Category Archives for "End of Day Analysis"

Apr 12

The best thing about days like Tuesday

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

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

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

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

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

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

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

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

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

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

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

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

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

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Apr 11

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

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

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

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

Now that we’re at the highest point since the 2022 correction started and within 200 points of all-time highs, we should expect the rate of gains to stall, if not outright retrench in a very normal and healthy step-back. Retesting 4,400 wouldn’t be a surprise.

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

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

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

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

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

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


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

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

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

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

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Apr 07

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

By Jani Ziedins | End of Day Analysis , Free CMU

Free After-Hours Analysis: 

The S&P 500 bounced off of 4,450 Thursday, making this the second day in a row 4,450 support held.

Headlines are a mess, which is to say, not much has changed.

Investors are slowly coming to terms with our new reality and most owners who are afraid of these things bailed out a long time ago. Running out of fearful sellers is keeping supply tight and putting a floor under stocks.

Two steps forward, one step back.

The index exploded 450 points higher from March’s oversold lows. But as expected, we have fallen into a very normal and healthy step back from those highs.

Is a 180 point pullback enough? Maybe. Maybe not. We won’t know until after it happens, which means as traders, we have to make decisions based on incomplete information.

While most people try to guess which bottom is the real bottom, I’ve been doing this for far too long to fall for such foolishness.

I realized a long time ago I can’t pick bottoms. But just because I can’t pick a bottom doesn’t mean I cannot trade bottoms. In fact, buying dips is one of my favorite ways to make money. But rather than guessing which bounce will be the real bounce, I hedge my bets by buying ALL of them.

Start small, get in early, keep a nearby stop, and only add to a position that is working.

Following those simple rules, I buy all of the bounces. Some of them work. Most of them don’t. But by starting small, getting in early, keeping a nearby stop, and only adding to a position that is working, the cost of being wrong is small.

In fact, many times I actually get in early enough to make a few bucks buying the wrong bounce. That’s because I quickly lift my stops to my entry points and then even a little higher as the bounce progresses. And when the bounce fizzles, I pull the plug at my raised stops, collect a few bucks, and wait for the next bounce.

The key is starting small and getting in early. And of course, keeping a nearby stop and only adding to a position that is working. Have I mentioned that yet?

But seriously, as nimble traders, there is no reason we have to pick and choose bottoms when we can simply buy all of them with very little risk.

I’ll let other people guess, for me, I’m sticking with the sure thing.

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Apr 05

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

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 continued struggling with 4,600 resistance Tuesday, but this isn’t a surprise. Last week I wrote the post: “Now that we have a mountain of profits, how to protect them“. In it I said:

Now that we’re at the highest point since the 2022 correction started and within 200 points of all-time highs, we should expect the rate of gains to stall, if not outright retrench in a very normal and healthy step-back. Retesting 4,400 wouldn’t be a surprise. In fact, that step back is far more likely than continuing to record highs above 4,800.

Well, here we are, a few days later and the market is nearly halfway back to 4,400 support. Funny how that works.

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As I’ve been saying all year, markets move in waves. That was just as applicable at the bottom of the wave, as it was back in early March, as it is following a huge, 450 rebound from those very same lows.

Stocks go up and stocks go down, that’s what they do. Yet every time it happens, people get caught off guard.

Anyway, back to Tuesday’s price action, it was awful. An early test of 4,600 resistance failed and the index closed at the intraday lows. That’s not a good sign.

While headlines remain dreadful, they are not getting worse. “Less bad than feared” was good enough to rebound from last month’s oversold levels. But now that huge wave of buying is behind us and it is getting a lot harder to convince new buyers to pay these premium prices.

Tight supply got us here, but we need new demand to keep going. And unfortunately, it’s nowhere to be found.

Maybe after the index retest 4,400 support and bounces, buyers will finally start feeling more comfortable at these levels. But until then, we continue sitting on the pile of profits we locked in last week and wait for the next bounce.

Be ready because it could come as soon as Wednesday. (Start small, get in early, keep a nearby stop, and only add to a position that’s working)


TSLA is blowing the doors off the competition, this time by announcing a huge stock split. While I don’t buy into the hype around stock splits, I love anything that is going up and TSLA definitely fits in that category. Good thing we’ve been in TSLA since it bounced off of $800 last month. Now there is nothing to do but lift our stops up near $1,050 and see where this goes.

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Mar 31

How savvy traders are handling this pullback from the highs

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Thursday turned into the ugliest session for the S&P 500 since early March as the index shed 1.6%. This quarter-ending blood bath was a fitting finish since it capped off the first losing quarter in two years.

As dire as that sounds, the index is only down 5% from all-time highs, so stocks are actually doing fairly well, all things considered.

There are two ways to interpret the index’s stubborn resilience. Either stocks are defiantly strong and no amount of bad news can weigh them down. Or stocks are standing on a ledge and there is a whole lot of open air underneath us.

And as usual, every bullish or bearish interpretation largely comes down to a person’s biases and outlook.

That’s why avoid all the noise and simply follow the market’s lead. If it wants to go higher, great, I jump aboard the rally. If stocks want to retreat back to 4,400 support, no big deal, I step aside and wait for the next bounce.

As for what comes next. Stocks go up and stocks go down. That’s what they do. And Thursday happened to be one of those down days.

If a person has been following this blog, they were sitting on a nice pile of profits after buying March’s spectacular rebound. But rather than get complacent by our good fortune, we were getting nervous at these towering highs and played defense by snugging our trailing stops up near 4,600.

Now that those stops have been violated and dumped us out, it is time to start looking for our next entry point. From here, I see two. Bouncing back above 4,600 resistance and resuming this week’s breakout. Or dropping back to 4,400 and bouncing off of support.

Either of those will be our buy signal. Start small, get in early, keep a nearby stop, and only add to a position that is working. Until then, I’m watching this one from the safety of the sidelines.

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Mar 30

What smart money is doing up here

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 slipped 29 points Wednesday in a rare giveback since the March lows.

This was only the third down day in a powerful, 450 point rally. While that shows just how huge this rebound has been, we need to be prepared for a reversion to the mean. In non-math lingo, that simply means every bit of up is followed by a bit of down.

It’s been a nice run and it’s given us a mountain of profits. But now it’s time to shift to a defensive mindset so we don’t let these profits escape.

As much fun as this has been, we only make money when we sell our biggest winners. And that time is getting close for this trade.

No one can consistently sell tops, so that means every time we sell, we are either getting out too early or holding too long.

There are advantages and disadvantages to both approaches. But rather than pick one over the other, why can’t we do both? And that’s my favorite way to play these setups.

Take a little money off the table and let the rest ride. That’s the best of both worlds. No matter what happens next, I have a pile of profits if prices fall and I’m still in the game if the rally continues a little further.

That’s a win-win in my book.

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Mar 29

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

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

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

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

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

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

Protect them, of course!!!

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

Now that we’re at the highest point since the 2022 correction started and within 200 points of all-time highs, we should expect the rate of gains to stall, if not outright retrench in a very normal and healthy step-back.

Retesting 4,400 wouldn’t be a surprise. In fact, that step back is far more likely than continuing to record highs above 4,800.

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

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

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

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

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Mar 28

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

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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Mar 22

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

By Jani Ziedins | End of Day Analysis , Free CMU

Free After-Hours Analysis: 

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

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

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

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

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

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

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

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

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

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

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

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

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Mar 21

Is the worst already behind us?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

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

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

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

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

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

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

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

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

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

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Mar 18

Why this week’s big bounce was inevitable

By Jani Ziedins | End of Day Analysis , Free CMU

Free After-Hours Analysis: 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Mar 17

Is it too late to buy this bounce?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

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

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

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

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

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

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

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

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Mar 16

Is this finally the real bounce?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 exploded 2.2% higher Wednesday after the Fed hiked interest rates for the first time since 2018 and laid out plans for another SIX hikes later this year…ouch!

That’s a bitter pill for investors addicted to cheap money, but the market was actually relieved the Fed’s plans weren’t even more aggressive and longer-term projections show rates topping out in a moderate 3% range.

Wednesday’s big gains add to Tuesday’s decisive rebound off of 4,200 support and that 4.4% two-day total is the biggest win in nearly two years. (Catch a ride on a 4.4% wave in a 3x ETF and now we’re talking about real money!)

So much for Monday’s bearish close under 4,200 support. But that’s the way this usually goes. Stocks only bounce after most people have given up. And unfortunately for all of Monday’s late sellers, not only do they have the humiliation of abandoning stocks at the lowest prices in over six months, they get to watch this rebound race higher without them. That’s the definition of adding insult to injury.

While I was equally discouraged by last week’s pathetic price-action and had low expectations Tuesday morning, I bought the bounce anyway because that’s what my trading plan told me to do. (Start small, get in early, keep a nearby stop, and only add to a position that’s working.)

Well, as is often the case, my gut was wrong while my trading plan was right. That’s a lesson I learned the hard way a long, long time ago and this single idea made more money for me than every other trick, tool, and strategy combined.

Come up with a simple, sensible trading plan and stick to it. Successful trading doesn’t need to be any more complicated than that.

As for what comes next, I’m fully invested and my trailing stops are above my entry points, meaning no matter what happens next, this is pretty much a free trade for me.

If prices continue higher, great, I let those profits pile up. If the selloff resumes and the index retreat under 4,200, I get out at my stops, collect some small profits, and get ready to try again next time.

If I’m right, I make a ton of money. If I’m wrong, I make a little bit of money. I love trades like this! But these opportunities only come to people willing to act early and decisively.

So to answer my opening question, is this the real bounce? Maybe. Maybe not. But no matter what happens next, this is a great trade for me.

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Mar 09

Did you buy the bounce? If not, why not?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 rebounded decisively Wednesday, adding 2.6% after oil prices pulled back from recent highs.

A month ago no one would have believed stocks would rally because oil was selling for $109/bbl, but that’s the world we find ourselves in.

Markets always take things too far, especially when emotion gets involved. That means it was inevitable this latest spike in energy prices was going to overdo it. And at least to this point, it appears like Tuesday’s run to $130/bbl was a bit too far and prices have since moderated from those overbought levels.

Maybe $130 was the capitulation point and things get better from here. Or maybe this is just a temporary reprieve before the next push to $140. Unfortunately, we won’t know until after it happens.

While some people try to guess the answers ahead of time, successful traders follow the market’s lead, especially when it comes to wildly emotional and unpredictable moves like these.

While $130/bbl is definitely unsustainable, that doesn’t mean prices cannot hit $140 or even $150 before falling back to a more appropriate level.

While I have opinions, I’ve been doing this long enough to know better than to trade those opinions. Instead, I follow the market’s lead and Wednesday the market was telling me to buy the bounce. Start small, get in early, keep a nearby stop, and only add to a trade that is working.

If prices continue higher Thursday, great, I will add more. If the bounce stalls and retreats, no big deal, I get out near my entry points and try again next time.

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

The next big bounce is coming and it will leave a lot of people behind. Luckily, I won’t be one of them. (If the selloff continues for a few more days or weeks, even better, I watch the carnage from the sidelines and swoop in and grab even bigger discounts when the next bounce finally arrives.)

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Mar 08

Why smart money was buying Tuesday’s midday rally

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Tuesday was another turbulent session for the S&P 500 as the index swung between 50 point gains and losses. Unfortunately, bears won the day and the index closed at the lowest levels since last summer.

The price action appeared encouraging after Biden announced a ban on Russian oil imports and the index surged 120 points from the early lows. That midday resilience went against what most people were expecting and unexpected strength is typically a really good sign. But that contrarian move proved short-lived and the index quickly gave back all of those gains and then some by the close.

While this extreme volatility is unnerving a lot of traders, the market doesn’t need to be scary if we come prepared with a sound trading plan.

As I’ve been saying since the start of the year, sell the dips and buy the bounces. While that sounds blindingly obvious, most people end up doing the exact opposite and that is why so many people struggle to make money.

As I wrote yesterday, I locked in profits last week when the previous bounce hit its head on 4,400 and undercut my trailing stops. That means I’ve been looking for the next buyable bounce ever since.

Tuesday’s midday bounce looked good, really good, and so I pulled the trigger on a partial position. (Start small, get in early, keep a nearby stop, and only add to a trade that is working.) When the rebound kept going, I  moved my stops up to my entry point, giving myself, in effect, a free trade. At that point, no matter what happened during the rest of the session, I was covered.

And as luck would have it, the selling resumed and I got dumped out near my entry point. Boooo!

While cynics laugh when people buy bounces that don’t work, I look at this as a free lottery ticket. If it works, I make 200 or 400 points when prices bounce back near recent highs. If the trade doesn’t work, I’m out at my entry point, losing nothing. 400 points of upside with virtually no downside? Only a fool ridicules that trade. (And lucky for us, the market is filled with fools. If it wasn’t, it wouldn’t be nearly this easy to make money.)

While Tuesday’s bounce didn’t work and I’m back in cash, I will be back at it again on Wednesday. And if that doesn’t work, there is always Thursday.

One of these bounces is going to work and I don’t want to miss it.

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Mar 07

The moves to make when bad news spells opportunity

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Monday was a bloody session for the S&P 500 as it shed 3% in the index’s worst performance in nearly a year and a half.

Headlines about inflation and rate hikes have been buried by what’s going on in Ukraine and oil price’s race toward historic highs. That said, there were not really any new developments this weekend and the stock market and oil markets are simply reacting to last week’s events.

Technically, Monday’s tumble leaves the index resting just above 4,200 support. This is the third test of support in recent weeks and unfortunately, while double bottoms are a thing, triple bottoms are not. That means the near-term prognosis for the market is not good. If the latest bounce was going to hold, we wouldn’t be retesting it this soon. So expect more pain over the near term.

That said, don’t expect a huge crash. While another -3%, -5%, or -7% wouldn’t surprise me, any overreaction will bounce hard and fast, returning stocks back near these levels within a week or two. So yes, while the near-term pain will get worse, it will be short-lived.

As long as we know what’s coming, we can plan around it. As nimble traders, there is no reason to hold through even a mild 2% dip and I already bailed out of my latest bounce play last week. Hopefully, you did the same.

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As I have been explaining to readers all year, I buy every bounce and that includes February’s latest bounce off of 4,100. But a nearby stop is ALWAYS part of every purchase, starting under the recent lows and then quickly moved up to my entry point as the bounce continues. And when the bounce keeps going, I keep moving my stops up with it.

While February’s bounce is on the verge of failing, I locked in some worthwhile profits last week and I’m getting ready to buy the next bounce.

Remember, we cannot take advantage of these great trading opportunities if we don’t have cash, and that means selling at higher prices.

Buy the bounce, sell the dip, and repeat as many times as necessary. With big, directional moves like these, making money isn’t hard.

Now that we’re in cash, the firs thing we’re doing is looking for that next bounce. Start small, get in early, keep a nearby stop, and only add to a position that is working. Maybe the bounce comes Tuesday. Maybe it doesn’t happen until Wednesday or even next week, but no matter when it happens, I will be there buying it again with open arms.

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Feb 28

What if Putin does the unthinkable and how to protect ourselves from it

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

S&P 500 futures fell as much as 2.5% during Monday’s overnight session as Russia’s war with Ukraine continued over the weekend and the West tightened the sanction screws on Russia.

But those overnight losses moderated by the open of regular trade to minus 1.5% and even better, the index finished the day down a very modest 0.2%.

While volatility remains off the chart, the index is trading amazingly well given the start of the largest European invasion since WWII. But as I told readers two weeks ago, this paradoxical behavior was expected:

This phenomenon of uncertainty being worse for stocks than bad news is what allows stocks to actually rally once bullets start flying.

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Well, that’s exactly what happened. While this crisis in Ukraine has turned into the worst-case scenario as Russia launched a full-scale invasion, US stocks have actually rallied nearly 7% from Thursday’s open. That’s not what a rational person would expect, but the stock market rarely does what it is supposed to do, so this mindbending move is par for the course.

While it feels a little strange to be profiting off of this conflict in Ukraine and my heart goes out to all of the people affected by this dreadful situation, I’m a trader by nature and when I see a great trade, I cannot help myself.

And given the market’s resilience Monday in the face of escalating economic sanctions, the stock market feels pretty comfortable economically with the way the situation is progressing on the other side of the world. While a massive human tragedy, the impact on US corporate earnings will be limited and is already largely priced into stocks.

As well as the index is acting, there isn’t much to do here except lift our stops to the 4,300 region and see if there is more upside left in this huge bounce.

That said, there is one risk that hasn’t been accounted for in US financial markets and that is Putin getting desperate and using tactical nuclear weapons to beat Ukraine into submission. Flatten one Ukrainian city with tactical nukes and the US stock market will open down 25% or more.

While this scenario seems highly unlikely, that’s the way many people felt about a full invasion early last week. That makes this a good setup for a bifurcated trade. Continue following the indexes higher with a conventional trade but buy a little insurance against the unthinkable by picking up some out of the money puts.

I typically don’t mess with options, but this is one of those cases where they make a lot of sense. The other alternative is staying in cash, but it is hard to resist these profits, so I will continue taking what the market gives me while using stock options to protect my backside against the unthinkable.

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Feb 25

Why the stock market’s rally following the Russian invasion makes perfect sense

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Russia invades Ukraine and US stocks rally?!?!

This has to be some kind of gigantic mistake, right?

Luckily for readers, I published a post last week titled “Why stocks could actually rally if Russia invades Ukraine“:

The thing to keep in mind regarding events in Ukraine is markets deal with bad news a lot better than uncertainty. That’s because traders can put a price on bad news and factor it into the market. Unknow outcomes are impossible to quantify and traders tend to let their imagination get the worst of them.

This phenomenon of uncertainty being worse for stocks than bad news is what allows stocks to actually rally once bullets start flying. While no one wants to see that happen, a hot war means we stop debating what could happen and instead focus on the actual impact of the conflict. And in most instances, reality turns out less bad than feared.

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The above analysis spelled out the market’s reaction to a tee when bullets started flying Wednesday night and hopefully readers were prepared because this was a fantastic trading opportunity.

(Note: The scale of this human tragedy in Ukraine cannot be overstated and my heart pours out to all the innocent people caught in the crossfire. But this is a stock market blog and the market has a cold, cruel heart when it comes to these things.)

Not surprising, the S&P 500 reflexively gapped 2.5% lower Thursday morning after the invasion started. But that’s when opportunity presented itself and only a handful of hours later, the index closed nearly 7% above those intraday lows. Blink and you missed an outstanding trade, especially if you use 3x ETFs like I do.

Now, this isn’t to say this was an easy trade. I’ve been looking for the bounce for a couple of weeks and made some premature buys along the way. But by being disciplined and following my trading plan, I made those “mistakes” with partial positions and by getting in and out early, those “failed” trades were mostly breakeven and some even returned a few bucks of profit.

While no one is getting rich trading these mini bounces, that was never the intent. I was big game hunting and I wasn’t going to let a few miscues detur me. Especially when those miscues were so inexpensive.

While some criticized these premature buys, I didn’t give up and my trading account is a lot fatter today because of it.

I cannot predict the future and I don’t know which bounce will be the real bounce. To deal with that, I simply buy all of the bounces because that means I will never miss one. And bounces that don’t work, no big deal, I get out at my nearby stop and try again next time

Rarely is making money this easy or fast. Hopefully, you didn’t miss this trading opportunity.

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As for what comes next, there isn’t much to do except lift our stops and see where this goes. If the emotional selling resumes, no big deal, I take my profits and wait for the next big bounce. I’m happy to keep riding these waves as long as the market is willing.

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Feb 23

Is smart money getting out before things get worse?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Wednesday was yet another bad session for the S&P 500 as it shed a further 1.8%, leaving the index 12% under January’s highs.

Nothing new happened Wednesday to drive this latest round of selling and instead, this continues to be “sell before things get worse” sentiment convincing people to abandon stocks at 8-month lows.

But to be perfectly honest, if I were going to sell, I would have done it weeks ago at the highs, not after stocks tumbled to multi-month lows. Which coincidentally enough, is exactly what I did back on January 5th:

Does [January 5th’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?

Well, as is turned out, the market’s “near-term dip” crashed another 500 points from that day’s close. Boy am I glad I switched to defense back when everyone else was too “fat, dumb, and happy” to be bothered.

These are the savvy moves we make when we follow the market’s lead and ignore what everyone else thinks “should” happen.

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While I cleared out of the market on January 5th, I bought a few of these bounces on our way lower. That’s because emotional markets bounce hard and fast. If we get in early enough, within hours we build a nice profit cushion protecting our backside.

While most of these bounces turn out to be false bottoms and stocks ultimately continue lower, buying the bounces early allows us to move our stops up to our entry points and sometimes even a little higher. (Imagine that, being wrong on a trade and still making money. It doesn’t get any better than that!)

While no one is getting rich profiting off these failed bounces, the most important thing is we stay in the game. While the first, second, or third bounce might fail, one of them is going to work and it will heap huge profit on those that get it right.

My approach to profiting from this volatility is simple, jump aboard these bounces early, often moving my stops up to my entry point, and then waiting for the real bounce. If this turns out to be another false alarm, no big deal, I get out and try again next time.

Traders dream of low-risk, high-reward setups. Well, this is one if we have the courage to trade it. Buy the next bounce; start small, get in early, keep a nearby stop, and only add to a position that is working. If the next bounce doesn’t work, no big deal, get out and try again the next day, the day after that, or the next week.

This emotional market is well on its way to getting oversold and that means the next bounce will be hard and fast. Don’t be left standing on the sidelines when it happens.

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Feb 22

It is time to sell before things get worse? Or is this a golden opportunity?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Monday was another painful session for the S&P 500 with the index falling to the lowest closing level since early October.

Putin moved Russian troops into eastern Ukraine and the West responded with a small list of economic sanctions. In fact, the sanctions were so modest that stocks actually rallied on the news. (Investors cheered that Russian energy exports were excluded.)

Okay, so stocks are at the lowest levels in several months and a big chunk of the bad news is already out there. Does that make this a good time to be selling stocks “before things get worse”? Or is this a better time to be looking at these discounts as the next golden opportunity?

While it never feels this way in the heat of battle, risk is simply a function of height, meaning the lower we go, the lower the risks have actually become.

Go back a month and a half when stocks were setting record highs and everyone was “fat, dumb, and happy”. With hindsight as our guide, how risky were stocks at that point? Yeah…

Fast forward a few emotional selloffs later and how risky are stocks now that they’re down 10%? Hmmm…

At the very least, we can say stocks are 10% less risky simply because they can only fall another 90% before hitting zero.

But we know the index cannot fall to zero, so current risks are actually a lot lower than that. (If the index falls to zero, civilization has ended and money is worthless, so our portfolios don’t really matter anymore.)

If this selloff falls 15% before bottoming, that means nearly 70% of the risk has been removed from the market. Does that sound scary? No, not really.

And more than just figuring out the rapidly diminishing downside risk, are people actually worried about what’s going on in Ukraine? Are they selling stocks because they think this crisis on the other side of the world will wipe out the American economy? No, of course not. No one thinks that. Instead, they are selling for no other reason than they think other people are going to sell.

I’ve been doing this a long time and doing something simply because you think someone else is going to do something is a really bad trading strategy.

Savvy traders buy and sell based on what the market is doing, not what they think other people are going to do. And down 10% on news that really doesn’t affect US markets is a far better time to be eyeing these discounts than rushing for the exits.

I’m looking for the next bounce and you should be too. Stocks closed pretty well Monday afternoon and there is a good chance this strength will continue Tuesday. Hesitate and these buying opportunities will be gone before you know it.

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

Follow those simple rules and buying bounces is a low-risk/high-reward trading strategy.

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