Category Archives for "End of Day Analysis"

The market answered our prayers, did you miss it?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

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

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

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

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

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

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

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

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

Now we wait to see what Wednesday brings….

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

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

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis 

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

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

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

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

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

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

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

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

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

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

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

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

Why a bull is rooting for this pullback to continue

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

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

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

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

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

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

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

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

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

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

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

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

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

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

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

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

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

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

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

By Jani Ziedins | End of Day Analysis

Free Weekly Analysis:

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

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

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

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

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

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

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

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

If this market doesn’t make sense, start by reading this

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

One day down and three days back up. As poorly as the week started, amazingly enough, by Thursday the S&P 500 already turned green for the week.

Bears did their best to break this market, yet most owners showed their stubborn resolve and kept holding. Real estate bubbles in China? Fed tapers? None of it seems to matter to this bull market. But should anyone be surprised? This bull market was born in the depths of a global health pandemic. Of course it doesn’t care about these “little” things.

While I bought the dip following Monday’s late bounce and added more on Tuesday, I’m not convinced this bounce is the real deal. False bottoms also look like the real deal moments before the bottom falls out.

Lucky for those of us that got in early, we already moved our stops up to our purchase price and are now sitting on low-risk trades. Compare that to the person who abandoned ship on Monday and is now riddled with regret and indecision. One trader is coasting on easy street. The other is lying awake at night, stressing over what they should do next. Which trader would you rather be?

As I say over and over again, every time we sell, always, always, always have a plan to get back in. Dips are almost always false alarms and we need to have a plan to deal with them so we don’t get left behind when the market bounces.

Start small, get in early, keep a nearby stop, and only add to a trade that is working. Follow those simple rules and dips like this won’t bother you either. In fact, you will actually look forward to them because they are some of the easiest and fastest profit opportunities we get.

But now that the good dip-buying opportunity is behind us, now it’s time to figure out what to do next.

As I said, I’m not convinced this bounce is the real bounce. Lucky for me, just because I bought the bounce doesn’t mean I’m married to it. My stops are at or above my reentry points, but even more important, I’m focused on SPX 4,400. Hold above that level and the rebound is alive and well. Fall under it and we need to move to a defensive posture, which means scaling back open positions. And at this point, there is zero excuses to stick with a trade if the index falls under 4,350.

Remember, the best traders move proactively, not reactively. Have a plan ready and you will never get stuck on the wrong side of the market.

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

Bump on our way lower or dip on our way higher, which is it?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Wednesday was the S&P 500’s first meaningful up day in what feels like ages. That said, this 0.95% gain would have felt even better if the index held above 4,400 support instead of slipping back under this key level ahead of the close. But at this point, a 1% up day is a 1% up day and no one is complaining.

Stocks don’t go up in straight lines and they don’t go down in straight lines either. That means every rally has down days and every decline includes up days. The million-dollar question is if the last two-week decline is a little wobble on our way higher? Or if Wednesday’s bounce was simply a bump on our way lower? And the answer is yes!

The latest selloff did a lot of damage and we are unlikely to bounce right back to the highs anytime soon, so that means we have a date with recent lows over the next week or two.

But just because we retest the lows doesn’t mean the stock market is imploding. Pullbacks like this are normal and routine. Last month I warned readers that almost every year has a 5% pullback and we hadn’t had one yet. Well, what do you know, look, a 5% pullback!

Maybe this hits -6% or -7% before it is all said and done. But even pullbacks of this magnitude are a normal and healthy way of consolidating gains and getting ready for the next move higher. I would be far more concerned about the sustainability of this bull market if we didn’t take this step back and instead continued charging higher without resting.

So yes, this is both a small bump on our way lower over the near-term and a very normal pullback on our way higher over the medium-term.

As for how to trade this, a nimble and savvy trader could have bought this week’s bounce off of Monday’s lows for a quick buck, but the all-bets-are-off line is 4,350. There is no valid reason to hold a trading position under this level. But after we get flushed out at 4,350, be ready to buy back in when we reclaim this level. Sell the dip, buy the bounce, and repeat until the real bounce finally takes us back to the highs.

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

A quick update on Tuesday’s pathetic price action and what to expect next

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 started Tuesday well enough, opening in the green and extending Monday’s late bounce. But by the end of the session, the index gave back all of those early gains and finished flat.

While flat is clearly better than extending the selloff, it didn’t do anything to end the selloff. And unfortunately, that means the selloff is still alive and well.

As I wrote previously, this decline turned into an emotional selloff and we rarely shake those off within a few days. More often than not, it takes weeks and even months to get back to the old highs. To get these things through our system, most of the time we need to go “too far” before we can bottom and bounce for good. Tuesday’s weak rebound tells me we haven’t reached “too far” yet and we need to prepare ourselves for lower prices over the near term.

The only question is if we minorly violate Monday’s lows or if we smash through them and keep going. At this point, I could see either scenario playing out and that means our trading plan needs to be prepared for both.

Hopefully, everyone reading this blog has their trading account sitting in cash and is ready to pounce on these discounts. If the index falls under 4,300 over the next day or two, bouncing back above this level becomes an excellent entry point with a stop just under this level.

Remember, start small, get in early, keep a nearby stop, and only add to a trade that is working.

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

Has the market’s mood finally soured and what that means for the rest of the year. Plus a Bitcoin trade.

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Monday was the ugliest session in a long while for the S&P 500 and only a late bounce off the midday lows saved it from being the worst day of the year.

Financial journalists blame this weakness on real estate problems coming out of China. But the thing to remember about journalists is if they could trade, they would be traders, not journalists…

While this property bubble story out of China sounds plausible, it’s been years since U.S. markets cared about what’s going on inside China’s economy and nothing changed this weekend.

Readers of this blog know the real answer is this “unstoppable bull” was setting up to run into some headwinds this fall. We didn’t know what “the problem” was going to be, but we knew it was coming. Markets move in waves and if it wasn’t China, it would have been something else. It was simply time.

Now that we got that out of the way, it is time to figure out what comes next. All of the other dips this year bounced within days, if not hours. Should we expect the same thing this time? Nope, not at all.

This time is different because it is the first dip that truly sent fear and indecision racing through the crowd. Previously every dip was met with a shrug and prices bounced within hours due to the lack of follow-on selling. That confidence is long gone and everyone is now wondering if this is “the big one”.

As for what comes next, it takes a while for emotional selloffs to work their way through the system and we shouldn’t expect this one to bounce back to the highs anytime soon. In fact, there is a good chance we’ve seen our last record high this year.

The market’s mood has clearly changed and that means the half-full outlook has been replaced by nervousness and second-guessing. Fear of the other shoe dropping will keep traders on edge for weeks, if not months.

Monday’s intraday lows near 4,300 set a new benchmark to keep an eye on. Above this level and an adventurous trader can buy a near-term bounce for a quick buck. But take profits early and often because we will retest 4,300 again over the next week or two, if not later this week.

Expect a few violations along the way, but anytime we get back above 4,300, that qualifies as a buyable bounce. Maybe it doesn’t amount to much, but if we start small, get in early, the risk is almost zero the potential reward is quite large.

And if this thing keeps falling, even better. The lower prices go, the better the discounts get. (You are in cash right?)

Bitcoin continues failing as a hedge against volatility in the equity market. This cryptocurrency fell along with everything else today and no one was safe.

Nimble traders had their trailing stops get them out closer to $50k and now these savvy opportunists are eager to take advantage of these discounts. A bounce off of $40k is buyable, but all bets are off if this falls under $40k. Plan your next trade accordingly.

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

The calm before the storm? Or the worst already passed?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 continues flirting with recent lows near 4,430 for the fifth day in a row.

To breakdown or not to breakdown, that is the question.

The thing about breakdowns is they typically fall hard and fast. Five days of grinding sideways isn’t hard and it isn’t fast. Does that mean the selloff is already over? The market sure is acting like it.

Lucky for us, we have a very clear line the sand near Tuesday’s lows that will tell us if and when this week’s bounce fails. Fall under this level and get ready for more selling. Hold above it and the rebound is alive and well. Above is buyable. Under is sellable. It doesn’t get any more straightforward than that.

But the market doesn’t like being easy, so the curveball might be a momentary violation of 4,435 support before bouncing back above. In that instance, the return above 4,435 is buyable and the rebound is back on.

Pundits are trying to convince us they know conclusively that this is either a bounce back to the highs or the start of a much lager selloff. Me, I don’t know and I really don’t care. I trade what the market gives me. If that means buying the bounce, then I buy the bounce. If it means shorting a bigger breakdown, then I short the bigger breakdown.

Following the market’s lead sure beats trying to win an argument when it isn’t listening.

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

Nice bounce, but can we trust it?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Wednesday was the first real good session for the S&P 500 in nearly three weeks. The index arrested a nearly two-week-old slide, bouncing nicely off of the 50dma and adding 0.85%

Is this the real bounce, or just a false bottom on our way lower? Unfortunately, only time will tell and we won’t know the answer until long after this trading opportunity passed us by. Sometimes the first bounce is the real deal, but often it takes two or three false starts before turning for good and Wednesday was only the first attempt.

But just because we don’t know if this is the real bounce or not doesn’t mean we cannot trade this move intelligently. When I have no idea if this is the real bounce or not, I trade it as the real thing until proven otherwise.

Reclaiming 4,460 this afternoon was a nice entry point and closing above 4,480 gave us another entry. As for stops, hold above Tuesday’s lows near 4,350 and everything looks good. Fall under this key support level and all bets are off. Easy as that.

I have no idea if this bounce is the real bounce, but I have a plan and I’m trading it. And if this isn’t the real bounce and the slide continues, no big deal. I simply get out and buy the next bounce. In fact, the lower this goes over the near-term, the better it is for me because the larger discounts give me more profit opportunities during the subsequent rebound. That makes this is one of those times I hope I’m wrong.

As always, start small, get in early, keep a nearby stop, and only add to a position that is working. If the market rallies Thursday, move stops up to our entry points, giving us a free trade.

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

Is the index standing on a trapdoor?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Friday makes it five down days in a row for the S&P 500.

That’s the longest stretch of down days since February. And for those that care about these things, the last time the index fell five days in a row, it ended up falling another 4% before finally finding a bottom. If history repeats itself, we could see the index fall another 200 points over the next week or two. As I said, this only matters to people that care about these things, so please feel free to disregard this if it isn’t relevant to you.

As I warned readers on Thursday:

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

Well, Friday’s pathetic price action confirmed this time is different and that means we haven’t seen the worst of this dip yet.

Unfortunately in trading, we have to make our moves before we have all of the information. Often that means pulling the plug days before something is obvious. Anyone still waiting for confirmation on Monday or Tuesday will be selling long after the damage has been done. By that point, why bother selling at all?

Smart traders buy early and they sell early. Suckers buy late and sell late. Please don’t be a sucker.

For those that have been paying attention, we moved to cash Thursday and waiting for that next buyable entry point. Odds are good stocks will bounce on Monday. But most likely that will be a fool’s bounce and lower lows are still ahead of us.

There is nothing wrong with buying Monday’s bounce if we are smart about it (start small, get in early, keep a nearby stop, and only add to a trade that is working). But odds are good Monday’s bounce will turn out to be a false bottom and we need to be nimble if we buy it. Most likely the selling will resume later next week before we finally carving out a more painful capitulation bottom.

But if we are savvy and nimble, we buy all of the bounces because we know we can get out when those false bottoms fizzle and start making fresh lows.

I have no idea if the first, second, third, or fourth bounce will turn out to be the real bounce. That’s why I buy all of them and then I don’t have to worry about it. (again, start small, get in early, keep a nearby stop, and only add to a trade that is working)

While some people hate volatility, I love it because that’s the fastest and easiest way to make money.

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

Why this week’s dip could finally be the start of a larger selloff

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

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

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

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

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

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

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

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

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

The key level SPX needs to hold, plus why even Bitcoin bulls should be hoping for a larger pullback

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 lost 0.34% on the first day back from the long holiday weekend. But more importantly, the index remains well above the psychologically significant 4,500 level.

Tuesday’s early selling found support near 4,510 and now that becomes our new canary in the coalmine. Anything above this level and all is fine and dandy. Slip under this level and we need to watch the price action with a more critical eye.

As we have seen all year, it is really hard for any dip to get started when so few owners are interested in selling. As much as conventional warns us about complacent markets, the critics always forget to mention just how long complacency lasts before the collapse.

I have no idea how much longer this rally can keep going, but at this point, it is not showing any signs of letting up. As much as I question the sustainability of this one-way strength, there is nothing to do other than follow the market’s lead. Until something changes, we operate under the assumption nothing has changed.

Near-term support is setting up near 4,510. Keep holding for higher prices as long as the index remains above this level. Slip under 4,510 and it makes sense to start peeling some positions off proactively. But like every other time we sell in an uptrend, we always turn around and start looking for the next buyable bounce, even if it happens a few hours later.

Remember, just because we harvest some profits proactively doesn’t mean we have to give up on a trade. As soon as this starts going up again, we need to be back in.

Tuesday was an ugly day for Bitcoin. The cryptocurrency floated above $52k this weekend ahead of El Salvador’s adoption of Bitcoin as a national currency. Unfortunately, the rollout was glitchy and that caused the cryptocurrency to tumble more than 10%.

Anyone that’s been trading for a while understands “buy the rumor, sell the news”. Is this what we are seeing in Bitcoin? It is certainly starting that way. As long as this remains under $50k, we have to be careful.

It makes sense to take some profits off the table and wait to buy back in after this reclaims $50k.

Buy low and sell high. Even bulls should be wishing for a larger pullback here so they can buy more at lower prices.

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

Is 4,500 finally too high? Plus, the right time to buy AMZN

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis

The S&P 500 poked its head above 4,500 on Wednesday for the first time in history. The “sell in May” crowd now finds themselves 300 points behind. So much for conventional wisdom…

Is 4,500 finally the top? Not if we use recent history as a guide because the same was said about 4k, 4,100, 4,200, 4,300, and 4,400. Heck, even I thought 4,400 was getting a tad too far.

But as long as something keeps working, we have no choice but to stick with it. Maybe 4,500 is finally far enough. Or maybe 4,600 is just around the corner. Either way, we will know the answer soon enough. Until then, continue giving this unstoppable bull market the benefit of the doubt by moving our stops up and continuing to hold.

Headlines remain benign and we have a couple of weeks until Labor Day signals the traditional end of the slower summer trading season. But once we get into the heart of September, be on the lookout for signs the market’s mood is changing. Until then, enjoy the ride.

Signup for free email alerts if you want to be notified when these subtle, but market-changing developments start taking place.

Last week’s rebound in AMZN is progressing nicely and this trade is going according to plan as long as it remains above $3,200.

As I wrote last week:

If $3,200 doesn’t bounce soon, then $3k is coming up. On the other side, a dip and bounce back above $3.200 is a buyable entry with a stop just under this level. This is acting like it wants to go lower, but it always does that just before the bounce. In this case, have a trade ready for either direction.

As it turned out, AMZN was playing possum and looked the most hopeless moments before turning it around. While there are no guarantees this bounce will stick, for those that acted early and decisively, this bounce gave us a low-risk entry with a lot of upside potential.

For those that missed the buyable bounce, this stock is still trading at attractive levels, unfortunately, buying now requires taking on a little more risk than buying last week. But the risk/reward still favors buying this bounce.

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

Is the Taper Tantrum already over? Plus what to do with AMZN’s ugly trade.

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Thursday started ugly when the S&P 500 gapped 0.7% lower at the open. The Fed disappointed investors Wednesday afternoon when it revealed they could start tapering bond purchases later this year. While not a dealbreaker by itself, it reminded investors this free-money gravy train isn’t going to last forever.

Wednesday’s disappointment spilled over to Thursday’s open, but as is often the case following large gap opens, supply dried up almost immediately. And within hours, the market was back in the green. So much for that ugly start.

Lucky for regular readers of this blog, they were prepared for the market’s sharp dip and bounce. As I wrote Wednesday:

Maybe the selling continues Thursday, but this has been an incredibly confident market all year long and chances are good this dip will stall and bounce like all of the other dips that came before it.

But as good as things appeared in midday trade, the rebound stalled and the index ultimately closed only a handful of points in the green. While it is usually hard to get excited by a 0.1% gain, context is everything. More important than the trivial gain, the market tried to break this bull market and very few owners took the bait.

This continues to be a confident market and no matter what the cynics say about complacency, the one thing they always forget to mention is just how long complacency lasts before the fall.

While it would have been nice to see Thursday’s rebound close near the highs, the most important thing is the selling stalled and reversed. Confident owners still don’t want to sell and as long as the market isn’t pressuring them, these confident owners will continue holding for higher prices. Close green on Friday and this week’s tumble is already old news.

As for how to trade this, hopefully, you were using sensible stops and were able to lock in some nice profits Wednesday afternoon. Thursday morning’s gap and bounce gave us a very attractive entry point with a stop just under the early lows. Now we simply wait to see what happens next.

Stay above 4,370 and everything looks good. Close above 4,400 Friday afternoon, even better. But if the selling resumes Friday afternoon and we fall under 4,370, all bets are off and we wait for the next buyable bounce.

AMZN is ugly and getting uglier.

This larger pullback was kicked off by disappointing earnings last month. It is hard to avoid a big earnings gap like that and it happens to the best of us. But the inexcusable mistake is holding the subsequent dip under $3,300. That was our clear signal to get out and for the most adventurous to initiate a short.

These tumbles are rarely a one-day events and AMZN is proving that there is still downside left in this move. If $3,200 doesn’t bounce soon, then $3k is coming up. On the other side, a dip and bounce back above $3.200 is a buyable entry with a stop just under this level. This is acting like it wants to go lower, but it always does just before the bounce. In this case, have a trade ready for either way.

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

Is this the start of the next Taper Tantrum, plus the smartest trade in HOOD

By Jani Ziedins | End of Day Analysis , Premium Analysis

Good news for the indexes, plus a nice trade in TSLA

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

It’s been a choppy week for the S&P 500 as opening waves of selling attempted to knock the index from its record-high perch. But as has been the case all year long, dip buyers are never far away and the index stubbornly remains within a handful of points of those all-time highs.

As I often remind readers, how we start a day is far less important than how we finish it. And by that metric, the last two sessions have been constructive despite Tuesday’s 0.7% giveback. Monday’s early weakness bounce decisively and ultimately finished at another record closing high. Tuesday’s follow-up dip didn’t bounce quite as hard, but it was good enough to push prices back to what would have been a record close just a few days ago.

Eventually, we will come across a dip that doesn’t bounce, but so far this rally continues defying the skeptics and we have to give it the benefit of the doubt. At this point, we have two key levels to watch, Tuesday’s intraday lows near 4,420 and recent support near 4,400. Hold above these levels and we have nothing to worry about. Fall under and we must shift to a more defensive mindset.

Wednesday’s open and subsequent price action will give us a good hint about what’s coming next. Open in the green and rally from there, then the worst is already behind us. Start the day red and crash through 4,400 support and the selling still has a ways to go. Anything in between and we take a wait-and-see, with a close near the highs being more bullish and a close near the lows being more pessimistic.

But as I said, as long as we remain above 4,400, reports of this bull’s demise are grossly exaggerated.

TSLA crashed through $700 support yesterday following a government investigation into its Autopilot feature and the selling continued on Tuesday. Savvy traders lifted their stops near $700 and were locking in nice profits as this stock rolled over Monday morning. But that was then and this is now.

What comes next for this stock? Well as obvious as this sounds, either prices bounce or they don’t. For the moment, this isn’t on solid ground until it gets back above $700, but the most adventurous can buy Tuesday’s midday bounce with a stop under the early lows. Start small, get in early, keep a nearby stop, and only add to a trade that is working.

If prices fall under Tuesday’s lows, no big deal, get out and wait for the next bounce.

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket

What does a bad night mean for Friday’s session? Plus when it’s safe to buy HOOD

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Thursday was a good session for the S&P 500 with the index adding 0.4% and pushing back near record highs.

But that was then and this is now. In after-hours trade, the indexes are tumbling on continued Asian weakness and U.S. futures down more than half a percent.

Is this finally the start of the long-predicted stock crash? Bears are definitely dreaming about that tonight.

But if bears have been wrong all year, what are the chances they finally get it right this time? Ummmm, yeah…..

While there is an entire night for this situation to develop, I don’t put a lot of weight in overnight futures. This is an incredibly thin market and easily swayed by small and impulsive night owls. Big money trades during the day and they couldn’t care less about what a bunch of guys in their pajamas think.

Occasionally other parts of the world lead our market, but those episodes are few and far between. Our current bull market is fueled by a huge resurgence in the U.S. economy and what’s going on in the rest of the world doesn’t matter. In fact, things are so good here foreign investors are flooding into our markets because this is where the party is happening.

No doubt Asia and Europe still have their problems, but they are not a concern for U.S. investors. If these weak futures cause our indexes to gap lower Friday morning, that gives us an excellent entry point. Wait for the early bounce and buy with a stop under those initial lows. This is an easy, low-risk trade. If the selling resumes, no big deal, we get out and buy the next bounce.

HOOD got slammed on its first day of trading, but that usually happens to most over-hyped IPOs. Expect the selling to continue for a few weeks and even months. But this will eventually bottom like it always does. And that is when investors who believe in this stock should be taking advantage of those discounts. No doubt a good trade in this stock is coming, we just need to be patient and wait for it to come to us.

If you find these posts useful, please return the favor by liking and sharing them!

Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.

What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours

Follow Jani on Twitter @crackedmarket