until after it is way too late to trade it.

I always treat every dip and bounce as the real deal until proven otherwise. Get in early and get out early and it doesn’t matter if the next bounce is the real deal or not. The most important thing is we are in the right place at the right time when the next big move happens. And the only way to do that is to get in early and see where it goes.

If we start small, get in early, keep a nearby stop, and only add to a trade that is working, the risks are not all that bad. In fact, it is far safer than what most traders are doing here. Just ask anyone that’s been holding since early September.

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Sep 29

Why a bull is rooting for this pullback to continue

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 bounced back from Tuesday’s thrashing, that is if a 0.16% gain qualifies as “bouncing back”.

The best we can say about Wednesday’s lethargic price action is at least the rout didn’t continue. But an early bounce that fizzled and finished near breakeven is nothing for bulls to crow about. If that’s the best offense dip-buyers can muster, it is going to be a very difficult few days for the market.

As I wrote Tuesday evening, markets rarely retreat and bounce exactly off of support. That would be too easy and the marked hates being easy. Prices either bounce above support or they bounce below support. Since the index already retreated back to last week’s closing lows, bouncing above this level is off the table and that means we have a date with a bounce under this level.

Now don’t get me wrong, I’m not fatalistic about this market. In fact, I’m looking at this weakness as a buying opportunity. (I even bought last week’s modest bounce and managed to squeeze a few bucks out of it before this second wave knocked us lower.)

Every directional move is a profit opportunity and I don’t care which way it goes. If the market bounces off of 4,350, great, I will buy that. If it is 4,305, even better. The lower we go over the near-term, the more money I make from these discounts. And if we crash through 4,300, that’s the best case of all because I’m currently in cash and the lower we go now, the more money I make later.

Let the bulls and bears slug it out on social media. I will be over here minding my own business and picking up all the money those other guys keep dropping.

As for a trading plan. Buy a bounce back above 4,400. If prices fall under 4,350, buy the bounce back above that level. And if prices crash under, 4,300, buy the bounce above that level. It really isn’t complicated. Start small, get in early, keep a nearby stop, and only add to a position that is working.

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Sep 28

Why savvy dip-buyers are not worried by Tuesday’s retreat

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Tuesday’s -2% bloodbath was the ugliest session for the S&P 500 since May. And this decline leaves the market teetering on the edge of collapsing under last week’s closing lows (4,357). From there it is only a hop, skip, and jump to last week’s intraday lows (4,305). As bad as Tuesday felt, it can definitely get a lot worse.

If last week’s bounce isn’t already dead, it is hanging on by a thread. These things don’t simply kiss support and then bounce. That would be too easy and the market doesn’t like easy. This will get a lot scarier before it is all said and done and that means crashing through support. From there, it largely depends on how previously confident owners respond to the pressure. Do they shrug and keep holding like they have been doing all year long? Or do they finally lose their nerve and abandon ship along with everyone else?

As I wrote last week, these things often require a few failed bounces before they find their footing. While last week’s bounce started off well enough, Tuesday killed it and that leaves us waiting for the next bounce.

For nimble traders, Tuesday’s selloff was no big deal. We got in early last week during Monday and Tuesday’s rebound. From there, we lifted our stops to at least our entry points on Wednesday and Thursday. By the time the selling hit us Tuesday morning, nimble traders were locking in modest profits and eagerly awaiting the opportunity to buy the next bounce.

Getting in early and getting out early is the name of the game. While buying last week’s bounce didn’t pan out, I actually consider myself lucky when I can make money when I’m wrong. And to be honest, I don’t even consider buying last week wrong. The only way to ensure we are in the right place at the right time is to buy every bounce. Jumping aboard the bounces early and getting out of the false bottoms early means any potential damage is minimal, and in cases like this week, we actually collect a few dollars for our efforts. But the real payoff comes from riding the real bounce back to the highs. Everything else is pocket change.

Start small, get in early, keep a nearby stop, and only add to a position that is working. Follow this simple recipe and episodes like this selloff actually become fun. And now that we’re in cash, the lower this goes, the more profit opportunities we get.

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Sep 24

This was a good week for those of that were paying attention. Plus what Bitcoin’s price action is telling us.

By Jani Ziedins | End of Day Analysis

Free Weekly Analysis:

The S&P 500 crashed at Monday’s open and the selling accelerated through the day. Luckily, a last minuted bounce prevented it from turning into the worst day of the year. And wouldn’t you know it, those Monday lows were as bad as it got. From there, it was all uphill and the index actually closed in the green for the week!

Talk about a wild ride. For traders playing offense, it actually turned into a fairly profitable week. The pullback that started two weeks ago chased anyone with a sensible trailing stop out of the market and they missed all of the carnage that wrecked so many traders this Monday. And just when the masses were bailing out of really good stocks at steep discounts, the opportunistic trader sitting on a pile of cash was licking his chops and getting ready to pounce.

Monday’s late bounce gave the aggressive trader an opening to put on a partial position and the subsequent strength on Tuesday and Wednesday was good enough to add to that initial position. By the end of the week, there was enough profit in the trade to move our stops up to our entry points and now we have a low-risk trade.

Maybe the bounce sticks or maybe it doesn’t, but for those of us that got in early, it really doesn’t matter. Collapse and I get out at my entry point and get to try again next week at even lower prices. Or keep bouncing higher and I’m sitting on some nice profits while this week’s sellers are riddled with regret and being left behind.

To the victor goes the spoils and in the market that means the people willing to act when everyone else is either too complacent or too scared.

(And for those that have been following this free blog, I’ve been laying it out all in real-time and hopefully some of you had the courage to profit from this volatility too!)

Bitcoin got punched in the face when China came out and outlawed cryptocurrency trading. But to be honest, a 5% loss following such dramatic headlines seems fairly insignificant. This remains above $40k support and at this point, that’s the only thing that matters. If this can shake off these headlines, it is hard to imagine what it will take to actually hurt this thing. I’m not a cryptocurrency fanboi, but it is hard to deny this unshakable resilience.

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