End of Day Analysis Archives - Page 21 of 56

May 06

Why bulls control this market, plus what’s next for $NFLX

Free After-Hours Analysis:

Thursday was a good session for the S&P 500 with the index reclaiming 4,200 resistance.

Two days ago it looked like the market was breaking down, today it looks like everything is under control. And so goes the swinging pendulum of sentiment.

But this shouldn’t surprise readers of this blog. As I wrote Tuesday:

As bad as this felt midday [Tuesday], the close was robust and showed most institutional investors are not taking profits and still holding for higher prices. How we finish always matters more than how we start and despite [Tuesday’s] red close, this qualifies as a good finish.

Two days later and the index is back near the highs. Blink during these dips and you’ll miss it!

The trend is higher and that gives the advantage to the bulls. Bears are the ones who have to prove something changed and they definitely didn’t get the job done this week.

Bouncing off of support and returning to the highs shows bulls are still in control. Keep doing what has been working, which is holding for higher prices and lifting our trailing stops.

This bull market will die like all of the others that came before it, but this is not that day.

As well as the index has been trading, TSLA appears to be stuck in the mud.

The stock slipped under $700 support on Monday and it has been unable to reclaim this key support level ever since.

TSLA has been underperforming the index all year and that trend continued Thursday as the stock finished in the red on a good day for the rest of the market.

At this point, it looks like the stock is headed back to $600 support. And if that doesn’t hold, then there is a lot of clear air down to $400.

Traders with with profits should be looking to protect them and aggressive traders can short this stock with a stop just above $700.

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May 05

What a half-full/half-empty day means for the indexes, plus the next $NFLX trade

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis

Wednesday morning the S&P 500 continued Tuesday’s bounce off of 4,120 support, at least initially. Unfortunately, after erasing nearly all of the previous day’s decline in midday trade, the index retreated back to breakeven by the close.

This was definitely one of those half-full, half-empty kinds of days. Bulls are pointing to the stalled selloff and bears are gloating over the weak close.

In situations like this, the tie-breaker always goes with the trend. This is still very much a bull market and that means when everything is equal, the next move typically resolves to the upside.

Tuesday’s dip and bounce gave us a clear line in the sand. Remain above 4,120 support and the bounce is alive and well. Retreat back to support so soon after bouncing off of it and lower prices are ahead. Plan your next trade accordingly.

As expected, NFLX violated $500 support, giving us a nice short entry.

Stocks bounce from oversold levels quickly. Unfortunately, NFLX has been hovering near $500 for a few weeks now. That tells us this pullback following disappointing subscriber growth hasn’t reached oversold levels yet. Something that holds next to support for too long will inevitably violate that support. And that’s exactly what NFLX did today.

NFLX is now a short with a stop just above $500.

That said, trading against the trend is one of the most difficult ways to make money because it requires impeccable timing. This is a good short entry, but we need to remain nimble. Keep a nearby stop and be prepared to take profits quickly. NFLX is still a great company and this dip will bounce hard and fast once it reaches capitulation. Don’t get caught on the wrong side of that bounce.

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May 04

Why Tuesday’s dip isn’t what bears think, plus the safest way to approach Dogecoin

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Tuesday was a rocky session for the S&P 500 with the index shedding 60-points intraday. But by the time it was all said and done, the index recovered half of those losses before the close.

As calm as things have been, a return of volatility definitely got people’s attention. But as dramatic as Tuesday felt, it really wasn’t that big of a deal. The index briefly tested the lows from three weeks ago before bouncing. If the bears were are looking to break this bull, they need to do a lot better than a modest test of lows so recent, if they were milk, they’d still be drinkable.

As bad as this felt midday, the close was robust and showed most institutional investors are not taking profits and still holding for higher prices. How we finish always matters more than how we start and despite the red close, this qualifies as a good finish.

These midday lows gave us our new stop levels and the index is ownable as long as it remains above 4,120.

If this dip crossed your stops (like it did mine), we have no choice but to get out. But just because the market dumped us out doesn’t mean we have to give up on this trade.

Most dips are false alarms and that means we always need to be looking for an opportunity to get back in. Sometimes we are lucky and the dip carries on for a bit, allowing us to get in at much lower levels.

Other times we are not as lucky and the bounce is quick, leaving us chasing our tails. But at the end of the day, I always prefer an annoying whipsaw over stubbornly holding through a far more damaging correction.

Savvy traders are willing to take small losses when it allows them to avoid larger ones.

Edit: Corrected to reference Tuesday

Three weeks ago I wrote the following about Dogecoin:

While I don’t have a problem buying something that is going up (meaning Dogecoin is a legitimate trade), but that is only as long as people are trading this and not investing in it. As long as a person is agile and willing to take profits, they can ignore all Dogecoin critics. But if a person believes the hype, good luck with that.

Dogecoin has doubled since then, yet nothing has changed about how I’m approaching this. This trade is a ton of fun. But if a person doesn’t have a plan to take profits, they will end up giving all of this back and then some. Don’t be the fool left holding the bag.

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May 03

What Monday’s feeble bounce means for the index, plus a word of warning for $GME holders

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

On Monday, the S&P 500 bounced back from Friday’s dip and recovered 0.27%.

While this green day seems positive enough, bears will point to the index’s inability to hang on to the psychologically significant 4,200 level. The opening strength fizzled and the index ultimately closed nearly the daily lows. That makes this price action “a green day with an asterisk”.

As is usually the case, there are no clear and obvious bullish or bearish trading signals. That would make this easy and as everyone knows trading is anything but easy.

As speculators, we live in a world of shades of gray. Monday was bullish in that Friday’s modest dip didn’t continue. And the resulting bounce had hints of bearishness since the index couldn’t hang on to the early highs. That gives us a mixed bag with both sides having something to crow about.

While this price action seems like a tie, in these situations, we always give the benefit of the doubt to the trend. When all things are equal, we stick with what has been working.

In this case, this 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.

While GME has faded from the headlines, the stock price remains stubbornly high.

The problem for GME bulls is this was always a momentum story. Unfortunately, the public has forgotten about this trade and as a result, momentum has vanished.

That said, this stock is still ridiculously valued (a $20 stock selling for $162). And that means the selloff still has a long, long way to go.

The bounce back to $200 was a fun ride and produced a quick buck for nimble traders. But the subsequent retreat has given us another lower-high and the downtrend is still very much intact.

This party is over and anyone still holding out for $1,000 is deluding themselves. If a person has profits, take them. If a person is stilling on losses, chalk the lesson up as experience and sell while prices are still high. There will always be other trading opportunities (as long as we still have money left to trade!)

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Apr 30

Why “do-nothing” is bullish for stocks, plus how a false-alarm in $TSLA gave us a great trade

By Jani Ziedins | End of Day Analysis

Free Weekly Analysis:

It was another do-nothing week for the S&P 500 with the index finishing almost exactly where it started. Combined with the previous week, the market moved exactly 0.11% over the last ten trading sessions. But for a bull market with plenty of reasons to fall, flat is a meaningful accomplishment.

Absurd valuations. Rising interest rates. Inflationary money printing. Looming tax hikes. Pick your poison. Yet this rally continues defying the skeptics.

Rather than argue with this market, smart money is going along for the ride. Don’t fight what is working and keep holding for higher prices. Leave your stops in the mid 4,100s and see where this goes. And if we get stopped out next week, guess what? You can always get back in when conditions warrant it.

Selling doesn’t mean we have to give up on a trade. Ask ask all the people who got left on the sidelines following November’s, February’s, and March’s dips. Think they are kicking themselves for not jumping aboard the rebound?

Stay safe by always respecting your stops, but never be afraid to buy the next bounce even if it happens a few hours later.

A market that refuses to go down will eventually go up and odds are really good we haven’t seen the top of this bull market.

TSLA retreated under $700 support this week and for many people, that meant locking in some profits defensively. But as is often the case, the dip proved to be a false alarm and prices bounce back above $700 Friday.

While a lot of people feel foolish buying back in after selling a false alarm, the only other alternative is holding a larger pullback all the way down to the bottom. Personally, I know which “mistake” I’d rather make.

As for TSLA’s latest violation and rebound, this was an excellent opportunity to start a new trade. Buy the bounce and leave a stop just under support. While chances are good this bounce won’t stick, with such a clear entry point and sensible nearby stop, the risk/reward is skewed heavily in our favor.

$700 remains a critical level. Hold above support and everything is good. Fall under and it is time to get defensive (and an aggressive trader can short the violation).

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Apr 29

Why the cynics keep getting this market wrong, plus what to do with “too high” $FB, $GOOG, and $AMZN

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

After a few do-nothing sessions in the first half of the week, the S&P 500 made up for it on Thursday by traversing nearly 80-points intraday in a dramatic whipsaw.

The index gapped above the psychologically significant 4,200 at the open. But rather than embrace the breakout, it was met by waves of profit-taking as some investors developed a fear of heights.

All too often people try to top-tick the market by guessing which point is finally too high. Unfortunately for them, too-high almost always turns into even-higher. And not long after the profit-taking knocked the index back under 4,200 Thursday morning, supply dried up and confident dip buyers pushed the index back to record highs.

Higher interest rates. Higher taxes. It doesn’t matter what the bears throw at this market, nothing can take it down. While this nirvana cannot last forever and stocks will falter at some point, this is not that point.

By reversing an early selloff and closing near the daily highs, this rally proved it is still alive and well. Ignore all the talk about too-high and stick with what has been working. Hold for higher prices and keep lifting our trailing stops.

The cynics will eventually be right, but they will be wrong for a long time before it happens.

FB and GOOGL had blowout earnings and not to be left out, AMZN joined the blowout earnings party. These are the best-of-the-best companies in our economy and it is no surprise they are roaring back to life as the economy recovers.

So much for fear of expensive, overbought, and every other cynical criticism thrown at these stocks. These companies keep doing what they are good at and it is little wonder their stock prices keep going up.

While this latest pop makes them even more expensive, high almost always gets even higher. Stick with what has been working and no doubt in a few weeks and months, people will be kicking themselves for not buying at these levels.

That said, don’t hold anything with blind devotion. Pick sensible stops and if these stocks falter, get out. Easy as that. Until then, keep holding for higher prices.

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Apr 28

What we should do with a do-nothing week, plus what $FB and $GOOGL have in-store for us

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

This is quickly turning into a do-nothing week for the S&P 500 with each day amounting to little more than a tenth of a percent swing in either direction.

As anti-climatic as this benign trade feels, stability is not a bad thing. Remember, boring markets are bullish markets. Free from outside pressures, almost all stock owners would prefer holding for higher prices and that is exactly what they are doing here.

While this feels like watching paint dry, it could be worse. And in fact, it will get worse soon enough. Enjoy these easy days while they last because increased volatility is just around the corner. We don’t know what will cause the next drop or when it will happen, but it always comes eventually, often when we least expect it.

Until then, a market that refuses to go down will eventually go up. While the going is slow, as long as we keep getting more up than down, everything is going according to plan.

Don’t fight what is working. Keep holding for higher prices as long as the market remains above our stops.

FB and GOOGL are riding the wave of aggressive ad buying higher. As bad as this economy looked 12 months ago, businesses are confident and in fact, the biggest problem most them have is making enough product to satisfy demand. These industry-leading ad platforms are near all-time highs and expect high to keep getting even higher.

And if the FAANG stocks get their mojo back, expect them to lead the entire market higher.

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Apr 27

Should bulls be worried about sideways? Plus how to deal with $TSLA’s dip

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Tuesday was another sideways session for the S&P 500. But for a market as “overpriced” as this one, anything that’s not down is actually constructive.

High and keeps getting higher; that’s the theme since the November elections. While everyone knows this cannot last forever, a trend is far more likely to continue than reverse.

While I’ve been cautious since the 4k breakout, last week’s dip was the perfect bearish setup. If this market was fragile and vulnerable to a collapse, there was more than enough to send stocks into a tailspin. Instead, most owners kept holding for higher prices and the selling stalled nearly as soon as it got started.

Conventional wisdom tells us to fear complacent markets. What most prognosticators leave out is periods of complacency last a long, long time. No doubt the cynics will be right…eventually, but they will be wrong for a long time before that happens.

This market is trading well and there is no reason to fight what is working. Keep holding for higher prices with stops spread across the lower 4,100s. The market will tell us when it is getting ready to pull back, and this is not that time.

TSLA posted all kinds of records in its latest earnings report. But in a stock whose P/E includes a comma, new records are not good enough. Investors were disappointed and the stock skidded more than 4%, resting just above the critically important $700 level.

Bounce off of $700 and all is the good times keep rolling. Fall under $700 and that risks triggering a larger wave of profit-taking.

With as much air as there is underneath this stock, it could get ugly if momentum escaping. Violate support and I’d much rather lock in my profits than hold this one all the way down.

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Apr 26

Why the index keeps going up, plus how to trade $TSLA’s bounce

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 finished Monday modestly higher and it eeked out another record close.

The index got within a few points of the psychologically significant 4,200 level. We long since passed meaningful resistance levels because virtually everyone holding stocks is sitting on a pile of profits. That means we don’t have conventional overhead supply coming from regretful sellers looking to get out at breakeven.

Instead, we are stuck with hesitant buyers who regret not buying at lower levels. Chase or be left behind is the torment of anyone sitting in cash. But so far, most buyers are keeping their cool and not chasing prices higher with reckless abandon. That more thoughtful approach is leading to this methodical grind higher.

As long as bearish headlines cannot take us down, the only direction left is up. While this rally cannot last forever, or even much longer for that matter, it is acting well enough right now to earn our continued support.

Maybe the rally will stall after cresting 4,200, but so far it isn’t giving any warning signs. We will evaluate the market’s behavior after the 4,200 breakout when (if) it happens.

This rally will run out of steam at some point, but this is not that point. Until then, stick with what has been working and that is holding for higher prices. (And following this rally higher with a trailing stop.)

TSLA is consolidating above $700 support/resistance.

This is turning into one of those half-full or half-empty situations depending on your outlook. Either this is resting before the next push higher, or it is stalling before the next leg lower.

Fortunately, as opportunistic traders, we don’t come to this with an agenda we need to justify and instead are trading this based on what the stock does next.

Ignore the rabid fandom and buy the bounce or short the breakdown. It doesn’t get any more straightforward than that. $700 is the line in the sand. The stock is ownable above this level and it is shortable under it.

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Apr 23

A bullish weekly loss for the indexes and a trade so bad it is getting good

By Jani Ziedins | End of Day Analysis

Free Weekly Analysis:

The S&P 500 finished last week in the red, snapping a four-week winning streak.

That said, retreating a barely noticeable 0.13% doesn’t count as a meaningful loss. In fact, this dip ended up being highly constructive for the index.

Everyone knows stocks cannot go up every single day and periodic down days (and weeks) are inevitable. As is usually the case, how we finish counts a lot more than how we start. Stocks slipped on Monday and Wednesday’s mid-week bounce fizzled and retreated. But when it mattered, the index rallied decisively on Friday and closed within a whisper of all-time highs.

This strong close turned a weekly loss into a very bullish development. As I often write, something that refuses to go down will eventually go up. If the bears couldn’t kill the bull market this week with the wind at their back, chances are good they won’t be any more successful next week.

Stick with what has been working, which is holding for higher prices with stops under the weekly lows near 4,120.

Far less constructive was COIN‘s post-IPO trading. After last week’s eye-popping initial pricing, the stock has retreated six of the last seven trading sessions and finds itself down 32% from the frenzied IPO highs.

But that’s the way this usually goes. The more hyped the IPO is, the bigger bust it turns out to be. (I will dig into the psychology behind this phenomenon another time. That said, it is fairly intuitive if you think about it.)

That said, COIN might be getting so bad it is starting to looking good. Now, this is nothing more than a short-term trade, but this stock is on the verge of bouncing hard. If not Monday, then over the next few days. Buy the bounce with a stop under the lows and be ready to take profits quickly.

As for investing in this stock, if a person is patient and waits a few more weeks, prices will get even more attractive.

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Apr 22

Is Biden’s tax increase going to kill this bull market? Plus the best time to buy Bitcoin.

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Thursday was a dramatic session for the S&P 500. The day started off well enough when a small opening dip bounced back to breakeven. But not long after, the flood gates opened the index tumbled nearly 60 points in an hour.

If you believe the headlines, traders were blindsided by reports Biden plans on doubling the capital gains tax. Right or wrong, that was enough to trigger a cascade of reflexive selling. But as ugly as things looked midday, the weekly lows near 4,120 provided rock-solid support.

Will 4,120 support continue holding on Friday? While there are no guarantees, there is a good chance this knee-jerk selling already came and went.

If anyone is surprised a Democratic president is going to raise taxes on the rich, I have a bridge to sell them. This is old news and anyone that feared president Biden’s tax agenda sold way back in November. Investors still holding stocks under a Democrat-controlled Washington D.C. are clearly not worried about these things.

While today’s reflexive selling put on a good show, don’t expect it to add up to much because higher taxes is old news. This bull market got to these levels because of the unprecedented money printing. As long as nothing threatens the flow of stimulus, then the rally is still on.

That said, never underestimate a spooked herd of selling fools. If prices undercut 4,120 on Friday, step out of the way and let the knee-jerk continue. But someone else’s loss can turn into our gain if we are willing to step in a few hours later and buy the bounce. And that’s only if we get lucky enough for the panic selling to continue Friday morning. Most likely, the worst has already passed.

Hold above 4,120. Sell if prices retreat under 4,120 and be ready to buy the bounce even if it is only hours later.

It’s been a rough few days for Bitcoin. The cryptocurrency is down more than 20% from last week’s record highs. While the initial $60k breakout was buyable, this subsequent fizzle was a clear signal to get out. As I wrote earlier:

The $60k breakout failed and it is best to get defensive until this gets back above $60k. Until then, expect the ride to get bumpy.

While it seems obvious now, everyone had the opportunity to sell when this fell back to $60k. While fortune favors the bold, that doesn’t include holding speculative investments all the way down. Remember, it is far easier to buy back in following a false alarm than it is to plead a stubborn trade higher. (Selling at a higher level is always better than wishing you sold at a higher level.)

As for what comes next, Bitcoin is in no man’s land between $40k support and $60k resistance. A bounce back above $60k is buyable as is a bounce off of $40k support. But in between these two trading signals, this is a wait-and-see.

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Apr 21

An index trade that worked as planned and a $NFLX trade that was postponed until Thursday

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Following two days of selling, the S&P 500 came roaring back Wednesday and added 0.9%.

Not bad, not bad at all. As overpriced as this market seems, dip buyers cannot help themselves.

As I wrote Tuesday, there were two ways to trade Wednesday based on the resulting price action:

Bounce and close well [on Wednesday], that is a buy signal with a stop under the intraday lows. If Wednesday’s selling cannot find a bottom, lock-in profits in our existing positions and agressive traders can short a violation of 4,100 with a stop just above this level.

Dip buyers took control not long after the open and this pullback disappeared even quicker than it came. But that’s the way this usually goes. Either dips bounce shockingly quickly or the selloff goes a whole lot further than anyone expected.

At this point, this looks like just another shockingly quick bounce.

As I described on Tuesday, Wednesday’s bounce was buyable with a stop under the dip’s lows. As long as the index remains above this level, the bounce is alive and well.

But if prices fall under 4,120, the selling isn’t done yet and an aggressive trader can even try their hand at a quick short.

While the index trade worked nicely, NFLX did the one thing I least expected, hold steady following a large gap lower.

Normally, big moves either accelerate or they reverse. Almost never does the pre-market get it exactly right and put the stock right where it should be. That’s like flipping a quarter and having it land on the edge. But almost never is not the same as impossible and occasionally these things happen.

That said, I don’t expect this stability to last for long. Either the selling picks up steam or the dip buyers come rushing in. It didn’t happen Wednesday, but the same trade is still valid for Thursday.

Buy the bounce in NFLX or short the breakdown. This stock is going to make a big move in one direction or the other, we just need to wait for the market to tell us which way it wants to go. (Not bouncing Wednesday suggests dip buyers are scarce and that gives the edge to NFLX bears.)

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Apr 20

How the index is going to tell us what comes next, plus the best way to trade $NFLX’s miss

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Tuesday was another bad session for the S&P 500. The index lost 0.7%, adding to Monday’s 0.5% loss and making this give-back the biggest in a month.

Let’s be honest, things must be pretty good if the biggest thing we are worried about is a two-day, 1.3% decline. That said, every big selloff starts off small.

So which is it? An insignficant wobble on our way higher? Or the start of the next downturn?

Since both of these outcomes start the same way, looking backward won’t give us the answer. Instead, we have to look toward what comes next, most importantly, what happens Wednesday. If prices slump at the open and the selling accelerates, this dip isn’t done and we still have a ways to go. On the other hand, open weak, bounce off of those early lows, and close well above those lows, the worst is already behind us.

This divergence on Wednesday forms the basis for our next trade. Bounce and close well, that is a buy signal with a stop under the intraday lows. If Wednesday’s selling cannot find a bottom, lock-in profits in our existing positions and agressive traders can short a violation of 4,100 with a stop just above this level.

Most likely this is nothing more than a minor wobble on our way higher. But we are due for a down wave and if it is getting started, we don’t want to be caught on the wrong side of it.

NFLX reported disappointing subscriber growth after the close and got smacked in after-hours trade. There are only two ways this plays out. Either this is a lot of nothing and the stock will continue higher. Or this is the start of the next big pullback. In a stock with such a sky-high valuation, there no room inbetween.

Much like the above index trade, it all comes down to how NFLX closes Wednesday afternoon. Bounce from the early lows and this is buyable with a stop under the midday lows. On the other hand, close near the lows and this turns into a short..

Let the market tell us what direction this stock is deaded and then hang on for a quick buck.

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Apr 19

The best way to trade the indexes at the highs, plus what to make of this Dogecoin trade

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

On Monday, the S&P 500 experienced its biggest loss in nearly a month. That said, “biggest loss” only amounted to a 0.53% decline. This shows just how gentile and benign this rally has become.

Two steps forward, one step back. That’s how this works, always has, always will. While no one is flinching over a 0.53% decline from record highs, there will come a time when these losses start piling up. And by the time people become worried about it, a good amount of damage will have already occured.

Now to be clear, I’m not a bear or anything remotely close. But I’ve been doing this long enough to know this rate of gains cannot continue indefinitely. And once this surge runs out of gas, there are only two options left, sideways or down. Either way, that is a far better time to be locking in profits than adding new money.

For those that have been following these posts for a while, we are sitting on a pile of profits and it is time to get defensive and protect those profits.

Once we give up on the foolish idea of picking tops, we realize the only two choices left are selling too early and selling too late. And as is usually the case in the market, this doesn’t have to be a binary decision. Don’t think all-in and all-out, instead trade in shades of gray. It is perfectly okay to take some profits and let the rest ride with a trailing stop. That gives us the best of both worlds.

For the time being, I’m holding for higher prices but if I see further weakness and closes near the daily lows, I will start peeling off profits proactively even if my stops haven’t been hit.

And you know what? Once I sell, there is nothing that prevents me from getting back in when prices bounce. It’s like having your cake and eating it too! Never forget, we only make money when we sell our winners.

Bitcoin tumbled under $60k support as it turned into a source of funds to fuel this borderline absurd Dogecoin rally. While I don’t have a problem buying something that is going up (meaning Dogecoin is a legitimate trade), but that is only as long as people are trading this and not investing in it. As long as a person is agile and willing to take profits, they can ignore all Dogecoin critics. But if a person believes the hype, good luck with that.

As for Bitcoin, the $60k breakout failed and it is best to get defensive until this gets back above $60k. Until then, expect the ride to get bumpy.

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Apr 16

When to lock in profits in the index and what the FAANG stocks are telling us

By Jani Ziedins | End of Day Analysis

Free End of Week Analysis:

After spending most of February and March consolidation between 3,900 and 4k, the S&P 500 finally broke out and launched itself nearly 5% in just two weeks.

Coil…spring…coil again…spring again…

So far everything is going according to plan. That said, 5% in two weeks is steep even for the most bullish of markets. That means at the very least, we should expect the rate of gains to slow down over the near term.

Expecting a slowdown doesn’t mean I’m bearish, just that I’m realistic and have been around the block a few times. Two steps forward, one step back.

That said, we don’t need to bail out of this market until the next dip actually starts. Keep holding for higher prices as long as the index remains above our stops in the upper 4k’s/lower 4,100s. Just because another 5% move is unlikely doesn’t mean it is impossible.

Savvy traders let the market tell us when it is time to lock in profits and so far this one isn’t signaling us yet. The biggest warning sign of faltering demand will be a couple of fizzles into the close. That is a good sign to lock in some profits proactively and we don’t need to wait for the market to hit our stops.

If there is one warning sign of a looming slowdown, it is the lethargic behavior of the FAANG stocks this week. These best-of-the-best stocks helped launch the 4k breakout, but these same stocks lagged behind badly this week.

If they get their act together next week and start outperforming again, all is forgiven and forgotten. But if their underperformance continues next week, expect this to weigh on the entire market and the near-term consolidation/pullback is upon us.

As we saw in February and March, the index cannot rally without the biggest stocks participating.

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Apr 15

How to protect profits in the index and the best way to trade $TSLA’s reversal

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 popped 1.1% Thursday and is up 8% in three weeks. (Trade that with a leveraged ETF and the profits are spicy!)

Three weeks ago investors were cowering from spiking Treasury yields. Now I cannot even remember the last time I saw an article mention Treasury yields. But that’s the way this always goes; buy the fear and sell the relief.

As good as this trade has been, only a greedy fool expects the index to surge another 8% by early May. I’m not suggesting people rush out and sell everything because “stocks are too high!”, but I am saying we need to be far more careful following a nice, one-direction run like this. (Everyone knows stocks move in waves.)

Keep holding for higher prices but move up our trailing stops and consider locking in some profits proactively if the index stumbles into the close on Friday or early next week.

Wednesday was an awful day for TSLA and things were only marginally better Thursday. The stock popped early Wednesday and challenged $800 resistance, but rather than chase prices higher, investors hit the sell button and the stock ultimately finished down 4%.

While I’m not going to give up on this stock because of one bad day, but this intraday fizzle was a huge warning flag. The important thing is the stock stabilized Thursday and the selling didn’t continue.

Everything is fine as long as TSLA remains above $700, but lock-in profits if this retreats under $700 because the selling won’t stop until it hits $600 support. (The most aggressive trader could short a violation of $700 with a stop just above this level.)

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Apr 14

What to expect from the indexes over the next few days, plus when to buy $GME

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 “tumbled” on Wednesday. Or at least that’s the way a 0.4% loss feels after such a pleasant climb following the 4k breakout.

This rally to the mid-4,100s has been a little too easy and as such, some near-term selling is inevitable. Nine up days over the last few weeks will most likely be evened out with several days of selling. (Everyone knows markets move in waves.)

That said, there is no reason to rush out and abandon this market simply because we’ve gone up too many days in a row. As ridiculous as this feels, nothing prevents this from getting even more ridiculous before the inevitable pullback. (Just ask all the people that sold at 3,800, 3,900, and 4,000.)

As long as this remains above our trailing stops in the mid-4k’s, keep holding for higher prices. While we might experience further near-term weakness, there is no reason to assume anything fundamentally changed and this bull market is still very much alive and well.

GME bounced back pretty hard following a long string of down-days. But until we get above $200, this is nothing more than another lower-high on our way back to $100. GME is definitely a buy above $200, but until we get there, this remains a strong short candidate.

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Apr 13

When to get worried about the bull market and what to do with bitcoin at $60k

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Tuesday was another record close for the S&P 500, this time cresting 4,140 for the first time ever.

These gains mean we rallyed more than 400 points since March’s Treasury yield pullback. That’s 11% over a handful of weeks if you play the normal game and a whole lot more if you take advantage of levered ETFs (like I do).

As boring as this market seems, there have been plenty of opportunities to make good money riding this gentle glide higher.

The looming complication is sentiment typically flips after becoming too obvious. A few weeks ago, it was obvious spiking interest rates were going to kill this bull market. And now it is obvious fundamentals don’t matters and prices will continue higher forever.

As contrarian traders, we need to be ready to go against the crowd. That does NOT mean buying a falling market or selling a rising one. That is arguing with the market and no one every wins an argument wit the market. But now that prices have gone too far in one direction, we need to have A PLAN to deal with the inevitable snapback WHEN it happens (and not a moment sooner).

The easiest and most most braindead way of protecting our backside is following this rally higher with a trailing stop. The most undeniable aspect of any pullback is declining stock prices. If prices fall under our stops, we get out. Easy as that.

There are other signs the rally is running out of gas, but none of those apply to an index that keeps making fresh highs. We can dig into those warning signs when prices retreat from the highs, but until then, keep holding for higher prices and continue lifting our trailing stops.

This rally will end at some point, but this is not that point.

Bitcoin broke out above the old $60k highs and added another 5%. So far so good. Keep holding for higher prices with stops just under $60k. If this breakout fizzles and retreats back into the consolidation, demand isn’t ready yet. But as long as this cryptocurrency remain above $60k, keep holding for higher prices.

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Apr 12

An easy index trade and bad news for $GME bulls

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 spent most of the day ever so slightly in the red, but that 15-point dip couldn’t stick and this stubbornly bullish index finished near breakeven.

No doubt this rally cannot remain this easy and brainless for much longer, but as long as it continues trading well, there is no valid reason to argue with what is working.

Trading is hard enough and we don’t need to make it harder by arguing with the market. Keep following the index higher and lift our trailing stops. This will run out of momentum at some point, but it will go a lot higher than most people think before it does.

GME‘s latest flirtation with $200 is ending in disappointment. I was impressed with how well the stock was holding near $200 and that often indicates the stock wants to break through resistance. But there always comes a point where resting turns into stalling. As I wrote last week:

GME is a buy above $200 but it is struggling to close the deal and it cannot get above this key resistance level. Fail to deliver on this obvious breakout and this starts looking more like stalling than resting and we need to be extremely careful.

GME has clearly crossed the tipping point into stalling and things are not looking good for the stock. This is why it is so important to wait for the breakout before committing. One, it requires the stock to demonstrate its strength before we put our money at risk. And two, it creates a clear stop loss level to protect our backside.

If GME cannot arrest this fall in a real big hurry, expect the selling to accelerate and for prices to tumble under $100 in the blink of an eye.

This remains a strong short until it gets above $200.

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Apr 08

A simple trading plan for the indexes

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 finished Thursday within three points of 4,100. Not bad for an “overbought” market.

It took a couple of months to rally from 3,900 to 4k, but it only took a few days to make the next step to 4,100. But that’s the way this goes; lunge…rest…lunge again…rest again…

I don’t expect this latest breakout to go a whole lot further before falling into the next consolidation. We will hit 4,100 imminently, but it could be a while before we get to 4,200. As the saying goes, two steps forward, one step back.

That said, as long as stocks keep going up, there is only one way to trade this. Keep holding for higher prices and lifting our trailing stops to the lower 4k’s.

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