End of Day Analysis Archives - Page 14 of 56

Apr 26

Why even bulls should expect lower prices. Plus what the market is trying to tell Elon.

Free After-Hours Analysis:

Bad gets worse for the S&P 500 as Monday’s rebound gives up the ghost and the index tumbles under 4,200 support.

While not quite the lowest levels of the year, we are not far away and the market rarely gets this close without shattering such widely watched levels.

I’m still looking for a buyable bounce, but this one is quickly shaping up as a double bottom, meaning the second bottom undercuts the previous low, usually by a meaningful amount. It’s gotta be shocking enough to convince all the fence-sitters to sell.

But not to despair, once those weak holders abandon ship, supply dries up and prices bounce. Hence why double bottoms are such reliable trading patterns.

(Or you know, the market could fall another 2,000 points in the biggest bloodbath since 2008. Either way, my trading plan is ready. Is yours?)

As I wrote yesterday, I bought the beautiful bounce off of 4,200 support. Obviously, that bounce didn’t work, but since I got in early, I was able to move my stops up to my entry points and that meant I didn’t lose anything when prices retreated Tuesday.

Free lottery tickets? Only a fool would turn his nose up at those and that is why I don’t mind buying failed bounces. For every two or three failed ones, I catch something spectacular, like March’s 10% surge, which produced some truly eye-popping profits when traded in a 3x ETF like I do.

But yeah, Monday’s buy failed, I got out at my entry points, and now I’m looking for the next bounce. Maybe it arrives Wednesday. Or maybe Thursday, Friday, or even next week. It doesn’t really matter to me. All I know is I will be standing in the right place at the right time when this thing finally pops and those profits will taste oh so sweet.

TSLA got murdered when it was revealed Elon plans on using his TSLA stock as collateral to buy TWTR. For anyone that’s been doing this for a while, they know collateral means margin calls. If TSLA falls into a slump, that gives the banks the right to dump Elon’s stock, adding fuel to an already falling stock price. That’s a recipe for disaster and is why TSLA fell 12% Tuesday. Luckily, my subscribers pulled the plug when the stock couldn’t hold $1k support.

If there is a silver lining to this story, it’s that TSLA’s tumble puts the entire TWTR deal in jeopardy. Hence why TWTR is trading so far underneath Elon’s offer prices. That tells us the market doesn’t believe this deal is going to happen.

Maybe the situation will change over the next few days, but at this point, neither stock is in favor of this deal. Maybe Musk will get the hint.

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Apr 25

Did you buy the bounce off of support? If not, why not?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Monday presented us with another boomerang session as the S&P 500 swung from -1.5% midday losses to finishing up +0.6%.

There were not any new headlines driving this whiplash and instead these gyrations were propelled by the market’s ongoing tug-of-war between bulls and bears.

Fear the collapse or buy the discounts? That’s the million-dollar question.

While lower prices could very easily be ahead of us, the midday bounce off of 4,200 support gave us the perfect bounce entry. No matter how this trade turns out, it will be hard to go wrong buying this bounce. Start small, get in early, keep a nearby bounce and add to a position that’s working.

Anyone following these simple rules is already sitting on a comfortable pile of profits and can move their stops up to their entry points, giving themselves a free trade. Even if the selloff resumes Tuesday, we get out near our entry points, no harm no foul. And if the rebound continues, move our stops up and let those sweet, sweet profits come to us.

While bulls and bears are busy arguing over what’s coming next, I’m over here minding my own business and collecting profits. When it comes to partisanship, I’m an equal opportunity capitalist.

If the rebound continues Tuesday, lift our stops. If the selling resumes, get out near our entry points and wait for the next bounce. Simple as that.

This isn’t my first bounce buy and it probably won’t be my last bounce buy, but as long as I keep getting out near my entry points when these bounces fizzle and fail, I’m in great shape. The most important thing keeping at it so I guarantee I will be standing in the right place at the right time when this thing finally pops. Just like back in mid-March when I caught that 450-point rebound in a 3x ETF and was printing money.

And even if we are falling into a bear market, that’s okay too, because bear markets have the biggest bounces.

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Apr 22

Why this was actually a good week for nimble dip buyers

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

What a difference two days make. The S&P 500 was well on its way to recovering from April’s intermediate step back when the index popped above the 200dma Thursday morning. Unfortunately, that was as good as it got and it was all downhill from there, with the index shedding nearly 250 points by Friday’s close.

To be honest, I really liked Tuesday’s bounce back above 4,400 support and I welcomed that rebound with open arms. Things looked even better Thursday morning following that opening gap higher. It really felt like this trade was firing on all cylinders. Nice!

Then Powell opened his mouth. From that moment on, the index did nothing but skid lower. Aa my dad loved to remind me when I was younger, easy come easy go…

While this late-week reversal sounds painful for a dip buyer like myself, it was actually an easy (and profitable) trade for myself.

By getting in early Tuesday, I was already sitting on a pile of profits by that afternoon and was able to move my stops up to my entry points. Then Thursday’s opening gap allowed me to nudge those stops even higher.

And that’s when the bottom fell out. But that’s not a bad thing. In fact, that’s exactly why we use stops. By that point, my stops were already spread around 4,450.

But the thing to remember is stops are only our last line of defense. There is nothing that says we cannot sell before they get hit. In fact, many trades are obviously broken before our stops get hit. And that was definitely the case with Thursday’s meltdown.

From the moment Powell opened his mouth, the market started skidding and it didn’t stop. That’s not what a good trade looks like. Anyone looking at that chart knew the market was broken and there was no reason to stick around waiting for our stops to get hit. Pull the plug and get out of the way.

Buy the lower 4,400s, sell the upper 4,400s, and watch the carnage from the sidelines. That was the story of my week.

Now that the index crashed through 4,400 support, things get a lot more interesting. Either the selling continues next week or it stalls and bounces.

From the safety of the sidelines, I’m fine with either outcome. If we bounce Monday, great, I’m a buyer. If that bounce doesn’t happen until Tuesday, Wednesday, or Thursday, that’s fine too. In fact, that’s even better because the lower we go now, the more money I make when this bounces back.

Never forget, we cannot buy the bounce if we are fully invested. That means always be willing to pull the plug on trades that are not working.

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Apr 21

Turning lemons into lemonade

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Thursday was a truly dreadful session for the S&P 500 as an early 1% gain disintegrated into a 1.5% loss. It doesn’t get more ominous than a strong open turning into a weak close.

We can blame this intraday reversal on Powell when he was very direct in saying a 0.5% interest rate hike is coming next month and we should expect more of the same in subsequent months.

It’s been two decades years since the Fed raised rates in half-percent increments and while most investors knew this was possible given our absurd 8% inflationary environment, some people were hoping for a more measured runup in rates.

But to be honest, simply falling back to 4,400 support is not horrible. It was definitely a dramatic reversal, but the bottom hasn’t fallen out from under us…yet.

As bad as Thursday looks on a daily chart, it was actually a very tradable decline for those of us that were paying attention. We started high and then skidded in a methodical way through the day. We weren’t caught off guard by a huge opening gap. There wasn’t a nearly instantaneous selloff. Instead, prices simply ground their way lower. And lucky for us, these slow-motion declines are the easiest to trade because they make it super easy to get out at our stops.

And to be honest, with something as telegraphed as this selloff, there was no reason to wait until our stops got hit. It was fairly obvious early in the session something was wrong. And when a trade isn’t working, there is no reason to ride it all the way back to our stops. Never be afraid of pulling the plug early. Buying back in is a heck of a lot easier than wishing prices would go back to the levels we regret not selling at.

Tuesday was a great buying opportunity and Thursday sent us scrambling for cover. But that’s the way this goes sometimes. If trading was easy, everyone would be rich.

While obnoxious bears will taunt me for being foolish enough to buy Tuesday’s bounce. I got in early Tuesday and then I got out early Thursday. While this bounce didn’t work and I was “obviously wrong”, buying in the lower 4,400s and selling in the upper 4,400s isn’t that bad of a deal. If that’s what being wrong looks like, then I definitely don’t mind being wrong.

And guess what? Now that I’m out, I’m already looking for that next bounce. If I’m lucky, my next trade will be just as “wrong” as this trade.

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Apr 20

Why Wednesday’s price action was bullish, plus what the next 12 months in NFLX will look like

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 finished Wednesday almost exactly where it started.

While flat is not as much fun as up, hanging on to all of Tuesday’s gains was a nice win for bulls.

As I’ve been saying since this latest test of 4,400 support started, real bounces take off and don’t look back. Last week’s failed bounces unwound their gains within hours. While Wednesday’s 24 hours of price stability isn’t enough to hang our hats on just yet, it is already doing better than last week’s fizzles.

As I wrote back on March 29th when the index hit multi-month highs:

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.

And wouldn’t you know it, here we are testing 4,400 several weeks later. Funny how that works.

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But rather than freak out and predict a much larger selloff like everyone else, to me, this looks like the “very normal and healthy step-back” I anticipated back in March.

Rather than freak out alongside the crowd, we should be buying these discounts fearful sellers are so graciously giving away.

I have no idea if this is the real bounce or not. But I do know Tuesday’s buys are sitting on a pile of profits and my stops are already above my entry points, making this a free trade. If I’m right, I make a pile of money. If I’m wrong, I get out near my entry points, no harm no foul. Boy do I love it when trades work out like this.

At this point, there is nothing for me to do other than keep holding and moving up my trailing stops. And if I get stopped out, no big deal, I collect some small profits and try again next time. Being “wrong” doesn’t get any better than that.

I could write a book about what’s going on with NFLX, but the Cliff Note’s version is it is setting up for a very tradable dead-cat bounce over the near-term before resuming the long-established down-trend.

Swing traders can buy the next bounce for a quick profit.

Anyone still holding NFLX needs to be looking for an exit because as bad as this looks, it is going to get even worse over the medium-term. Use any bounces as an opportunity to get out.

And for the most aggressive traders, shorting the dead-cat bounce is probably the best trade going here.

As for what comes next, expect a saw-tooth decline with plenty of fool’s bounces on our way down to $140ish over the next six months. From there, expect this to turn into dead money for the next six months as people give up and forget about this stock. And then, and only then, will this finally become buyable for a longer-term hold.

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Apr 19

Is this finally the bounce we’ve been waiting for? Plus what to do with NFLX on Wednesday

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 shot up 1.6% Tuesday, easily retaking 4,400 support and reclaiming even more ground before the closing bell.

Monday’s violation of 4,400 support couldn’t go any further than 4,370 before it ran out of impulsive sellers and bounced. To be honest, that was a pathetic showing by the bears. If that was the best they could do, what are people so worried about? And now that the index is back above 4,400 support, all lights are flashing green.

Is this finally the real bounce? Maybe. Maybe not. But as a nimble trader, I don’t care. I jump aboard these things early and within hours, I was already lifting my stops up to my entry point, giving myself a free trade. If the bounce continues, great, I let those profits pile up. If the bounce fizzles and retreats, no big deal, I get out near my entry point and I get to try again next time. No harm no foul.

While critics claim I’m stupid for buying bounces that are so obviously destined to fail, I don’t mind. Any low-risk trade is worth taking no matter how unlikely it is to work. It’s like I found a pile of lottery tickets. Just because the first three didn’t payout doesn’t mean I give up and throw the rest in the trash. I will keep scratching until I find the one that makes it all worthwhile. And if they are all losers, no big deal, the only thing I lost was my time.

In March, I hit the jackpot, catching that 450-point surge in a 3x ETF. Will the next bounce payout like that? Most likely not. But since I like free money, I’m willing to give it a shot.

Buy the bounce above 4,400. Move stops up to our entry points. And if a person isn’t already fully invested, add more Wednesday if the index continues trading well. And if prices rollover, no big deal, get out near our entry points. Simple as that.

In fact, there is no reason to hold this all the way back to our stops. If this looks broken, then it is broken. Real bounces take off and don’t look back. If this retests support so soon after bouncing, it’s not the real deal. Get out and wait for the next bounce. Remember, buying back in is always easier than wishing stocks will go back to the levels we wish we sold at.

I love buying bounces, but I will never keep holding one that’s stopped working.

NFLX got murdered in after-hours trade after badly missing subscriber growth projections.

Growth stocks are great…until they stop growing. Down 25% after the close. Ouch!

But this is nothing new for NFLX. This stock is already down 50% from last year’s highs. Anyone still holding from those highs is just plain foolish. We only make money when we sell our winners and right now, anyone that bought NFXL over the last few years watched big piles of profits vanish. And worse than that, they let a great trade turn into a big loser.

It is impossible to make money in the market with a strategy like that.

As for nimble traders, I don’t mind buying bounces and Tuesday’s bounce was buyable with a stop under Monday’s lows. But every disciplined trader starts with a small position and lets a trade start working before adding more. While waking up tomorrow to a 25% haircut is painful, it hurts a lot less with a 1/3 or 1/2 position.

As for how to handle NFLX going forward, the stock will probably bounce early Wednesday. Owners can keep holding with a stop under the early lows and try to reclaim some of those losses, but don’t get greedy and be ready to lock in losses later Wednesday or Thursday.

As for opportunistic traders, can buy the bounce with a stop under those early lows.

This bounce will probably fail and if (when) it does, there is no excuse to continue holding under the opening lows. From there, the pain will only get worse.

But don’t take this stock out of your scan. In a few weeks, just when things look their most hopeless, there will be a very large bounce from those grossly oversold levels.

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Apr 14

Why Thursday’s fizzle could actually be bullish price action

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 stumbled into Thursday’s pre-holiday close, finishing the session under the all-important 4,400 support level.

Thursday’s dip wasn’t a make-or-break moment for the index, but it did reveal demand isn’t ready to power the next leg higher…yet.

It isn’t unusual for investors to be a little gunshy ahead of a three-day weekend. Big money is thinking, “Why take unnecessary risk here when I can just wait until next week to buy?” And given all of the headline uncertainty surrounding us, that cautious approach makes a lot of sense.

As poorly as the index acted Thursday, I don’t read much into holiday-affected sessions. In fact, I think the market could be setting up for a nice bounce next week. Slip to 4,350, squeeze out the last of the weak danglers, and then pop back above 4,400 support. (capitulation bottom) To my eye, that would be the perfect setup for a buyable entry.

Will we get it? Maybe. But there are no guarantees in the market and that is why I bailed on Wednesday’s bounce when the market retreated under my entry points.

While it feels like buying a failed bounce is a waste of time, getting out at the level I got in means the market gave me a free lottery ticket. If the bounce worked, great, I made money. If the bounce failed like it did, no big deal, I got out at my entry price and it didn’t cost me anything.

That’s about as good of a risk/reward as a person could ask for. (My favorite “bad” trades are when the bounce is a little bigger before fizzling and I actually make a profit by being “wrong”.)

Anyway, I’m out and looking to buy a bounce back above 4,400 support next week. (Start small, get in early, keep a nearby stop, and only add to a trade that is working.)

Maybe it happens, maybe it doesn’t. But either way, my trading plan is ready for the next opportunity.

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Apr 13

Why savvy traders don’t give up

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Wednesday turned into another promising session for the S&P 500 as the index attempted a second bounce off of 4,400 support.

While it feels like we are chasing our tail when trying to catch the next bounce, that’s simply the cost of doing business. And I most definitely prefer tail chasing to the alternatives of holding a big tumble lower or missing the next big rebound higher. Compared to those alternatives, a little tail chasing isn’t bad at all.

I bought Tuesday morning’s bounce, sold when prices retreated back near my entry points Tuesday afternoon, and bought the next bounce Wednesday morning.

By starting small, getting in early, keeping a nearby stop, and only adding to a position that is working, getting in and out of the market hasn’t been a problem for me. And given Wednesday afternoon’s nice close, my stops are already near my entry points, making this another low-risk, high-reward trade. (That only happens when we are willing to act decisively.)

Maybe Wednesday’s bounce sticks. Maybe it doesn’t. But if I’m wrong and I get dumped out near my entry points, no big deal, I take my money and try again next time.

The most important thing is I stick with it because the real bounce is coming and I don’t want to miss it. (Every failed bounce brings us that much closer to the real one.)

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Apr 12

The best thing about days like Tuesday

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 popped Tuesday morning after inflation hit a new 40 year high.

While record-high inflation and rising stock prices don’t go together intuitively, that didn’t stop people from chasing that early wave higher. Apparently, a fair number of traders were relieved inflation was not even worse.

Unfortunately, that relief proved short-lived and stocks ultimately slumped under 4,400 support in late afternoon trade.

But as wild as the intraday ride felt, it was actually a fairly benign session with the index finishing down a modest 0.3% and just a hair under 4,400 support. Not exactly panic material.

As I wrote yesterday, I was out of the market and looking to buy the next bounce. Which I did Tuesday morning. But as always, I started small, got in early, and kept a nearby stop.

While that initial buy started working right out of the gate, by midday, it was pretty obvious the bounce was faltering and it was time to pull the plug on my small position.

The thing about bounces from oversold levels is they take off and don’t look back. Any kind of second-guessing like we saw Tuesday afternoon tells us stocks are not yet oversold and further weakness is likely.

While my initial stops were back at Monday’s close, there is no reason we need to wait until our stops are hit before we sell. When a trade isn’t working the way it is supposed to, don’t wait for the losses to pile up, get out and start looking for the next trade.

If Tuesday afternoon’s fizzle turned out to be a false alarm, no big deal, there is no reason I can’t jump back in. But most of the time when these things don’t stick, things are only going to get worse the longer we wait.

The greatest strength we have as independent traders is the nimbleness of our size. If we give that up because we are too scared to jump aboard an early bounce or we are too hesitant to pull the plug on a trade going wrong, then we have no chance at surviving this game against bigger, stronger, and more sophisticated opponents.

Big money has its strengths and we have ours. And we can both make money if we stick to our trading plan.

As for what comes next, I’m out and looking to get back in. If prices bounce Wednesday morning, then I get to do this all over again. The best thing about a failed bounce is it means we are that much closer to the real one.

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Apr 11

The imminent trade in the indexes and what savvy traders are doing with TWTR

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Monday was another bad session for the S&P 500 as the latest step back continues and the index now finds itself just a few points above 4,400 support.

But this isn’t a surprise for readers of this blog. I warned readers to be careful back on March 29th when the index hit 4,631 following a stupifying 450 point rally from March’s lows in little more than two weeks:

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.

Well, wouldn’t you know it, here we are back at 4,400 support. Funny how that works.

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Now, I’m not claiming I predicted this. The rally’s momentum just as easily could have continued up to 4,800. But that wasn’t the most likely outcome and the risk/reward following a 450 point surge flipped against us. Rather than get greedy, that was the time to move to defense and make sure our trailing stops were snug up against current prices, ensuring our big pile of profits was well protected. (We only make money when we sell our favorite positions.)

March was a good month and it felt good to lock in all of those profits. (I rode that wave in a 3x ETF.) But as soon as I’m out, the first thing I start doing is looking for the next entry point.

While 4,400 support was the most obvious target, sometimes these things bounce above support and I didn’t want to be left behind if that happened this time. So I bought the bounce off of 4,450 last week and rode that for a little bit. (Start small, get in early, keep a nearby stop, and only add to a position that is working.) I was even fortunate enough to be able to move my stops up to my entry points as the bounce progressed a little.

While last week’s bounce didn’t work, it was a small position and I pulled the plug near my entry points, giving me a virtually free trade. Critics will make fun of last week’s buy because it obviously didn’t work, but by being nimble and getting in early, I had a free trade! If it made money, great. If it didn’t, I got out and it didn’t cost me anything. By that measure, it would be stupid to not jump on that ridiculously generous risk/reward. (If that’s considered one of our “bad trades”, then we are definitely doing something right!)

But now that I’m out, guess what, I’m already looking for that next entry point. And chances are good we will see a nice bounce off of 4,400 support Tuesday. Maybe it sticks. Maybe it doesn’t. But either way, I’m starting small and getting in early. If it works, great. If not, no big deal, I sell and try again next time.

TWTR popped 27% last week after Elon revealed he bought nearly 10% of the company. Unfortunately, the stock has retreated from those initial highs.

While we don’t need to give up on this trade, a savvy and nimble trader would cut bait when this undercut the pop’s lows. It’s not that we don’t believe in this trade, but every good trading plan always starts with defense. If we know ahead of time when we will get out, then a lot fewer bad things will happen to us. (Making money in the market is easy, the hard part is keeping it!)

In this case, TWTR is definitely buyable if it gets back above $50. But we need to be careful under $50 because these things have a nasty habit of closing the gap and there is no reason to ride this all the way back down to the lower $40s.

As I always remind my readers, buying back in is a lot easier than wishing prices would go back to the levels we wish we sold at.

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Apr 07

Why I’m buying the bounce off of 4,450 support even though it probably won’t hold

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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Apr 05

What to make of Tuesday’s weak close. Plus what to do with our TSLA profits

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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Mar 31

How savvy traders are handling this pullback from the highs

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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Mar 30

What smart money is doing up here

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.

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Mar 29

Now that we have a mountain of profits, how to protect them

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Tuesday was another great session for the S&P 500 as the index finds itself comfortably above 4,600 resistance.

This rebound amassed more than 450 points in two weeks. Nearly 10% if you like counting that way. And it added up to a huge pile of profits if you traded this rebound in a 3x ETF, as I do.

Not bad for a few weeks of “work”. The only thing we had to do was hold and keep lifting our trailing stops.

But now that we have a big pile of profits, what should we do next?

Protect them, of course!!!

Rarely does the market give us such a fast and easy trade, but as they say, don’t look a gift horse in the mouth. Only a fool is expecting this easy ride to continue.

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.

But rather than try and predict what’s coming next, savvy traders are making sure their trading plan is ready for both 4,400 and 4,800.

The best way to straddle this fence is holding for higher prices while snugging up our trailing stops to mid to upper 4,500s.

If the market goes up, great, I make even more money. If the market retreats, I lock in a pile of profits and get ready for the next trade. That’s a win-win in my book.

As I wrote in early March, markets move in waves. This is just as valid at the bottom of the wave as it is at the top of the wave. It’s been a very profitable ride. Just make sure we don’t screw it up by letting those huge profits escape.

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Mar 28

The painfully obvious reason why bears got this so wrong. Plus what TSLA owners should be doing here

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis

Monday was another good session for the S&P 500 and the index is quickly approaching multi-month highs.

Headlines remain the same, which is to say, dreadful. But if these things haven’t killed our economy yet, we will get through this. At least that’s what most investors are currently thinking.

While bears don’t agree with this latest runup, it makes a lot of sense when you look at the underlying supply and demand.

The 2022 correction started nearly three months ago and it’s been dragging on ever since. Three months is an eternity in the stock market. If nervous owners haven’t bailed out by now, chances are good nothing will convince them to sell.

If people want to know why stocks have already recovered 2/3 of 2022’s correction, it’s because we ran out of fearful sellers. And more than that, those fearful sellers were replaced by confident dip buyers. Out with the weak and in with the strong, that’s an obvious recipe for a market rebound.

While these things seem obvious now, for those of us that have been paying attention, it was just as obvious two weeks ago when stocks were probing the lows.

Back on March 9th, I wrote a post titled “Did you buy the bounce? If not, why not?“:

I follow the market’s lead and Wednesday [March 9th] the market was telling me to buy the bounce.

If prices continue higher Thursday [March 10th], great, I add more. If the bounce stalls and retreats, no big deal, I get out near my entry point and try again next time.

Maybe this is the real bounce. Maybe it is another false bottom on our way lower. Either way, my trading plan has me covered. Buy the bounce, sell the breakdown, and repeat as many times as necessary.

The next big bounce is coming and it will leave a lot of people behind. Luckily, I won’t be one of them.

If you were left behind, learn from that mistake. Sign up for my free email alerts so you don’t miss the next big trading opportunity.

400 points later and this is the time to be taking profits, not adding new money. If you missed this trade, wait for the next opportunity because the risk/reward is not in our favor.

As the saying goes, it is better to miss the bus than get hit by the bus. Don’t worry, another one will be along soon enough.

What’s good for the goose is good for the gander. The indexes are bouncing hard and they are taking most of the high-flying stocks with them. Not to be left behind, TSLA is up more than 40% from the lows of two weeks ago!

Without hesitation, we sell stocks when they violate our stops, but just because we got out doesn’t mean we give up on a trade. Stick with it and buy the next bounce and you can be pocketing 40% profits like this move in TSLA too.

Sell the breakdown, buy the bounce, and repeat as many times as necessary.

Move stops up to $1k and see where this goes.

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Mar 22

Why buying something that feels so wrong almost always turns out so right

By Jani Ziedins | End of Day Analysis , Free CMU

Free After-Hours Analysis:

Tuesday was another good session for the S&P 500 as the index closed at the highest levels in over a month.

But paradoxically, headlines are not improving. Oil remains at the highest levels in eight years, inflation is at 40-year highs, the Fed is cooling the economy with a long string of rate hikes, and the war in Ukraine gets uglier by the day.

But as is always the case in the market, anyone waiting for headlines to get better before buying is going to be waaaaaay too late.

To get the best prices (and make the most money!), we have to buy before everyone else feels comfortable. And this crazy environment definitely counts as one of those times when most people don’t feel comfortable.

The market is forward-looking by nature and that means it trades based on what it thinks is going to happen in the future, not what is going on today. While all of the above situations are dreadful, they are not getting materially worse. And as is often the case, “less bad than feared” is an excellent reason to buy stocks.

As I’ve been saying all year, markets hate uncertainty more than they hate bad news. The market’s correction started on the double gut punches of rate hikes and a full-on war in Ukraine.

While it is obvious stocks will fall in an environment like that (and is why I recommended readers bailout back in early January), but two months later and there is far less uncertainty. Now the market can finally put a dollar amount on inflation, rising interest rates, the war, sanctions, and oil prices.

We are no longer worried about what could happen but are finally able to price in what is happening. And as is almost always the case, reality is turning out less bad than feared. (Our reality is most definitely ugly, but not nearly as ugly as the market’s runaway imagination.)

As wrong as this rally feels, this is the way it always goes. Savvy traders buy when everyone else is too afraid to buy because that’s the point when everyone who is going to sell has already sold and supply dries up. That capitulation point always occurs when headlines are their worst.

While there is always room for things to get worse (Inflation breaching 10%, oil breaking $150/bbl, Russia bombing Polish airfields, or Russia nuking Ukrainian civilians), it will take a significant escalation for stocks to crash under recent lows.

Trading always involves risk, but savvy traders trade what is happening, not what could happen. The greatest strength we have as independent traders is the nimbleness of our size. While I like the way the market is trading right now, if something changes tomorrow, no big deal, I lock in some really nice profits in the mid 4,500s and wait for the next bounce.

As for anyone sitting out of this market and looking to get in, I’m sorry to say, but this is most definitely the wrong time to be buying. These big two steps forward are poised for a very normal and healthy step back. Wait for that step back before jumping in.

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Mar 21

Is the worst already behind us?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 spent Monday bouncing between modest gains and losses before finishing the session almost exactly where it started.

An afternoon slump was sparked by news the Fed is willing to move in half-percent increments as it raises interest rates this year. That is a little more aggressive than some investors expected, but at the same time, a 25-point midday give-back on the heels of last week’s towering 300-point rebound is hardly anything to worry about.

Two steps forward, one step back. That’s the way markets work, always have, always will. Given how much ground we covered last week, it wouldn’t surprise me to see a bigger than usual step-back, even something in the range of 150 points is reasonable.

But if a 150-points pullback is reasonable, Monday’s 25-point dip still had a lot of room left to run, so why did prices bounce and close flat?

Very few dip buyers are looking to cash in profits and that afternoon weakness vanished by the close.

At this point, more people are looking up than down. And that’s not a surprise. It’s been more than two months since this correction kicked off, meaning all of the worrywarts have been given plenty of opportunities to abandon ship. And more than that, all of these nervous owners sold their stocks to dip buyers demonstrating a willingness to hold stocks in this headline environment.

While the bearish headlines haven’t gotten any better, at some point, we run out of people willing to sell those headlines and that’s when prices stop falling. And it appears like this market has crossed that tipping point.

Don’t be surprised if we slip a little further in a very normal and healthy step-back this week, but unless the headlines get materially worse (ie $150/bbl oil, 10% inflation, or Russia bombing Poland or nuking Ukraine), expect stock prices to find their footing quickly after taking a quick break.

The pullback from January’s highs already priced in all of this bad news and as bad as things seem, stocks have already started rallying on “less bad than feared”.

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Mar 18

Why this week’s big bounce was inevitable

By Jani Ziedins | End of Day Analysis , Free CMU

Free After-Hours Analysis:

The S&P 500 surged 290 points since Monday’s close and is now sitting at the highest levels in a month. And to think, five days ago the crowd was predicting another big crash. So much for conventional wisdom.

In percentage terms, the index is up 6.9% since Monday’s close. Catch this wave in a 3x ETF and now we’re talking about real money! Not bad for a week’s worth of “work”.

Now, I wish I could say I knew the market was going to bottom Monday afternoon and rally sharply the rest of the week. Unfortunately, I’m not psychic and was along for the ride like everyone else.

But while I couldn’t predict the exact when and where this rebound was going to happen, I knew the odds of a sharp bounce were good. This is a volatile market and that means oversized moves in BOTH directions.

First, the market loves symmetry, meaning big drops are followed by big bounces.

Second, headlines are dreadful, but they haven’t been getting worse. The correction since the January highs priced in a lot of bad news. Owners that fear these headlines have been given plenty of time to bail out of the market and have been selling to far more confident dip buyers.

And third, as I’ve written before, the market hates uncertainty more than bad news. While nothing is getting better, we can finally quantify what we’re dealing with. Ukraine is horrific, but it isn’t turning into WWIII. The spike in oil prices stabilized in the low $100s. And the Fed is only planning to push interest rates up near 3%.

While none of this qualifies as good news, it wasn’t as bad as some people feared and stocks have rebounded in a “less bad than feared” trade.

Given the above, I knew the market was poised for a big bounce, what I didn’t know was when. And that’s why I started buying bounces the week before. When I don’t know which bounce will turn out to be the real bounce, the only way to make sure I don’t miss it is to buy all of the bounces.

But rather than do this in a reckless, pick a spot and wager everything on it sort of way, I start small, get in early, and keep a nearby stop. When a bounce fizzles and retreats, no big deal, I get out and wait for the next bounce. And when that one fizzles, I get out and try again.

Two weeks ago people thought I was crazy buying these bounces. But markets don’t bottom until most people have given up. That simply means I need to be more persistent than the average trader.

Some of my early buys turned a small profit. Others broke even. And a few lost a few bucks. Throw all of those trades together and it was largely a wash. But more important than the profit or loss on those small trades is I was ensuring I would be standing in the right place at the right time when the real bounce finally came along.

I’m more than happy to lose a few dozen points on a 1/3 position when the potential upside is 300 points on a full position. This is the kind of risk/reward traders dream of! All it takes is the vision and courage to buy when everyone else thinks we’re foolish. Four days later and who’s the real fool?

At this point, there is nothing to do but lift our stops up near 4,400 and see where this goes. (You bought the bounce on Tuesday, right?)

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Mar 17

Is it too late to buy this bounce?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 undercut 4,200 support Monday afternoon and just when things looked their worst, the index exploded 240 points higher over the next three sessions and is now resting above 4,400 resistance. Funny how that works.

While a lot of people were caught off guard by this “unexpected” strength, it doesn’t surprise savvy traders that have been doing this for a while. As I’ve been explaining to readers since this correction started back in January, this is a volatile market and that means oversized moves in BOTH directions! Oversold turns into overbought in the blink of an eye and if you hesitate, even for a moment, you miss a fantastic trade.

Sign up for free email alerts so you don’t miss the next big trade.

While cynics criticized my testing the waters last week with small buys and nearby stops that kept dumping me out near my entry points, this week shows why smart traders stick to their trading plan no matter what other people say.

I wish I could tell people there is still time to buy this bounce, but unfortunately, that ship sailed and only fools are chasing prices at these levels. Smart money buys bounces off of support, they don’t chase big moves near resistance.

Maybe the index continues up to 4,600, and as someone fully invested in 3x ETFs, I’d love to see that. Unfortunately, this remains a volatile market and that means oversized moves in BOTH directions. (I cannot repeat that often enough!) Adding new money up here is way too risky for my blood. Luckily, I loaded up Tuesday and am already sitting on a pile of profits.

The window for offense closed and this is time to shift to defense. My stops are spread between 4,300 and 4,350. If the index retreats to these levels Friday, no big deal, I collect my profits and get ready to buy the next bounce. But if the rebound continues higher, even better, I move my stops up to 4,400 and let those sweet profits come to me.

Fortune favors the bold and that means buying bounces when everyone else questions your sanity. In reality, the biggest fools were the ones waiting until stocks fell to 6-month lows before finally abandoning ship. (I bailed out back on January 5th, in case you missed that post.)

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What’s a good trade worth to you?
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