Category Archives for "End of Day Analysis"

A common sense approach to figuring out what comes next

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 added 0.61% last week and it continues hovering near record highs despite the relentless inflation warnings.

As I’ve been telling readers all along, if the market cared about these things, it would have crashed by now. Everyone has heard these warnings and those that feared them sold a long time ago. Anyone still holding stocks acknowledges these risks and is unlikely to be spooked by recycling the same old headlines.

This stubborn resilience confirms this is a strong marker, not a weak one. As common sense as this sounds, way too many traders fail to grasp the simple concept that a market that refuses to go down will eventually go up.

Bears calling for the “inevitable” breakdown will need to wait a while longer. They’ve been predicting a crash for over a year now, what’s a few more months?

The path of least resistance remains higher. Until further notice, keep holding for higher prices and raising our trailing stops.

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 inflation worries don’t move the market anymore. Plus updates on NFLX, GME, and AMC.

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Thursday was a bumpy ride for the S&P 500 with the index crashing through 4,200 support at the open and shedding nearly 1%. But as bad as the day started, the selling stalled thirty minutes later and it was all uphill from there.

Headlines again remain benign. The market was initially spooked by unexpectedly low weekly unemployment claims and that stoked inflation worries. But as I’ve been saying for a while, that story has already played out. Most of the people who fear inflation are long gone and were replaced by dip buyers who don’t fear any such thing.

That said, I still think the odds on favorite for killing this bull market is high inflation. But we need more than just early hints of potential inflationary pressures, we need to see the real thing. The boy has cried wolf one too many times and no one is listening to him anymore. Traders need to see the Fed lose control of inflation, not this hypothetical crap. Until then, confident owners will simply ignore the headlines and keep holding.

As much as bears have tried to break this bull market, they cannot get the job done. A market that refuses to go down will eventually go up.

As much as I like the FAANG stocks, NFLX needs to be taken behind the woodshed. I’m not giving up on this company over the long-term, but the stock’s price action is awful and failing to hold $500 support suggests lower prices are ahead. The latest bounce is dead and savvy longs are already out. And not only that, aggressive traders can short this weakness with a stop just above $500.

The other big news is the silliness continues in GME and AMC. As badly as this will end for most people, stupid still has plenty of room to get even stupider. Early breakout buyers can keep holding for higher prices. But if you missed this trade, it’s too late because there is no way to protect your risk at these levels. Move on and look for something else.

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 rally stalling at 4,200? Plus, the wrong way to handle AMC.

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 finished within a whisper of 4,200 for the seventh session in a row. That leaves a lot of people asking if this key level is acting as support or resistance?

Aside from two dips in early May, the index has been stuck on 4,200 since mid-April. That’s a month and a half of almost zero headway in either direction, equally frustrating both bulls and bears.

While holding near the highs is almost always a good sign, there comes a point when resilience starts looking more like stalling. Have we reached that tipping point? Not yet…but it is approaching quickly.

As is normally the case, there are two ways this plays out. Either prices continue higher or they stall and reverse.

In these cases, we always give the benefit of doubt to the trend. This is a bull market and that means 9 times out of 10, these things resolve to the upside. If a person likes betting on the higher probability outcome, they are trading this from the long side.

While holding here covers the long side, there is still that 1 out of 10. That’s what our stops are for. Pick a level where you will admit defeat and pull the plug. If the market stays above this level, keep holding. If it slips under, get out and try again next time.

Personally, I like keeping my stops nearby. That allows me to get out early and be in the best position possible to buy the next bounce. But a nearby stop also increases the likelihood of a false alarm. Fortunately, there is an easy fix for that too. As soon as I get out, I’m already looking for the next entry point, even if it comes a few hours later.

Most likely this consolidation will resolve to the upside. But if it dips and forces us out, be on the lookout for the next buyable bounce. And despite what the cynics claim, the least likely outcome is the demise of this bull market. They’ve been wrong for twelve months and they are most likely wrong here too.

TL;DR: Keep holding for higher prices with nearby stops and be ready to get back if a dip pushes us out.

Yesterday I said AMC’s latest breakout was buyable and a few hours later the stock doubles. While I’d love to say I predicted this, I doubt anyone who has been doing this for a while would be bold enough to predict a 100% move over a few short hours.

That said, this had all the right ingredients, namely a stupid following that is prone to getting even stupider.

While holding these irrational moves is great, don’t fall for the hype. This is a trade, not an investment. Stay near the exits and be ready to lock in some heady profits as soon as the cracks start showing. Those that get greedy and hold too long will end up giving everything back and then some.

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 the bull market is still alive and well, plus what to do with AMC at these levels

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Tuesday morning saw a good open turn sour. The S&P 500 pushed to within a whisper of record highs in early trade, but it was all downhill from there. Within an hour, the index retreated more than 30-points and was retesting 4,200 support. But just when things looked their most dire, supply dried up and the market traded sideways the rest of the day, ending two points above this key psychological level.

There were not any new headlines driving this selling and instead, this was simply another flareup of second-guessing over inflation worries.

Indecision and fear of heights is a normal part of every move higher and this rally is no different. But the thing to remember is we’ve been living under these clouds for nearly two months. If they were going to smother this bull market, it would have happened by now. Instead, this is little more than a purge of nervous owners and is replacing these weak sellers with confident buyers who are comfortable holding these risks.

If the first few bouts of indecision couldn’t kill this rally, the third and fourth attempts are even less likely to succeed.

That said, we could still see a dip back to 4k support before this is all said and done. But until something new and unexpected comes along, treat every dip as a buying opportunity.

The meme stocks are making a comeback. GME broke through $200 resistance last week and as I wrote then, this breakout is buyable for the most nimble and risk-tolerant traders. This is trading well and still holdable, but be ready to lock in profits at a moment’s notice because these gains will disappear even quicker than they came.

AMC secured some financing and it looks like it will survive Covid. No doubt investors are happy to see this company on solid financial footing. That said, the stock is trading near record highs. To say this company is in the best shape of its life overlooks a lot of dark clouds hanging over it. Namely the relentless shift to video on demand with many studios now streaming moves simultaneously with their theatrical release.

AMC is a buy for the moment because something that is high tends to get even higher. But never forget, this is a trade, not an investment. Let someone else get stuck holding the bag. Keep holding for higher prices, but be ready to pull the plug as soon as this turns south.

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 long until the S&P 500 finally leaves 4,200 behind. Plus, a sensible strategy for trading Bitcoin’s latest dip.

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 finished Thursday 0.88 points above the psychologically significant 4,200. Friday it bested this key level by 4.11.

As trivial as these gains seem, the most important thing is we continue holding near record highs. Markets collapse from unsustainable levels quickly. Holding here all week confirms there is meaningful demand at these levels. As I often write, a market that refuses to go down will eventually go up.

While counting profits as the index races higher is more fun, sideways grinds are a normal and healthy part of every sustainable rally. And you know what, so are dips. Nothing ever goes straight up and that includes this stubbornly resilient bull market.

Looking back at recent history, it took us three months to go from 3,600 to clearing 3,800. There was another three months between 3,800 and the 4k breakout. And counting back from today, we are about two months into the current 4k breakout. If history repeats itself a third time, we should be prepared to wait for another month before finally leaving 4,200 behind.

The index is acting well, but we need to keep our expectations in check and that means being patient a little longer.

Bitcoin slipped back into the mid-$30k’s after flirting with $40k resistance over the last few days. It’s been a rough few weeks as the cryptocurrency shed nearly 50% of its value after Elon Musk renigged on his promise to accept bitcoin at TSLA.

While the $30k bounce was buyable, we really need to see this reclaim $40k support to help put investors at ease. If we cannot get there, a test of $20k support becomes increasingly likely.

If a person bought the $30k bounce, you can keep holding. But if a person is still in cash, wait for a second bounce off of $30k or hold off on buying until this reclaims $40k. Buying anything in the mid-$30k’s is no man’s land and leaves us vulnerable to near-term losses. And if this falls under $30k all bets are off and it is time to abandon ship because this could fall another 30% before finding support at $20k.

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

Does 4,200 matter? Plus a FB update.

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 finished Thursday up a fairly trivial 0.12%. That said, it was enough to let the index close above the psychologically significant 4,200, if only by 0.88 points.

Does 4,200 really matter? While round numbers always sound nice, in reality, this is just another level and is no different than 4,199 or 4,198. More important than some number that ends in a double zero, now we can move on. From here, 4,200 simply turns into another minor milestone disappearing in the bull market’s rearview mirror.

Inflation worries are gone for now, but no doubt they will be back. And inflation might even cause the demise of this bull market. But that’s an issue for another day. Until then, we trade what’s right in front of us and that is riding the rally higher. With 4,200 down, the next stop is all-time highs.

As I often say, a market that refuses to go down will eventually go up.

FB is on fire and closed at all-time highs. So much for the post-election drama hanging over this stock.

And you know what? Stocks that are high tend to get even higher. No reason to give up on what has been working. Keep holding for higher prices and lifting our stops.

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 stalling or resting? Plus, what to make of GME’s pop.

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Another day, another finish short of 4,200. As well as the index has been trading, it sure is having a heck of a time getting above this psychologically significant level.

As I wrote subscribers earlier today:

Stalling before the fall? Or pause before the next rally?

While both scenarios could easily play out, until proven otherwise, we continue giving the benefit of the doubt to the rally. Holding near the highs is a sign of strength, not weakness. While I would get concerned if we cannot get above 4,200 over the next few weeks, pausing at these levels for a handful of days is a very normal and healthy thing to do.

More important than the lack of follow-on buying is the absence of contageous herd selling every time stocks dip. The market is acting well and the path of least resistance remains higher.

GME smashed through $200 resistance Tuesday afternoon and that surge of buying continued Wednesday. This breakout is very much buyable, but a person has to have an iron stomach, be incredibly nimble, and view this as a very short-term trade. Take profits early and often because they won’t last long.

As I wrote previously:

Wait for the $200 breakout and we can buy the bounce for a quick trade, but only after this gets above $200.

Tuesday was that day and now we’re sitting on 20% profits. Not bad for a few hours of “work”. But don’t get complacent, this thing falls even faster than it climbs. Be ready to take profits at the first hints of trouble and no matter what, do NOT let this trade slip into the red. This could be the last time this stock gets to these levels.

Profit from the hysteria, but don’t fall for the hype.

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 both bulls and bear are trading the S&P 500 wrong, plus how to respond to NFLX’s bounce

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 slipped a modest 0.2% Tuesday and while that size of a decline seems fairly trivial, it is notable this was the second day in a row the index failed to hold early gains above 4,200.

This counts as one of those half-full, half-empty kinds of days. On the positive side, the index remains within a handful of points of all-time highs. Not bad given how unnerved traders felt a couple of weeks ago when inflation worries dominated the headlines. On the other side of the coin, the previous two pullbacks started with rejections by 4,200 resistance. Are we witnessing the start of the third pullback?

Is this just another insignificant hiccup on our way to record highs? Or are we on the verge of the next test of 4k support?

To be honest, I could see either outcome playing out. While bulls and bears are busy arguing why their analysis and outlook is superior to the other side’s, I’m over here crafting a trading plan that accounts for both scenarios. Why pick one or the other when we can have both!

At the moment, I’m riding this wave higher with stops in the mid-4,100s. Buying last week’s dip early gave me entry points at much lower levels and that affords me the flexibility of riding this out with a “free” trade. If this goes higher, great, I collect those profits. If this dips back to 4k support, I get out at my entry points (making this a “free” trade) and I buy the next bounce at even lower levels. Either way, I win. (In fact, a bigger decline here gives me even more profit opportunity buying the next rebound.)

The key to surviving and even thriving during periods like this is trading proactively and decisively. By getting in early, we have a whole lot more options.

NFLX reclaimed $500, making this a buyable bounce. But the subsequent price action has been fairly lethargic. Fall back under $500 and not only does it make sense to close the long, but this turned back into an attractive shorting opportunity. Hang out near the lows long enough and inevitably, we start making even lower-lows.

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 bull market is doing exactly what it should be doing, plus what the FAANG stocks are telling us

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Monday was a good session for the S&P 500 as it added 1% and pushed up against 4,200 resistance.

The index has been flirting with this key level since April and up to this point, it has been unable to hold above it for any length of time. Monday was no exception with a midday push to 4,209 slipping back to 4,197 by the close.

Should we be worried about the market’s inability to close the deal and put 4,200 in the rearview mirror?

Everyone knows markets move in waves and this is especially true following big directional moves. The index broke through 4k for the first time on April 1st and then it sprinted to 4,200. A 5% surge in two weeks is downright impressive and a little sideways consolidation was the most obvious next step. And that is exactly what the index has done since mid-April.

So I ask again, should we be worried about the market’s inability to close the deal and put 4,200 in the rearview mirror? No, of course not.

This sideways consolidation is very normal and healthy behavior following a big and fast move. In fact, I would be far more concerned about the sustainability of the bull market if that 5% move continued to 10% without taking a break.

Resting here is the right call and it sets a solid foundation for the next leg higher.

As I often write, something that refuses to go down will eventually go up and that is the case here. As hard as bears are trying to break this market, they cannot get the job done. Their failure becomes our gain.

Keep holding for higher prices and lift our stops once the index gets above 4,200.

Monday was a good day for the FAANG stocks, especially FB and GOOG. These are the biggest and most important stocks in the market and their underperformance has been weighing on the entire market. If their recent outperformance continues, expect these stocks to lift the entire market. If their underperformance resumes, expect them to drag all stocks down.

These highflying stocks are the canary in the coalmine and if they start struggling again, all investors need to be paying attention. Let’s hope it doesn’t get to that.

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 bulls should be rooting for a bigger stock pullback, plus how much lower this Bitcoin selloff can go

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 slipped for a second week in a row. But for as ominous as things appeared Wednesday morning, the 0.43% weekly loss seems fairly benign.

This was the second week in a row bears tried to break this bull and the second week in a row they failed to get the job done. Dips in the first half of the week bounced decisively in the second half. And here we stand, within 2% of all-time highs following two weeks of robust selling. As I often write, a market that refuses to go down will eventually go up.

That said, there are no guarantees the second bounce is the end of this volatility and we could easily experience another test of 4k support next week. But if the first two attempts couldn’t close the deal, odds don’t look good for a third attempt. (Often the 3rd bounce is the charm!)

As has been the case all along, keep holding for higher prices, pulling the plug at our stops, and being ready to jump back in when the dip proves to be yet another false alarm. While trading through these whipsaws is inconvenient, it sure beats holding blindly through a much bigger correction. While the next dip will most likely bounce like all of the others that came before it, there are no guarantees and I certainly don’t feel like betting my trading account on it.

And in fact, I’d rather be wrong and see the index fall significantly further. The lower this goes now, the more money I make buying the next bounce.

I normally like to mix up these individual analysis pieces and spread them across different stocks, but Bitcoin is just too juicy to ignore. Thursday’s bounce above $40k support failed and this is back in the mid-$30k’s. If BTC cannot get back above $40k soon, we could very easily see prints that start with a $2#,###.

As I’ve been writing all along, with something this volatile, we need to have a stop and we need to stick to it. $60k was a sensible level to lock in profits. So was $50k and more recently $40k. And now there is a good chance people will be kicking themselves for not selling at $30k.

I’m not giving up on Bitcoin, but this has a nasty habit of falling 80% and that means this might not bottom until $12k! While this also has a habit of bouncing back, don’t forget last major selloff took three years to get back to the old highs. Just think about that when deciding if you want to hold through the dip.

Even the most bullish of bulls can see the value of selling $60k and buying back in at $12k.

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 traders are buying this bounce, plus the simplest trade for Bitcoin.

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Thursday was a good session for the S&P 500 as it extended Wednesday’s rebound off of recent lows.

So what is this, a bull market breaking down or a rally getting ready to make new highs? Depending on the hour, you are likely to find widely differing opinions.

As I’ve been saying for a while, until given a compelling reason to change our outlook, we continue giving this bull market the benefit of the doubt. This bull market started in March 2020 and every wobble since then has been a false alarm. While the cynic will claim the end is coming (and he will be right…eventually), this rally bounced more than a dozen times and is up nearly 100% from the Covid lows. Anyone who pulled the plug early has missed out on a lot of easy money.

That said, I’m never one to blindly hold “no matter what”. I’m in the market when it is going up and I step to the side when it slips under my trailing stops. When the dip turns out to be a false alarm, I get back in and do it all over again.

Will this week’s rebound stick? Maybe. Or maybe it fizzles and retests recent lows. Either way, I’m ready for what comes next. I bought back in yesterday and by acting early, I am already lifting my stops up to my reentry points. Few things are better than free trades.

I still like this bull market, but if this week’s bounce fizzles, I will get out at my stops and try again next week. No harm, no foul.

Bitcoin finds itself at a critical juncture. Buy the bounce above $40k and short the break underneath it. As much as people want to debate the fundamentals, this is nothing more than a sentiment trade and either prices bounce or they don’t. 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

How to stay ahead of this market volatility, plus a stress free way to trade Bitcoin

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

It’s been a bumpy couple of weeks and that theme continued Wednesday morning as the S&P 500 retested mid-4k support. But the other important theme also continued, and that’s every scary dip finds a bottom and bounces within days, if not hours.

Taken together, this week’s tumble combined with Wednesday’s strong recovery gave both bulls and bears something to crow about.

While the market thus far appears inclined to bounce off of 4,050, odds are that level won’t withstand another test.

Do we fall under 4,050 support? At this point, chances are pretty good. But most likely that 3rd dip will turn out to be the charm and the resulting bounce will be the real one.

But can I say that with 100% conviction? No, of course not. And that means I include flexibility in my trading plan.

I’m buying these bounces, but I’m also ready to pull the plug if they don’t work out. Just because the first or second bounce doesn’t work doesn’t mean I will give up. As I said, often these things don’t work until the third time.

And if the third time doesn’t work, no big deal, I get out and try again.

Selling the dip early and buying the bounce early is the best way to stay ahead of this volatility. Unfortunately, most people get their ass handed to them because they get out late and get in late.

Trade proactively, not reactively and you will come to enjoy this volatility, not fear it.

The wild ride continues in Bitcoin. But if a person was savvy and had stops near $60k, or even $50k, today’s huge collapse to $30k would have been a fantastic buying opportunity, not a reason to panic.

Plan your trade and trade your plan. Life becomes so much more pleasant once you learn to trade this, p 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

What Tuesday’s dreadful close is telling us, plus the most important thing all #Bitcoin owners should do

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Tuesday started off well enough for the S&P 500 with the index hovering near Monday’s close. The index bounced back decisively from last week’s tumble and everything looked great. Unfortunately, the situation deteriorated Tuesday afternoon as the index tumbled 0.76% in a waterfall selloff into the close.

While I was quite pleased with how resilient the market was acting all the way up until lunchtime, this late selloff is a big red flag. As I often write, it isn’t how we start but how we finish that matters most. This rebound gave way to second thoughts and maybe last week’s selloff isn’t done.

It all comes down to Wednesday. With emotion and volatility ramping up, the market is going to make a big move, we just don’t know which direction yet.

I’m fine with a gap lower at the open, as long as the selling stalls and prices bounce not long after regular trade starts. Dipping at the open and closing in the green would be another big win for bulls and confirms this is a resilient market, not a weak one.

But no matter where we open (up, down, or flat), if the selling resumes Wednesday morning and continues into the afternoon, last week’s lows are vulnerable and at risk of being undercut.

We cannot count the bull market out just yet, but we need Tuesday’s weak close to bounce on Wednesday. Any continuation of the late selling will quickly spiral out of control.

As for how to trade this:

If a person has cash, a weak open that bounces is buyable.

Any open that devolves into another wave of selling is shortable with a stop just above those early highs.

For a person with existing positions and nearby stops, don’t automatically sell a weak open. Wait 10 to 15 minutes before pulling the plug to see if that early weakness turns around. If the market bounces, those early lows then become our new stops.

Once we get past 15 minutes, any dip that undercuts our stops is a clear signal to get out and reassess.

Remember, it is far easier to buy back in than it is to wish the market higher if we hold too long.

Bitcoin is at a critical juncture. Either prices bounce off of this $40k test of support. Or the selling violates support and this cryptocurrency gets hit by another big wave of selling.

Right or wrong, this is a sentiment trade it doesn’t really matter what the future holds, only what the crowd thinks will happen. Bitcoin is prone to large swings and this 30% tumble from the highs could early turn into 60% in the blink of an eye.

While a lot of people wish they took profits at $60k, there is a good chance people could be wishing they took profits at $40k. Don’t be one of them. Pick a stop-loss and stick to it.

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 complacency is not killing this bull market, plus the biggest risk to #Bitcoin

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 slipped modestly following Monday’s open, but fortunately, it found good support near 4,150 and eventually closed near the intraday highs.

Monday ultimately finished a quarter of a percent in the red, but more importantly, this price action looked more supportive than anything else. The majority of last week’s bounce remains intact and the index is holding comfortably above 4,120 support.

Unsustainable bounces tend to fizzle and retreat quickly. Holding support and trading more sideways than down this afternoon shows most owners are not looking for the exits and would rather hold for higher prices.

As I said previously, selling begets selling and any break in the selling pressure allows most owners to keep holding. Another sideways to up day on Tuesday and last week’s dip will be old news.

As complacent as this market feels, the thing to remember about complacent markets is they last a long, long time before the inevitable fall. At this point, I don’t see anything that suggests we are on the verge of collapse. In fact, these resilient bounces tell much of the opposite. If there is one thing we know for certain about weak markets, they don’t keep setting record highs.

On the downside, the one thing that would make me cautious is retreating back under 4,120 and retesting last week’s lows so soon after bouncing off of these levels. Barring that, the only thing to do is keep holding for higher prices and lifting our stops when this starts making new highs.

It was an ugly weekend for Bitcoin, with the cryptocurrency retreating back to the lower $40k’s following Musk’s criticism last week.

While Bitcoin has always been the gold standard of cryptocurrencies, being the original of the breed also means it is the most flawed in terms of execution. Many alt-coins have tried to address Bitcoin’s shortcomings but they never matched the mainstream adoption of Bitcoin.

With Elon turning his billion-watt spotlight on Bitcoin mining’s inefficient use of energy, that could easily increase calls for a more efficient coin. Like Myspace and BlackBerry, often the first widely popular version is not the one that wins in the end.

Right or wrong, it doesn’t matter what the future holds for Bitcoin, only what the crowd thinks the future is at this very moment. If sentiment flips on Bitcoin, prices could fall a good long way before finding support since the next obvious levels under $40k all the way back at $30k and $20k.

If this falls under $40k, there is no reason to keep holding. Remember, it is far easier to buy back in following a bounce than beg the market to go back to a level you wish you sold at.

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 dip already over?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 kicked off the week with three dreadful sessions, but things got better in the second half after the index strung together a couple of winners and erased a big chunk of those early losses. By the time it was all said and done, the index only gave up 1.4% this week.

Two steps forward, one step back. Everyone knows this is how markets work, yet they always seem to forget this simple fact during every bout of selling.

The typical pattern for this bull market has been bouncing within a day or two, but this week’s selling turned into the first string of three losses since early March. But just when things felt their most hopeless, the selling capitulated and prices bounced decisively off of Wednesday’s closing lows.

As I reminded readers Thursday:

What is the best way to approach these situations? Well, for nimble traders this is easy, treat every bounce as if it is the real deal. Start small, get in early, keep a nearby stop, and only add to a trade that is working.

Anyone that followed this simple plan is back in the market and already sitting on some tidy profits. And not only that, there is enough margin that they can lift their stops to their entry point, giving themselves a free trade.

Is the dip already over? It sure looks like it. Unsustainable bounces fizzle and retreat quickly, often within hours. Instead, this bounce stretched across two full days and pushed the index back above prior support at 4,1200. Two days of non-stop dip-buying tell me there is a lot of money supporting this rebound.

As is usually the case, if a person waited for confirmation, they missed almost all of the profit opportunity. And not only that, by buying late, they expose themselves to the risk of a near-term dip.

The best way to trade this week was selling the dip early and buying the bounce early. Do that and you are ahead of the game. Unfortunately, most people listen to their gut and end up selling late and getting back in late. Those traders are left wondering why their account acts like it has a hole in the bottom of it. (Because it does!)

Approach the market proactively, not reactively and you will forever be better for it.

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 savvy way to trade the index’s rebound, plus the biggest risk to #Bitcoin

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Q: What’s the best way to make money in the market?

A: Buy when other people are scared.

Following three dreadful days of selling, the S&P 500 was poised for a bounce.

While this rebound provided much-needed relief, the question on everyone’s mind is if this was the real bounce or just another false alarm on our way lower.

Was Thursday’s bounce the real deal? Maybe…but probably not. The problem is we won’t know until after it is over and by then it will be too late to trade it. That means to make money, we have to act with imperfect information.

What is the best way to approach these situations? Well, for nimble traders this is easy, treat every bounce as if it is the real deal. Start small, get in early, keep a nearby stop, and only add to a trade that is working.

If the bottom is already in, great, we bought early and added more as this rebound climbed back to the highs. That means we are already in the perfect position to profit from this bounce. (You were following the rally higher with a trailing stop and moved to cash when this selloff started, right?)

If this is not the real bounce, well, we got in early and placed our stops near Wednesday’s lows or Tuesday’s open. If prices retreat, we get out and try again the next time. No big deal. In fact, a deeper selloff is actually preferred because it gives us even more room to make money buying the next bounce. So here’s to hoping this bounce fails and the discounts get even bigger!

In reality, the third bounce seems to be the most likely to work, but I don’t want to be caught sitting on my hands if this time it’s the first bounce.

Stay nimble and be ready to buy when other people are too scared. If that means we buy one or two dips too early, no big deal. We get out and try again the next time. The important thing is we are in the perfect position to profit from the real rebound.

Elon shocked cryptocurrency investors Wednesday night when he announced TSLA would no longer accept bitcoin payments. This was a big blow because TSLA’s buying into bitcoin was a big component of the rally from $40k to $60k.

Even more concerning than if a bitcoin millionaire can buy his newest electric car using his favorite cryptocurrency is the reason Musk pulled the plug on this bitcoin experiment. It’s because he doesn’t like the amount of energy bitcoin mining uses and its impact on global warming.

This is an often overlooked aspect of cryptocurrencies and Elon shining his billion-watt spotlight on bitcoin’s energy usage could cause long-term ramifications. If this turns into a wider movement, we could see the herd move away from bitcoin and toward a more energy-efficient cryptocurrency. This green shift wouldn’t surprise me in the least.

As I said previously, a prudent trader was to waiting for bitcoin to break above $60k before adding new money. Now that prices have retreated under $50k, this is just another example of why it is often better to be a little late than a lot early.

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 Bulls should be cheering this weakness, plus what will signal the bottom

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Selling begets selling, that’s been the overriding theme for the S&P 500 this week. After closing at record highs last Friday, it’s been all downhill since then.

But as I reminded subscribers earlier today:

Before we panic and head for our bomb shelters, a dip back to 4k only amounts to a 5% pullback, something that happens once or twice a year during normal bull markets. While this feels awful and it could get even worse, this is still fairly routine behavior for a bull market.

The problem with impulsive selling is there is no way to predict how far is too far until it is over. What could have bounced off of 4,120 didn’t. How much lower we go before capitulating is anyone’s guess, but at this point, 4k is very much on the table.

As bad as things look, I remain optimistic. Bull markets dip and bounce countless times, but they die only once. From a statistical standpoint, this is almost certainly nothing more than another wobble on our way higher. But just because the odds are on our side doesn’t mean we blindly hold this dip.

As I’ve been saying all along, in addition to holding for higher prices, we also need to be following this rally by raising our trailing stops. If a person stuck to this plan, they locked in profits nearly 100-points higher and are in a great position to take advantage of this dip.

Just because we remain optimistic doesn’t prevent us from taking advantage of trading opportunities like this. This is almost certainly a buyable dip, but remember, we cannot buy the dip if we don’t have cash.

The Achille’s Heel for this market continues to be weakness in the FAANG stocks and today was no different. After a promising bounce Tuesday, these best-of-the-best stocks resumed letting us down today. While these stocks are leading us lower, most likely they will also be the ones to pull us out of this nosedive. Look for a bounce in these stocks to be the signal that the worst has passed us by. The first bounce in these stocks failed. And maybe the second one will too. But don’t give up, often the third time is the charm.

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 there is still hope for the bull market. Plus, what’s up with the FAANG stocks?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

It’s been a rough week for the S&P 500 as it shed more than 80 points over the first two days.

The index closed at record highs on Friday but by Tuesday it was already retesting 4,120 support. And so goes the swinging pendulum of sentiment.

There are only two ways this plays out. Either this is the start of the end. Or this is just another routine wobble on our way higher.

So far we haven’t seen any meaningful technical damage telling us “this time is different”. The index gapped near 4,120 support at open and traded mostly sideways for the remainder of the day.

While Tuesday finished deep in the red, more important is the selling didn’t accelerate following the opening gap. That tells us most owners chose not to pile on the weakness and instead, shrugged and kept holding their favorite stocks. This rally has been built on the unshakable confidence of owners and Tuesday’s dip didn’t change that. Most owners would prefer to keep holding for higher prices and as long as we avoid the waterfall selloff, expect them to keep holding.

And this gives us the tipping point for this market. Remain above 4,120 and most owners will continue shrugging off these inflation headlines and will keep holding for higher prices. But fall under 4,120 and the real second-guessing will start.

At this point, we still have to give the edge to the bulls. A trend is far more likely to continue than reverse. And let’s not forget, we are only two sessions removed from yet another record high. Weak markets do many things, but setting record highs is not one of them.

Monday was a dreadful day for the FAANG stocks as they went into freefall. Fortunately, Tuesday turned out much better, even going as far as being good for these best-of-the-best stocks.

As I wrote previously, these critical stocks have been underperforming the indexes and that persistent weakness threatened the entire bull market. Yet Tuesday was a stark turning point with most of these stocks producing nice gains or at least finishing well off their early lows on an otherwise dreadful day for the indexes.

If these tech highfliers lead us lower, it makes sense to reason that they could also be the spark that pulls us out of this funk. If these stocks have another good day Wednesday, the worst could already be over for both these stocks and the entire market.

That said, there are no guarantees and if these leading stocks retreat under recent lows, expect them to continue pressuring the entire market.

Tuesday was a really good day, but we need these stocks to confirm this reversal in fortune on Wednesday or Thursday.

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 trade the S&P 500’s latest wobble, plus what the FAANG stocks are telling us

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Monday started off well enough for the S&P 500 with the index opening near Friday’s record close. Unfortunately, second thoughts overcame traders later in the afternoon and those pushed the index under 4,200 by the close.

Is the top already in? Bears certainly think so. Of course, they’ve been saying the same thing for the last several hundred points so we take everything they say with a huge pile of salt. But like a broken clock, eventually, they will be right. Could this be that time? Without a doubt yes…but in reality, probably not.

The key levels for this market are 4,200 on the upside and 4,120 on the downside. Get back above 4,200 Tuesday and all is forgiven and forgotten. Fall under 4,120 and last week’s bounce is dead and the bears might be on to something.

How do we trade this? Easy, keep holding until our stops get hit. And even if our stops haven’t been hit, there is nothing wrong with lightening up a little until this gets back above 4,200. It is always easier to think more clearly with a partial position and the reduced threat of loss.

While it is tempting to hold through a small dip, the inconvenience of trading around a whipsaw definitely beats the discomfort of holding a through “small dip” that turns out a lot bigger than expected.

But as has been the case all year long, if we get out, always be ready to get back in if/when this wobble proves to be yet another false alarm. Just ask all the people that failed to get back in following the dips at 3,300, 3,500, and 3,700.

This market is buyable above 4,200 and shortable under 4,120. Plan your next trade accordingly.

While the S&P 500’s 1% loss felt uncomfortable, that was quaint compared to the bloodbath taking place in the FAANG stocks. The best FAANG stocks, AAPL and GOOG, “only” lost 2.6%. The rest shed between 3% and 4%. Ouch!

While I’m not overly concerned with the S&P 500’s price action (yet!), the FAANG stocks are a different story. And unfortunately for the broad market, losing the best-of-the-best stocks is enough to take everything else down.

I’m giving the S&P 500 the benefit of the doubt but if this FAANG underperformance continues this week, it is time to get defensive and all bets are off.

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 bull market just won’t quit, plus what Cryptocurrency history tells us is coming next

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

After a few weeks of flirting with 4,200, the S&P 500 finally smashed through this psychological barrier Friday.

The monthly employment report missed expectations by a country mile Friday morning, but not only did the shockingly poor employment fail to spook the investors, it caused them to flood in and start bidding up prices.

As paradoxical as this seems, this remains a stimulus-fueled bull market and lethargic employment promises to keep the government spigots flowing at full speed.

No doubt there will be consequences for all of this money printing, but that is a problem for another day. Today, let the good times roll.

Stick with what has been working and that is holding for higher prices. As I wrote Monday following a modest bounce :

[T]his mixed day still favors the bulls. If this rally was truly overvalued and fragile, Friday’s selling would have accelerated, not stalled and bounced. Until we see a more compelling warning, keep holding for higher prices and lifting our trailing stops.

More than 100 points later and this is still as true now as it was then.

There is an interesting divergence developing in the Crypto markets. Until recently, Bitcoin was the only place to be. Bitcoin surged from under $10k late last year to more than $60k earlier this year, leaving all of the altcoins for dead. But then a switch flipped as Bitcoin stalled near $60k and all of the copycats started popping, including the most famous meme coin, Dogecoin.

This resurgence of the altcoins has set off a treasure hunt as speculators chase the next Dogecoin.

The problem for Bitcoin (and all the other cryptos) is this rapidly widening net is diluting the money available to drive any individual crypto higher.

Those of us that have been doing this for more than a few months remember Bitcoin’s last peak back in 2017. Coincidentally enough, that top coincided with a similar explosion of altcoins. Fewer dollars chasing more coins means less demand for each individual coin. Less demand = lower prices.

Will this flood of altcoins end any differently? Only time will tell, but only a fool believes “this time is different”.

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