End of Day Analysis Archives - Page 16 of 56

Jan 26

The easy way to trade this market volatility. Plus what to do with TSLA at these levels

Free After-Hours Analysis:

The S&P 500 took us on another wild ride Wednesday.

The session started off well enough with the index spending most of the day up a healthy 2%. Unfortunately, the Fed rained on the market’s parade when they hinted at the possibility of a more aggressive rate-hike schedule than many investors expected.

As much as bulls and bears want to argue over what this means for stocks, for savvy traders, the process is fairly simple. Either this is a non-event and prices make their way back to the highs over the next few weeks and months. Or the market is about to implode in a death spiral of panicked selling.

Option A we go up. Option B we go down. Why bother picking sides when it will be easy enough to simply follow the market’s lead? That’s what I will be doing.

The only thing that matters to me is the market does something. If I’m fully honest, it would be nice to see stocks fall a little further because cheaper is always better. But if it wants to go higher, I’m fine with that too.

Buy the bounce, sell the breakdown, and collect my profits. It doesn’t really get any more straightforward than that.

As for how I’m trading this. As I explained in my previous posts this week, I bought Monday’s bounce and was adding to that position with stops at or above my entry points. Things were looking really good Wednesday when the rebound was hitting new highs. But the Fed came along and changed all of that.

This remains an emotional and volatile market and there are no half-steps. When the market started falling Wednesday afternoon, that was our sign to get out. Holding and hoping for a quick bounce wasn’t an option. This market moves too fast to think like that. Pull the plug quickly and start looking for the next entry point.

If a person acted decisively enough, they pocketed some nice profits locking in this week’s swift bounce from Monday’s lows.

While it’s nice to pocket a few bucks, we are always looking toward what’s coming next.

Maybe the index bounces Thursday, giving us another nice entry. Or maybe the panic selling sends us crashing under Monday’s lows. Either way, I’m perfectly content being a little late than a lot early. I’ll let other people argue about what stocks “should” be doing. Instead, I’ll stick with trading what it “is” doing.

Buy the bounce and sell the breakdown. Start small, get in early, keep a nearby stop, and only add to a position that is working. And if I get dumped out, no big deal, I wait for the next bounce and try again.

Follow a simple trading plan and this isn’t nearly as difficult as most people make it out to be.

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TSLA reported historic profits after the close but the stock barely moved in after-hours trade. While flat isn’t as exciting as up, it sure beats going down. That tells us most investors were expecting this result and are comfortable with these valuations.

More important is this week’s bounce off of $850 is still intact. Stick with this bounce as long as it remains above support and see where this trade goes.

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Jan 25

The market gods answered your prayers. What are you waiting for? Plus the next profit opportunity in TSLA

By Jani Ziedins | End of Day Analysis , Free CMU

Free After-Hours Analysis:

Tuesday was another wild session for the S&P 500 as it swung between 3% losses and breakeven before eventually finishing down an intermediate 1.2%.

When is a 1.2% haircut actually considered constructive price action? When it follows a 4% intraday reversal the day before. In this case, two steps forward, half a step back. It is hard to call Tuesday a bad day given what could have happened.

If Monday’s sharp rebound was a house of cards, it would have collapsed Tuesday during that early 3% retreat. But instead of spiraling out of control, supply dried up and prices spent most of the day comfortably above those early lows.

Everyone laments how they wish their favorite stocks would pull back so they could buy more. But every time the market gods answer our prayers, most people lose their nerve. Instead of loading up on all of those wished-for discounts, most people join the panicked herd dumping stocks. Pretty ironic, eh?

While it feels like these selloffs and bounces come out of nowhere, that is almost never the case. Like a lobster resting in a cool pot of water, the heat comes on gradually.

Back in early January, we got that first interest rate fueled 2% tumble. But the market actually gave us plenty of time to get out near 4,750 when prices undercut recent lows. (You use trailing stops right???) That was our first and best signal to start peeling off profits. A few days later, the index bounced off 4,600. People who missed the first 4,750 selling opportunities were given another chance to get out.

And here we are, two weeks later, testing 4,200.

As I told readers back on January 5th when all of this started:

I came into Wednesday with sensible trailing stops spread across the lower to mid 4,700s to protect my profits “just in case”, but I was already pulling the plug on some of those positions long before those stops got hit. As easy as it is to buy back in, there is no reason to stick around when the tide so obviously starts turning against us. When the panic selling hits, I want to be one of the first to get out, not one of the last. And that means acting early and decisively.

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That was then, but what about now?

While Monday’s 4% rebound left a lot of people flat-footed, Tuesday’s retrench gave everyone another shot at buying those big discounts. Did you have the nerve to take advantage of it?

Remember, start small, get in early, keep a nearby stop, and only add to a position that is working. Follow those simple guidelines and you can profit from these great trading opportunities too.

If prices retreat later this week, no big deal. We get out at our stops and then buy the next bounce. It really isn’t that hard.

If a person is paying attention, the market isn’t nearly as cruel as its reputation. Look for the clues and you can avoid most of the carnage and be there to profit from everyone else’s misfortune.

Keep your cool during times like this and making money is pretty easy.

Much like the indexes, TSLA gave us a nice buyable bounce Monday.

If we sold the violation of $1k support last week, we were sitting on a pile of cash looking for the next trading opportunity. And as luck would have it, it only took two trading sessions for TSLA to give us the next entry point. Buy the bounce with a stop under Monday’s lows.

Maybe this bounce holds or maybe it doesn’t. But someone that bought the $850 bounce is already well ahead of the TSLA owner that held this retreat from $1,200.

Profit comes to those willing to act. Everyone else gets left holding the bag. Don’t be everyone else.

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Jan 24

Why savvy traders knew Monday was going to end in a sharp bounce. Plus the next trading opportunity in Bitcoin

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

If a person only looked at the S&P 500‘s closing print, the 0.3% daily gain completely obscured one of the most shocking trading sessions in nearly two years.

The index crashed 4% in midday trade, easily shoving us into correction territory (a pullback greater than 10%). Last week’s aggressive selling over rising interest rates devolved into a full-on, panicked dash for the exits on Monday.

But just when all hope was lost, an impressive rebound erased every single dollar of those midday losses. As jarring as the crash was, the rebound was even more spectacular.

All told, we covered more than 8% in a single session. You have to go back to the depths of the original Covid crash to find something this wild.

But to be honest, Monday afternoon’s “shocking” rebound wasn’t all that shocking to those of us that have been doing this for a while.

Monday’s early 4% crash was far and away the largest losing session of this correction. And during periods like this, the critical thing to keep in mind is emotional, waterfall selloffs typically capitulate on their biggest down days.

And guess, what? This emotional, waterfall selloff capitulated on its biggest down day.

Who could have seen this coming??? Oh yea, that’s right, readers of this blog knew it was coming. As I wrote last Friday:

Emotional sellers panic, get out, and prices bounce hard not long after. This story is as old as trading itself.

Odds are good next week will enjoy a meaningful bounce. Selloffs that go too far in one direction inevitably end with a snapback that goes too far in the other.

Maybe the market bounces Monday. Or maybe it happens Tuesday. Either way, nothing is going to keep me from jumping aboard that next big rebound.

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The best part of using trailing stops means we sold at much higher levels and were sitting on a giant pile of cash coming into Monday. While everyone else was losing their mind over this selloff, we were eagerly eying those huge discounts. Rather than get sucked into the herd’s panicking selling, those of us with cash were waiting for the capitulation bounce. And you better believe I was scooping up those crazy discounts Monday afternoon. (A critical note: Fools buy dips. Savvy traders buy bounces. Don’t be a fool.)

Maybe Monday’s capitulation bottom is the end of this correction. Or maybe it is just another false bottom on our way lower. Either way, it doesn’t really matter to me. I picked up some attractively priced stocks Monday afternoon and those positions are already sitting on a healthy profit cushion. If the correction resumes, no big deal, I get out at or above my entry points and try again next time. But if this is the real bounce, I will be counting my profits while all of Monday’s emotional sellers are left wondering what just ran over them.

I’m not a big fan of Bitcoin, but I know a trade when I see one. Bitcoin has been mirroring the equity indexes lately and if stocks are bouncing, expect that resilience to carry over to cryptocurrency. Bitcoin’s latest buy is buyable as long as it remains above Monday’s intraday lows.

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Jan 21

What happened the last time the index fell nearly 6% in one week and what does it tell us about what comes next?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 crashed another 1.9% on Friday, leaving the index down nearly 6% for the week.

It’s hard to believe we were sleepily notching record highs little more than two weeks ago. But that’s the way this usually goes. Few things sour faster than the market’s mood.

This rout in the equity market was initially triggered by an “unexpected” jump in interest rates. (I put unexpected in quotes because seriously, who didn’t see this coming??? Anyway…)

Since the market doesn’t do things in half measures, rather than respond to these changes in the bond market thoughtfully and deliberately, the crowd started impulsively rushing for the exits. Not because they thought a few basis points increase in Treasuries was going to wreck the economy, but because they assumed other people were going to panic. And logically, the only thing to do in those situations is panic first! Or at least that’s what happens when we let our lizard brains take over.

Now we find ourselves down 9% from those highs two weeks ago and the question becomes, what comes next?

Well, if we pull up a weekly chart and look back a little more than a year, we see a similar weekly plunge in the stock market (-5.64%) back in late October 2020.

That was the week leading up to the election and traders were afraid of what a President Biden would do to their taxes and regulations. Given how big the “Trump Rally” was, it makes sense the business environment could swing the other way if a Democrat took over.

Sell first, ask questions later was the name of the game back then, just as it was this week. And you know what happened next? Yeah, the market rallied 7.3%, easily erasing all of those prior losses and adding an extra couple of percent just to further humiliate all of the prior week’s impulsive sellers. Ouch!

But that’s the way this usually works. Emotional sellers panic, get out, and prices bounce hard not long after. This story is as old as trading itself.

With the index already down 9% from recent highs, is that low enough? Probably. While I don’t expect a repeat of 2020’s 7.3% snapback, odds are good next week will enjoy a meaningful bounce. Selloffs that go too far in one direction inevitably end with a snapback that goes too far in the other.

Maybe next week’s bounce isn’t the real bounce and panicked sellers are correct that this couple tenth’s rise in Treasury yields will lay waste to the US economy. But odds are good they overreacted just a tad this week.

Now for how I will trade this. I never, ever buy dips. That’s a fool’s game. But bounces? Yes please!

Maybe the market bounces Monday. Or maybe it happens Tuesday. Either way, nothing is going to keep me from jumping aboard that next big rebound.

And now for a quick rant: anyone selling on Friday is an idiot! There are only two ways to handle these situations. Either we sell early or we hold through it. Only fools wait until they get too scared and then impulsively dump everything near the bottom.

The really isn’t that hard! Back on January 5th, I warned readers that smart money was selling:

Sell and see what happens from the safety of the sidelines is how I’m approaching this. If prices bounce Thursday, great, I’m getting back in. No harm, no foul. But if the selloff continues, even better, I wait for the next bounce and buy at even lower prices. That’s a win-win in my book.

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Well, here we are two weeks later and 350 points lower and I’m sitting on a big pile of cash itching to get back in the market.

I tested the water with a couple of small buys since then, but every time selloff started making new lows, I got out and waited for the next bounce. And the lower we go, the more excited I get. We’re going to make some good money next week. I can’t wait!

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Jan 20

Why smart money was buying Thursday morning’s bounce. Plus, why NFLX owners only have themselves to blame

By Jani Ziedins | End of Day Analysis , Free CMU

Free After-Hours Analysis:

Thursday’s session for the S&P 500 was far more dreadful than the day’s 1.1% loss suggests.

The day started off well enough when the index popped nicely at the open and rallied all the way to 4,600 support by late morning. But rather than propping up the market, 4,600 turned into a ceiling and that was as good as it got. By the end of the session, the index shed 120-points from those intraday highs and crashed through recent lows. Ouch!

But if Thursday was such a dreadful session, why were savvy traders buying that morning bounce?

The answer is simple, it gave us a nice, low-risk entry and it would have been foolish to not take it.

All too often novice traders fixate on whether a trade worked or not. But what these rookies fail to realize is a good process is far more critical to long-term success than the result of any individual trade.

For example, if an eccentric trader bought far-out-of-the-money call options based on an astrology chart, just because the trade worked for him that single time doesn’t mean it was a good trading decision.

While people often claim it is better to be lucky than good, the problem with luck is it always runs out.

Stick with a good process and we don’t need luck, we just need to be smart enough to stick with it.

Even something with an incredible 80% win percentage will still fail one time out of every five. Does it make sense to throw out a highly reliable process simply because it didn’t work that one time? Of course not.

And the same goes for buying this Thursday morning’s bounce.

Now, don’t get me wrong, buying bounces doesn’t work 80% of the time. Not even close. In fact, it only works about 30% of the time. But the win percentage isn’t the genius of the trade. It’s the unbelievable risk/reward these setups give us.

Buy the bounce early with a partial position. When prices continue higher, as they usually do, move our stops up to our entry points. Bam, this just turned into nearly free trade.

If Thursday’s bounce returned to the highs, like every other dip has over the last 14-months, that’s 200 points of profit in our pocket. If the bounce stalls and retreats, like it did Thursday, we get out at our entry point for what we paid. No harm no foul.

So a trade with 200 points of upside and close to zero downside? Who cares if it only works 30% of the time, we should be buying it every chance we get.

This is why smart money was buying Thursday’s early bounce.

And you know what? I will do it again Friday if we get the same setup. Except this time there will be 300 points of potential upside if we return to the highs. Bring it on!

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NFLX got hammered after the close following disappointing subscriber growth. While the after-hours losses put the stock back to $400, that’s a long, long way from the $700 autumn highs.

But here’s the thing, savvy traders are not taking tonight’s 20% haircut. This stock has been in free-fall since failing to hold $600 support at the beginning of January. If a person didn’t sell the first $600 violation, there was no excuse to keep holding after it fell under December’s lows.

Big selloffs like this are many months in the making and while it feels like it hits us all of a sudden, anyone caught up in this ignored a lot of very obvious sell signals. I mean seriously, the stock gave us THREE chances to get out at $600!

And while it feels like this cannot possibly get any worse and it has to be close to a bottom, just ask a PTON owner how much lower these things can fall.

I like NFLX. They have a great product. But this is a momentum stock and the momentum is clearly in the wrong direction.

I’m more than happy to buy the next bounce, but it needs to bounce first.

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Jan 19

Has this selloff gotten bad enough to be good yet?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Wednesday turned into another painful session for the S&P 500 as it shed an additional 1%. This leaves us 5% under recent highs of only a couple of weeks ago. Easy come easy go…

But Wednesday’s follow-on selling wasn’t a surprise. As I explained to readers Tuesday evening:

Emotional selloffs rarely kiss support and bounce cleanly. Get this close and a more painful violation is all but inevitable. While there are no guarantees in this business, the risk/reward is definitely stacked against us. As the prudent saying goes, “never try to catch a falling knife.”

We got a modest bounce Wednesday morning, but the dip-buying barely lasted an hour before another wave of selling knocked us under 4,600 support for the remainder of the session.

While that early bounce was technically buyable, as soon as prices undercut yesterday’s lows, it was time to get out. As easy as it is for independent traders like us to get in and out of the market, there are no valid excuses to continue holding a falling market. That was true two weeks ago when this selloff first started and it remains just as valid today.

Now that most readers are safely in cash, we cannot allow ourselves to sit back and relax. Instead, we are always looking for that next buyable bounce.

Stocks bounce hard and fast from oversold levels. While only fools try to pick bottoms, if we wait more than a few hours after a bounce, we quickly find ourselves getting left behind.

Start small, get in early, keep a nearby stop, and only add to a position that is working. Follow those simple rules and you too will profit from the next big rebound.

And if the next bounce turns into another false start, no big deal. We simply get out at our nearby stop and wait for the next bounce.

By starting with partial positions and having clearly defined exits under recent lows, buying these bounces is a low-risk proposition. Compared to the potential upside of riding this 5% dip back to the highs (15% in a 3x ETF!), I’m more than willing to take a few small and calculated lumps along the way!

This is a numbers game. As long as we stick with our trading plan, we guarantee we will be standing in the right place at the right time when the real bounce finally takes hold.

This will only bounce after most people have given up. That means we need to be more persistent than most.

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Jan 18

Why savvy bulls are cheering for a bigger pullback. Plus GME is showing its true colors.

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Tuesday was another painful session for the S&P 500 as the index shed 1.8% and failed to hold 4,600 support.

Low keeps getting lower and that’s never a good sign. While Tuesday’s selling didn’t spiral out of control after undercutting last week’s intraday lows, that’s a silver lining at best.

Emotional selloffs rarely kiss support and bounce cleanly. Get this close and a more painful violation is all but inevitable. While there are no guarantees in this business, the risk/reward is definitely stacked against us. As the prudent saying goes, “never try to catch a falling knife.”

I came into Tuesday’s session holding a small position I bought following Friday’s late bounce. I liked Friday’s setup and more often than not, those things work. But “most of the time” is not the same as always, so that’s why I only started with a partial position.

When the market gapped lower Tuesday morning, I took my lumps and got out. But doing it with a partial position wasn’t all that bad. Slippage like this is simply the cost of doing business in the market.

While critics will laugh at my “wrong” trade, in this case, being wrong is actually creating an even more profitable trading opportunity. Now that my trading account is 100% in cash, the lower this goes, the more money I make buying the inevitable bounce. So burn the house down for all I care. All I know is I will be there with a pile of cash to pick up the pieces. When the crowd is busy abandoning ship at the bottom of this dip and selling their favorite stocks at deep discounts, their loss will turn into my gain.

If the market bounces Wednesday, I will be there to buy it. If the bounce doesn’t come until next week, no big deal, I can wait.

Start small, get in early, keep a nearby stop, and only add to a position that is working. If the next bounce keeps going, great, I add more. If it turns into another false start, no big deal, I pull the plug at my stops and wait for the next one.

The most important thing is I keep at it. All of these small, partial position losses will be wiped out when I’m standing in the right place at the right time and catch the next big wave.

And the most important thing is you can do it too! Sign up for free email alerts so you can follow along.

A handful of weeks ago GME was challenging $250, now it is barely hanging on to $100.

When moment stocks fall, they fall hard. Unfortunately, there is no indication GME is anywhere near a bottom. It is down 80% from all-time highs and it is acting like it could fall another 80% from here.

If Christmas and NFTs couldn’t save this stock, I don’t know what is left to turn this around.

But remember, as bad as this looks, it can always get worse. There is no rational reason to ride this one all the way into the dirt. And you know what? If it bounces, you can always buy back in. A more nimble approach like that definitely beats hoping and praying for a turnaround.

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Jan 14

When chasing your tail is the smart trade. Plus what to do with TSLA

By Jani Ziedins | End of Day Analysis , Free CMU

Free After-Hours Analysis:

The S&P 500 went for another wild ride on Friday.

The index gapped lower at the open, but as is often the case with opening gaps, supply dried up within minutes and prices bounced back to breakeven. (I’ll get into the reasons why this happens so often in another post. Sign up for free email alerts so you don’t miss it.)

Unfortunately, the relief was short-lived and prices quickly slumped back near the opening lows when dip buyers failed to show up and support the early buying.

But rather than crash through the lows and trigger another wave of panic selling, supply dried up for a second time and the index actually bounced back to breakeven, even managing to eke out a small, 4-point gain by the end of the day.

Phew, that was a mouthful and it was definitely a topsy-turvy session. But what it wasn’t was another rout. Bears had the perfect setup to launch another big wave of panic selling, but they couldn’t get stock owners to play along. And that’s a pretty good indication bulls are still in control of this market.

As I often remind readers, it’s not how we start but how we finish that matters most. And while it is hard to get excited about a measly 4-point gain, that is actually a respectable win given where the index spent most of the session.

In fact, I was encouraged enough by this price action to start buying back in. If this market was fragile and vulnerable to a larger collapse, it would have happened Friday. The fact we closed well above early lows tells me this market wants to go higher, not lower.

To the untrained eye, it looks like I am chasing my tail these last two weeks because I keep getting in and out of the market. (And it definitely feels like I am chasing my tail!)

I sold the initial dip at my stops in the upper 4,700s. Then I bought the first bounce late last week but ended up getting dumped out during last Friday’s pathetic close. I tried again this Monday, buying that impressive bounce. That trade worked well until Thursday’s interest rate second-guessing told me it was time to get out again. And then as I wrote above, I bought back in Friday afternoon.

I hate buying and selling this often. But that’s what my trading plan tells me to do at each of these junctures and I know better than to question my trading plan. When done right, my trading plan A) keeps me safe and B) makes sure I am in the right place at the right time to take advantage of the next big move.

If that means I have to chase my tail every once in a while, so be it.

While I collected a small profit this week arbitraging these whipsaws, that’s not the reason I’m selling these dips and buying these bounces. I’m doing it to protect myself from a larger selloff.

I will be the first to admit I can’t predict the future and I don’t know if this pullback will bounce at 4,600, 4,400, or 4,200. What I do know is it doesn’t matter if this is a 200 point pullback or a 600 point pullback, I don’t want to hold through either of those pullbacks.

When I move to the safety of the sidelines, I no longer care if it is a 200 point or a 600 point pullback. And as soon as I’m in cash, the first thing I’m doing is looking for the next buying opportunity so I can get back in.

Maybe Friday’s buy will prove to be a mistake. And I’m okay with that. I simply get out and try again. Or maybe the market bounces nicely Tuesday and I add more.

Either way, it doesn’t matter to me as long as I’m standing in the right place at the right time.

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TSLA took a big hit Thursday, but more importantly, the stock held $1k support.

While it is more fun watching a stock go up every single day, we know that’s not realistic.

TSLA is trading well enough to stick with as long as it remains above $1k support. In fact, for those that missed the first bounce, this pullback is giving you a second chance to get in.

Buy the bounce with a stop just under support.

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Jan 13

The obvious reason traders should have been ready for Thursday’s pullback. Plus, is there hope for the meme stocks?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis

Thursday started off well enough for the S&P as it opened with a 0.2% gain. Unfortunately, that was as good as it got and it was all downhill from there. By the end of the session, the index shed 1.4% and it closed at the daily lows. Ouch!

As the saying goes, easy come easy go. Luckily this drop didn’t surprise readers of this blog and we were ready for it.

As I reminded readers Tuesday evening:

First bounces have high failure rates. And this bounce is not any different. When everything starts feeling easy is when the market tends to pull the rug out from underneath us.

Now don’t get me wrong, I was not predicting a top Tuesday evening. I learned a long time ago trying to predict the market’s exact turning points is a fool’s game. But just because we are not predicting the market’s next move doesn’t mean we cannot prepare trades based on probabilities.

The market covered a huge amount of ground from Monday’s very nice (and very buyable) bounce. That does two things. First, the higher we go now, the less upside we have remaining in the move. And two, risk is a function of height, so the higher we are, the more room we have to fall.

Less upside and more risk? That is a poor buying environment and tells us we should be shifting away from offense and getting into a defensive mindset.

If I traders came into Thursday with a defensive game plan, they would have been perfectly positioned to protect this week’s nice profits.

Anyone playing defense Thursday is now we’re sitting on a pile of profits. But rather than pat ourselves on the back, it is time to start looking for the next buyable bounce. It could come as early as Friday so we need to be ready.

Maybe the selloff continues Friday and the index crashes through 4,600 support. Or maybe prices bounce off of this support level Friday morning. Either way, cash is the best place to be because we don’t have to worry about how big this selloff will be. Instead, we eagerly await the next trading opportunity. And the lower this goes now, the more money we make buying the next bounce.

If the market bounces Friday, remember, start small, get in early, and keep a nearby stop. And if the index closes at the upper end of the day’s range, add more.

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The meme stocks are getting killed. Sometimes things get so bad they become good. But in the case of GME, AMC, and HOOD, bad is just bad. These are momentum stocks and the momentum is most definitely negative.

Savvy traders abandoned these stocks when they violated support back in November. But if a person is still hanging on to these deadbeats, it isn’t too late to sell. Things will only get worse the longer you wait.

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Jan 12

What to expect when trading feels a little too easy. Plus how savvy traders are handling TSLA’s dips and bounces.

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 finished Wednesday nearly 150 points above Monday’s early lows. It is truly amazing how much ground the market can cover when it sets its mind to it.

But now that the crowd is finally breathing a sigh of relief because “the first selloff of 2022 is already over”, is it time for savvy traders to start getting nervous?

As I wrote earlier this week, first bounces have high failure rates. And this bounce is not any different. When everything starts feeling easy is when the market tends to pull the rug out from underneath us.

But just because this week’s bounce could fail doesn’t mean buying it was a mistake. Those of us that got in midday on Monday are sitting on a healthy profit cushion. That gives us a lot of margin to protect ourselves in case this rolls over. In fact, this trade has progressed to the point my trailing stops are already above my entry points. Even if this bounce fails, I could be “wrong” and still turn a profit. (Gotta love it when even your bad trades make money.)

Low risk, high reward. These are the setups we live for. By starting small, getting in early, and keeping a nearby stop, we were able to jump aboard this bounce in a low-risk way.

And if you missed Monday’s bounce, don’t worry, another one will be along soon enough, especially if Monday’s bounce fails. You just have to keep your eyes open and be willing to move when everyone is paralyzed by fear and indecision.

TSLA’s latest bounce off of $1k support is also progressing nicely. Sell the pullback from $1,200 at our trailing stop and buy the next bounce off of support. What’s not to like about that?

Sure, most owners held through the dip and are just fine. But that’s only because prices bounced off of support. What happens when prices don’t bounce?

There is no reason to hold a pullback if we don’t have to. For independent traders like us, getting in and out is so easy, there is no excuse not to.

Because you know what? One of these dips won’t bounce and that will make all of the extra effort worthwhile. Just ask the long-term holders of GME, PTON, ZM, and DOCU what that feels like.

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Jan 11

Why both bulls and bears were right and how we profited from that. Plus how TSLA is giving us another great entry.

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 recovered 100 points in little more than 24 hours. As I often write, markets bounce hard and fast from oversold levels and the last two sessions of buying frenzy definitely count as hard and fast.

While Powell and the Fed keep talking up near-term rate hikes to combat inflation, aside from this little wobble, the stock market doesn’t seem all that concerned. After five days of selling, supply already dried up and confident dip buyers have cut those losses in half. If this is the best bears can do, we don’t have much to worry about.

As I wrote last week:

While both bulls and bears will tell you they know for certain what is going to happen next….in reality, both sides will probably be right. Prices will fall further, initially proving bears right. But inevitably, every selloff finds a bottom and prices bounce, proving bulls right.

The market fell another 100 points after I wrote that … and it has since reclaimed all 100 of those points.

While this up and down is a wash for most investors, for the nimble traders among us, selling high and buying low is the name of the game. Rather than sit through these dips, hoping and praying they bounce, I get out, wait for the bounce, and get back in at lower prices.

Cutting my risk and getting paid for the protection? Trades don’t get any better than that!

Now, I will be the first to admit there are no guarantees in the market and this bounce could fail. But by buying midday on Monday, our entry points are well underneath current levels and we have a huge profit cushion. My stops are already at or above my entry points, meaning this is already a profitable trade for me even if prices collapse.

And guess what? If I’m wrong and the market noses over later this week, even better. I get out above my entry points, collecting a small profit for my effort and then I get to buy even bigger discounts next week. Go up and I win. Go down and I win. Learn to trade proactively and this could be you too.

TSLA bounced nicely off of $1k support Monday, giving us an attractive entry for this popular high-flying stock.

For those of us that bought TSLA’s last bounce off of $900 and followed it up to $1,200 with a trailing stop, we locked in some really nice profits. And a few days later, we are already buying back in, ready to do it all over again.

I don’t know if this bounce off of $1k support will stick or not. But by getting in early and keeping a nearby stop, the risks are low and the rewards high. These are the setups we dream of.

If it doesn’t work, no big deal, I get out and buy the next bounce.

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Jan 10

Bears tried to break the market and they were broken instead. Plus, is Bitcoin so bad it’s good?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Monday proved to be a wild ride for the S&P 500 with the index traversing more than 150-points intraday.

While it felt like the world was ending in the first two hours of the session, as is often the case when the crowd gives up hope, stocks found a bottom and it was all uphill from there. In fact, this decisive rebound carried us so far we nearly erased all of those early losses.

Bears tried to break the market and they were broken instead. This price action is as bullish as it gets. Bears threw everything they had at the market and all of it bounced off.

While this won’t end our near-term volatility, it did go a long way toward shaking out most of the weak hands and with them gone, there are a lot fewer people left to sell the next bout of weakness. Every selloff eventually runs out of sellers and that is the exact moment when the gettin’ gets good!

Hopefully most readers honored their trailing stops last week and locked in a pile of profits before this morning’s blood bath took place. At most, we should have carried a small partial position through the weekend, and even that would have been dumped not long after Monday’s poor open.

But like every nimble trader, as soon as we are in cash, the first thing we do is start looking for the next buying opportunity. And wow, was that bounce off of 4,600 was a thing of beauty. Entry points don’t get much better than that!

Now that our early buys have 70-points of profit margin in them and our follow-on purcahses are doing nearly as well, it is simply a matter of holding and seeing where this goes. This has already gotten to the point where we can lift our stops to our entry points, giving us in effect, a nearly free trade.

Huge upside and nearly zero downside, gotta love that risk/reward. These are the kinds of trades we dream about. Hopefully you didn’t miss it.

But as is always the case, the market is anything but predictable and that’s what our stops are for. But as long as this reams above Monday’s lows, this bounce is alive and there is nothing to do but keep holding and adding.

Bitcoin went through a similar whipsaw Monday morning when it undercut $40k support. While this felt horrible for anyone that’s been holding since the $60k’s, for those of us that used trailing stops and locked in really nice profits months ago, this bounce off of $40k support is a great entry point.

Buy the bounce with a stop underneath $40k and see where this goes. I don’t particularly care for bitcoin’s long-term prospects as an investment, but I know a good trade when I see one. While there is a good chance this bounce could fail, this is a clearly defined entry point with a sensible nearby stop. Low risk, high reward. Even with a lower probability of success, that’s still a great trade and very much worth making.

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Jan 06

The smart way to trade this week’s selloff. Plus is GME finally getting its mojo back?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 is traded mostly flat following Wednesday’s 1.9% blood bath, finishing Thursday down a modest 0.1%

Half-full or half-empty? Both sides have good arguments here.

Not extending the selloff is a bullish sign. Collapses are breathtakingly quick. Stop to ask questions and you are already too late. So holding at these levels for a full day is definitely helpful and is the first step in a recovery.

But on the bearish side, there was little dip-buying Thursday. Prices bounce hard and quick from oversold levels, meaning we might not be oversold yet.

So which is it? While both bulls and bears will tell you they know for certain what is going to happen next, the simple truth is no one knows and only time will tell.

In reality, both sides will probably be right. Prices will fall further, initially proving bears right. But inevitably, every selloff finds a bottom and prices bounce, proving bulls right.

What should traders do during turbulent times like these? Leave our biases at the door, stay nimble, and only trade what is happening right in front of us.

Ideally, most of my readers were using sensible stops and bailed out Wednesday afternoon when the index undercut our stops. Now that we’re safely in cash, the first thing we start doing is looking for the next entry point.

Thursday morning gave us an interesting buying opportunity. Unfortunately, the opening bounce failed not long after it got started. But if we were disciplined and started small, got in early, and kept a nearby stop, any slippage from buying that early would have been trivially small.

Small risk, large potential reward, those are the trades we wait months for. Just because it didn’t work this time doesn’t mean it was a mistake. Give me a low-risk/high-reward trade like that and I will take it every time!

The market bounced again off of those mid-morning lows. Again, giving us another invitation to buy a partial position when it got above the opening levels. Again, start small, place a stop under the intraday lows, and wait to see what happens next.

While it would have been nice to see prices rally strongly into Thursday’s close, the market gave us an ambiguous close, deferring its next move to Friday. No big deal. These things happen.

Should we have held that small position overnight or pulled the plug? That’s entirely up to you. If you like this bounce and are willing to let a small position ride. Go for it. A little uneasy, no problem, pull the plug and try again Friday. There are no wrong answers here.

And if a person feels like they missed a bounce, don’t sweat a few points here or there. Getting in 20 points late won’t matter much when the real bounce rallies another 200. More important is we get in even if that means missing the lows by a few hours. The timing isn’t nearly as important as most people make it out to be.

And if this isn’t the real bounce and we get dumped out again? No big deal. Trading small positions limits our losses and we simply wait for the next bounce.

Remember, periods like this is when we make our money. If this was easy, everyone would do it. But the payoff will be there as long as we stick with it and don’t give up.

GME popped as much as 30% in after-hours trade following reports it was getting into NFTs. If you don’t know what NFTs are, don’t worry, no one else does either. All you need to know is NFTs are the newest buzz term and companies embracing it is the equivalent of adding “.com” to a business’s name back in the 2000s. It’s good for some temporary hype, but real investors want to see the money and so far NFTs have been more hype than substance.

Even with this big pop, GME only reclaimed a few weeks’ worth of losses. This stock is in a strong downtrend and unfortunately a no TLA*, no matter how buzzy, is going to bring its momentum back. (*three-letter acronym)

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Jan 05

Why smart money was holding Wednesday morning and selling Wednesday afternoon. Plus what’s driving bitcoin’s selloff

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

A modest midday slump in the S&P 500 devolved into a late blood-bath after the Fed’s meeting minutes suggested interest rate hikes could be coming a whole lot sooner than many investors expected. That’s all it took to rain on the bull’s parade and send previously confident owners scrambling for the exits.

As I wrote yesterday evening, I was comfortable with the market’s recent price action. That even carried over to this morning’s modest slump. Everyone knows we cannot go up every single day and red days are a normal and healthy part of every move higher.

But that changed Wednesday afternoon when normal and healthy took a sharp turn into panic. While I was comfortable a few hours earlier, when conditions change, my outlook changes along with it. Only stubborn traders dig in and ignore the evidence in smacking them in the face. And luckily, I’m not one of them.

I came into Wednesday with sensible trailing stops spread across the lower to mid 4,700s to protect my profits “just in case”, but I was already pulling the plug on some of those positions long before those stops got hit. As easy as it is to buy back in, there is no reason to stick around when the tide so obviously starts turning against us. When the panic selling hits, I want to be one of the first to get out, not one of the last. And that means acting early and decisively.

Does Wednesday’s dip stand any better chance of succeeding than all of the other aborted selloffs the market shrugged off last year? Probably not. But as nimble traders, why do we need to pick sides? As easy as it is to jump out and get back in, why would anyone want to ride through a near-term dip if they didn’t have to?

Sell and see what happens from the safety of the sidelines is how I’m approaching this. If prices bounce Thursday, great, I’m getting back in. No harm, no foul. But if the selloff continues, even better, I wait for the next bounce and buy at even lower prices. That’s a win-win in my book.

Wednesday’s bloodletting extended to Bitcoin as cryptocurrency proves to be a follower and is nothing close to the alternative asset class proponents claimed it would be. If equities continue selling off Thursday and Friday, expect the carnage to take Bitcoin down with it.

But none of this should surprise readers. As I’ve been saying for a while, Bitcoin isn’t buyable until either it bounces off of $40k support or gets above $50k resistance. Until then, it is a no-touch.

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Jan 04

What the S&P 500 is telling us it wants to do next. Plus Bitcoin holders, what are you doing?

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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Jan 03

Only fools give up on something that is working, plus TSLA answered our prayers

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.

As I wrote a few weeks ago:

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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Dec 21

Why the index bounced back so quickly, plus a less painful way to trade Bitcoin at these levels

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.

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Dec 20

What really drove Monday’s tumble and why we should expect a bounce, plus how savvy traders are dealing with $TLSA

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 gapped 1% lower at Monday’s open after Biden’s Build Back Better bill died in the Senate and Omicron spread like wildfire over the weekend.

But the selling didn’t accelerate as most owners continued holding their favorite stocks and the index finished the day almost exactly where it started. This definitely counts as a bad day for stocks, but after the dreadful open, the herd did’t rush for the exits and that follow-up stability was nice to see.

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.

I don’t read much into what retail traders are doing this week, but the price is the price and we have to respect these moves even if we don’t believe they will stick around.

We don’t change our trading plan just because this is a holiday week and little guys are running amok. We sell violations of our stops and we buy the (inevitable) bounces by starting small, getting in early, and keeping stops nearby.

Monday morning’s slump under the opening levels forced me out of my partial positions for a loss, but the potential for this to happen is why Friday’s purchase was only a partial position.

But like any good trader, I don’t know when to give up and when the index bounced above Monday’s opening levels Friday afternoon and actually closed fairly robustly, I went ahead and bought another partial position. If stocks open well Tuesday morning, I’ll add even more. If not, no big deal, I pull the plug and keep watching and waiting for the bounce. Maybe Wednesday.

But the market traded well Monday afternoon, all things considered, and I don’t see any panic in the midday price-action, which is a good first sign.

Bad keeps getting worse in TSLA as last week’s violation of $1k is now testing $900.

This stock is down nearly 30% from this Fall’s highs and is just another reminder that holding too long is just as bad as selling too early.

Always follow highfliers like this with a trailing stop because these things fall even quicker than they rise.

While no one wants to sell their favorite stocks, selling our biggest winners is the only way we make money in this game.

If $900 doesn’t hold, then $800 is up next.

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Dec 17

When a half-full market becomes half-empty, plus why TSLA is on the naughty list

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

On Friday the S&P 500 tested and bounced off of 4,600 support for the second time this week.

Between the exploding number of breakthrough Omicron cases and the Fed accelerating taper and rate hikes plans, it was a busy week for financial newsrooms. But for as dire as the headlines seem, the market was surprisingly resilient and remains steady near all-time highs.

Sure, the index finished the week down nearly 2%. But last Friday was an all-time closing high and having traded through 2013’s Taper Tantrum, the market “only” falling 2% after the Fed penciled in three rate hikes next year is actually quite impressive.

If this market was truly overbought and fragile, these headlines could have knocked us down 5% or more in the blink of an eye. The fact it took five whole days to shed a measly two percent is fairly impressive.

The counter point to the above half-full argument is the index is hovering just above recent lows. Fall a little further and that violation of support could unleash a big wave of stop-loss driven selling.

So, the question is if we should be focused on the half-full side of the market or the half-empty?

Well, surprisingly enough, the answer is pretty easy. Above 4,600 is half-full territory and anything under 4,600 puts us in the half-empty side of the glass. Trade accordingly.

While I’m giving the S&P 500 the benefit of the doubt, TSLA’s violation of $1k support this week puts the stock on my naughty list.

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.

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Dec 16

The thing bears don’t understand about this bull market, plus an update on TSLA

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

It’s been a volatile few sessions for the S&P 500 as the index keeps jumping between dramatic up and down moves.

While we’ve been living with elevated volatility since late November, every bit of down has been matched by an equal amount of up. While these fear-mongering headlines and choppy price action are good for Tum’s sales, equities seem to be taking everything in stride.

If there is one thing we know about stock market crashes, they are breathtakingly quick. Stop to ask questions and you get left holding the bag. But here we stand, three weeks from the initial Omicron outbreak and the index is still within 1% of all-time highs. If these headlines were going to break us, it would have happened by now.

To further compound bears’ confusion, Wednesday the Fed told us to expect three interest rate hikes next year. Conventional wisdom warns us that rate hikes are bad for stocks, yet prices surged 1.6% on the news.

As I’ve been saying for a while, a market that refuses to go down will eventually go up. Bears have thrown everything they can at this bull and it keeps shrugging it off. If this was going to crash, it would have happened by now. Argue with this market at your peril.

No doubt this bull will die like all of the others that came before it. But this is not that point and bears will continue getting humiliated by this stubborn bull.

TSLA slipped under $1k support last week and that was our final, undeniable signal to get out. Smart traders were already peeling off profits as the stock slipped from $1,200 resistance, but now that we’re under $1k support, there is no excuse to keep holding.

I’m not giving up on this stock and it will probably make higher highs at some point, but I don’t need to hold through the pullback in the meantime. And in fact, I’m looking forward to buying back in at lower prices.

For the time being, this doesn’t get interesting until it gets back above $1k. Until then, keep watching from the safety of the sidelines.

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