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Jan 13

ZM: Bargain or Bull Trap?

Free After-Hours Analysis:

It’s been a good couple of days for ZM. The stock bounced decisively off recent lows and gained 5.7% Tuesday and it added another 2.2% Wednesday. What’s not to like about that?

Well……

Every rebound starts by bouncing off of the lows and ZM has done a great job resisting another leg lower this month. I often say, “something that refuses to go down will eventually go up.” Unfortunately, that doesn’t apply to ZM here. In fact, this looks more like the mirror image, “something that hangs out near the lows long enough will eventually fall under them.”

Tuesday’s bounce was a good start, but Wednesday’s 2.2% gain was actually more bearish than bullish. That’s because the stock retreated from much higher levels earlier in the day. In the stock market, it’s now how you start, but how you finish that matters most. And in this case, rather than embrace the early rebound, regretful owners took the opportunity to sell these higher prices. Selling pressure every time the stock rallies tells us a large number of owners have given up and are looking for the best way to exit their positions. That’s never a good sign.

As far as the stock chart goes, even the last two days of gains cannot erase all the damage that’s been done. At the very least, the stock needs to get above $380 resistance and break above the larger downtrend. Until then, this remains a shockingly bad chart.

ZM will be a lot more interesting if it back above old support at $400. Until then, this is a no-touch (and a shorting opportunity for the most aggressive trader).

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Jan 12

A plan for protecting Bitcoin profits

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

It’s been a wild few weeks for Bitcoin. The last time I covered this cryptocurrency on my free blog was back in mid-December when it first broke the $20k barrier.

As I wrote back on December 16th:

I don’t expect this buying frenzy to cool off anytime soon. As I said [in early December], maybe the top is $25k, maybe it is $30k. Or maybe we keep going to $40k. Who knows. But when something moves this fast, the only choice we have is to grab ahold and see how far it goes.

This is a strongly directional move and we can (and should) follow this higher with a trailing stop. Right now $20k is a good level to protect our profits. When prices get up to $25k, we move our stops up again. $30k, ditto.

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To be honest, my initial $40k profit target was a tad optimistic, but BTC proved all of the doubters wrong and did something that seemed impossible only a few months ago.

But now the $40k euphoria is wearing off and we already find ourselves in the lower half of the $30k’s. This is definitely a challenging spot for Bitcoin. Prices rallied 400% from the October lows and anyone expecting this buying frenzy to continue another 400% is quite honestly, drunk on greed.

All good things come to an end and so will this latest surge in Bitcoin. Maybe this week’s brief poke above $40k was the near-term top for this rally. Maybe we get a little higher. Either way, we need to be thinking about taking profits, not pressing our bets. We only make money when we sell our winners. And unfortunately, as quickly as these things go up, they fall even faster.

Make sure you have a plan to take profits and don’t let these epic profits escape. Maybe you take profits proactively. Maybe you keep following this higher with a trailing stop. Or better yet, do a bit of both; take some profits proactively and follow the rest higher with a trailing stop.

But no matter what you do, have a plan. Only fools hold too long ride these things all the way back down.

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Jan 11

Do we need to worry about this political uncertainty?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 slumped Monday morning as investors contemplated the disaster taking place in our nation’s capital. But as has been the case every other time recently, most stock owners shrugged and kept holding for higher prices.

To be honest, none of this political noise matters for corporate profits. If Trump gets impeached or if he doesn’t get impeached, Biden is still taking office on January 20th. The same goes for widespread protests over the week. The BLM protests didn’t hold stocks back last summer and Trump protests over the next few weeks won’t turn out any different for stocks.

The only thing that threatens this rally is a shift in investor sentiment. Up to this point, this has been an unstoppable rally and chances are good this modest wobble doesn’t change anything.

As I often say, a market that refuses to go down will eventually go up. Headlines are overwhelmingly negative and if this market was vulnerable to this political uncertainty, there have been far more than enough excuses to send stocks tumbling. Instead, most owners keep holding for higher prices and that confirms this is a strong market, not a weak one.

It gets a little tiring writing the same thing every day, but as long as we are making money, we have nothing to complain about.

While we are always on the lookout for the next big turning point, only a few of those occur each year. The rest of the time we stick with what is working. In this case, that’s holding for higher prices as long as the index remains above our stops in the mid to lower 3,700s.

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Jan 06

Should investors be worried by all of this political unrest?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Wednesday was a shockingly bad day for American democracy. But as dramatic as the pictures were from inside the Capitol, the stock market barely flinched.

As I wrote Tuesday:

It doesn’t get any more straightforward than this. [The S&P 500] is buyable above 3,660 and sellable/shortable if the index falls under this level.

The index opened just above 3,700 support and that was all the confirmation investors needed that Monday’s selloff was truly dead. A couple of hours later, frenzied buying pushed prices 80-points higher and the S&P 500 was carving out yet another intraday record high.

Unfortunately, the afternoon unrest at the Capitol dampened the market’s mood slightly before the close. But finishing up 0.5% on a day when the U.S. Capitol is ransacked by an angry mob shows just what a bizarre period in history this is.

As I often say, if the market doesn’t care about these things, then as investors, we shouldn’t care about them either. While it seems like the world is crumbling around us, as long as stock keep going up, there is only one way to trade this. A market that refuses to go down on bad news is one that clearly wants to go higher. Stocks took a breather in December and now they are rested and ready to start charging higher in January. There is only one way to trade this stubborn strength.

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Jan 05

A simple plan for Wednesday

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 kicked off 2021 with the biggest one-day loss since late October. Fortunately, Monday’s selling proved fleeting and the index rebounded smartly Tuesday, reclaiming half of Monday’s losses.

What counts more, Monday’s losses or Tuesday’s bounce? Good question.

The thing to keep in mind is one day of selling doesn’t kill a bull and a one-day bounce doesn’t end a dip. Quite simply, the information we need is coming Wednesday.

Tuesday’s bounce was definitely helpful for bulls. The biggest stock market crashes are multi-day affairs with no break in between. Tuesday’s bounce prevented this from turning into a runaway selloff. This is important because it gives stock owners a moment to collect their composure. And most of the time when you give stock owners the chance, they will choose to keep holding their stocks, ending the flow of supply.

As long as the index remains above Monday’s lows, expect stock owners to maintain their cool and keep holding for higher prices. Dip under 3,660 so soon after bouncing off of this level tells us Tuesday was a false bottom and lower prices are ahead.

It doesn’t get any more straightforward than this. Stocks are buyable above 3,660 and sellable/shortable if the index falls under this level. Plan your next trade accordingly.

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Jan 04

Did this weekend’s headlines finally kill the bull market?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The first trading session of 2021 got the new year off to a rocky start. The S&P 500 shed 1.5% in the biggest daily decline since late October.

Election uncertainty is flaring up. A super version of Covid-19 is spreading across the U.S. England is going back into lockdown. And the vaccine rollout is progressing far slower than planned. In all, it was a dreadful weekend for headlines.

But none of this should surprise anyone. The news has been dreadful for ten months and this latest spurt is nothing new. Stocks didn’t rally to where they are because our environment has been good. They got here because the future is a lot brighter than the present.

It’s common knowledge stocks are priced for what investors expect in six to twelve months. And so the question we have to ask ourselves is if anything that happened this weekend changes this six to twelve month outlook?

By this summer, the election will have long since been settled. Even with this slow vaccine rollout, most people who want a vaccine will have been given one by this fall. Or at the very least, the vulnerable populations and essential workers will be inoculated, allowing the rest of us to resume our normal activities without putting other people at risk.

If anything, this latest headline brouhaha increases the urgency for another round of stimulus. And if there is anything we learned from 2020, at least as far as the stock market goes, stimulus trumps everything else.

Monday’s selling could continue into Tuesday and even Wednesday. But this is nothing more than a minor wobble on our way higher. Two-steps forward, one-step back. Nothing meaningful changed this weekend and the prior uptrend remains intact. Any near-term weakness is giving us a buying opportunity, not an excuse to abandon ship.

As always, respect your stops. But if you get stopped out, be ready to jump back in as soon as this proves to be a false alarm. This latest dip will rattle nerves but it will also bounce far quicker than anyone expects.

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Dec 30

Is AMZN finally warming up?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

As expected, the S&P 500 has been gliding gently higher into year-end. Nothing surprising or interesting to report there. As long as we keep getting more up than down, everything is going according to plan.

That said, there have been quite a few interesting stories developing underneath the surface. I already covered ZM and Bitcoin earlier this week. Now it’s time to turn our eyes toward AMZN.

It was actually a fairly disappointing Christmas season for the stock and AMZN has been going more sideways than anything since late summer.

AMZN was an obvious Covid winner as locked-in consumers were forced to order everything they needed online. But as is often the case, stocks that rebound first also tend to stall out first while everything else is catching up. That was definitely the case with AMZN this fall.

But more interesting is Monday’s 3.5% pop. That was unexpected and happened on a day when the S&P 500 was only up 0.9%. That healthy outperformance tells us there is strength bubbling under the surface. And following a multi-month sideways consolidation, this stock might finally be ready to make its next move higher.

AMZN is buyable as long as it remains above $3,170. And even if it dips under this level momentarily, it is buyable again as soon as it reclaims it. Either way, expect this stock to be making fresh highs over the next few weeks.

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Dec 29

What happens after Bitcoin tests $30k?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

My last free Bitcoin post was two weeks ago and as expected, this cryptocurrency exploded higher.

December 16th:

I don’t expect this buying frenzy to cool off anytime soon. As I said a [month] ago, maybe the top is $25k, maybe it is $30k. Or maybe we keep going to $40k. Who knows. But when something moves this fast, the only choice we have is to grab ahold and see how far it goes.

As I’m writing this, Bitcoin is pushing toward $28k and there is a good chance it will have already crested this milestone by the time you read this. That is just how quickly this is moving.

As I wrote in early December, this breakout was inevitable:

These huge rebounds almost never touch the old highs [$19k] and then simply give up. Even if the bubble eventually bursts, we are going to smash through the old highs before that happens. Maybe the top is $25k or maybe it is $30k. Either way, this latest buying frenzy is far from over.

But that was then and this is now. Unfortunately, the easy money has already been made and things are going to get a lot more tricky.

Only the most greedy fools look at a 50% gain over two weeks and assume the next two weeks will be just as effortless. More experienced traders know the stall is coming and it will be here soon. Maybe we hit $30k and take a breather. Maybe we exceed the $30k barrier briefly before pulling back to $25k or even the lower $20k’s.

Two-steps forward, one-step back. Cognitively everyone knows that’s the way this game works, yet they always forget this simple concept in the heat of battle.

Ride this move higher but be ready to lock-in your profits and get off this ride before the inevitable pullback. Even if you only take partial profits, that’s still a far more comfortable way to ride out the next dip. When everyone else is debating if they should abandon ship, you have cash ready to buy the next bounce.

Consider taking some profits proactively near $30k and then used a trailing stop to protect the rest. All good things come to an end and this breakout is no different.

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Dec 28

How much worse will this get for ZM?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Monday was a noteworthy session with significant price developments in S&P 500, Bitcoin, TSLA, NFLX, and AAPL. All were behaving exactly as I expected and wrote about over the last few weeks. But on a day where so much was going on, ZM definitely posted the most shocking move, and unfortunately for ZM owners, the news wasn’t good.

(I will cover all of these other stocks, indexes, and cryptocurrencies in follow-up posts later this week. Make sure you don’t miss those by signing up for Free Email Alerts)

On a day when it seemed like everything was going up, ZM went the other direction and tumbled 6.3%. It’s never good a good sign when a high-flying stock falls while everything else is up. And equally significant, the stock undercut the November lows. Last week’s bad news turned even worse when the stock violated this widely followed technical level.

But all of this was expected and I’ve been warning ZM owners for a while. Between the disappointing price-action following blow-out earnings and tumbling under $400 support last week, it was hard to see anything but further losses ahead for ZM.

December 1st

There are few things more worrying than a stock that falls on good news. That signals unrealistic expectations and once the selling starts, it usually doesn’t stop. The market loves symmetry and rallies that go too high are almost always followed by pullbacks that go too low.

December 23rd

I’d love to be proven wrong and see this stock bounce decisively, but this price action is dreadful and we should be prepared for the worst. If a person still believes in this name, take profits with a plan to jump back in after the stock retakes $400. As I often say, it is better to be a little safe than a lot sorry.

And unfortunately for ZM, I don’t see things getting better anytime soon. Once sentiment sours on these highfliers, the punishment is relentless. The buying euphoria on the way up turns into a selling frenzy on the way down. The mad dash for the exits won’t stop until this becomes so ridiculously oversold value investors cannot help themselves. And we have a long way to go before that happens.

At the very least, don’t expect a meaningful bounce until prices test $300. Until then, this remains strong short.

And while it doesn’t do any good to cry over spilled milk, we can learn from our mistakes so we don’t make them again. The smart play here was following ZM higher with a trailing stop that got savvy traders out at $550.

And because I’m not always right, ZM is buyable if it bounces back above $400. But I wouldn’t touch this until it reclaims and holds $400. It is better to be a little late than a lot sorry.

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Dec 24

Merry Christmas

By Jani Ziedins | Weekly Analysis

Wishing you and yours a very merry Christmas!

Thank you for your support and I’m looking forward to an even better 2021.

Jani

Dec 23

ZM owners need to be careful

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

I love writing analysis when people are making tons of money and everything points to them making even more money. Unfortunately, that’s not the case with ZM and I feel bad writing this, but these things need to be said.

This latest episode of weakness started back in early December when the stock tumbled 15% following robust revenue growth. As I wrote back then:

There are few things more worrying than a stock that falls on good news. That signals unrealistic expectations and once the selling starts, it usually doesn’t stop. The market loves symmetry and rallies that go too high are almost always followed by pullbacks that go too low.

December’s initial breakdown paused near $400 for a few weeks, but as is often the case, when something refuses to bounce, that usually means lower prices are ahead. And today’s 6% tumble was the day. The stock violated $400 support, unleashing a torrent of defensive selling. The stock closed just a hair under recent lows but we should expect this to only get worse from here.

I’d love to be proven wrong and see this stock bounce decisively, but this price action is dreadful and we should be prepared for the worst. If a person still believes in this name, take profits with a plan to jump back in after the stock retakes $400. As I often say, it is better to be a little safe than a lot sorry.

On the other side, this looks like a great short entry with a stop just above $400 support.

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Dec 22

Why AAPL is a strong buy

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Tuesday was a good session for AAPL. The stock popped nearly 3% on a day when the index finished in the red. This strength followed rumors Apple is entering the automotive space (again). These gains adds to last week’s outperformance when the stock popped 5% following reports it was increasing iPhone production.

When things are going right, everything seems to go right and that is the case with AAPL right now. And that’s exactly what I wrote last week:

As I often write, a stock that refuses to go down will eventually go up. That’s definitely the case with AAPL here. After a four month cooling off, this stock is finally ready to make its next move. And given the size of [last] Tuesday’s pop, there is a lot of enthusiasm for this name.

The stock is just shy of its September highs and there is no reason to think it won’t get there. And when it gets there, there is no reason to think it will stop. Instead, expect this to break through the highs and keep going. Sentiment is bullish and that is a powerful force, especially following a five-month consolidation.

Now, that’s not to say this will be a straight line higher or this will occur over the next few days, but momentum is definitely behind this stock and it clearly wants to go higher. Maybe we break the highs next week. Maybe it doesn’t happen until next month. But as long as this remains above $120, all lights are green.

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Dec 21

Is TSLA running into trouble?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

Monday was a historic day for TSLA as it officially joined the S&P 500. This addition triggered some wild gyrations Friday afternoon as institutional investors scrambled to get into the stock and it surged 7% in the final moments of the day. Unfortunately, TSLA struggled to hold those gains Monday and it retreated nearly 7%.

A majority of the frantic, index driven buying is already behind us. Investors that needed to buy the stock have mostly already bought it. And speculators that got in ahead of this wave of institutional buying are starting to collect their profits. Tapering demand and accelerating profit-taking threaten to turn this into a very typical sell-the-news trade.

Investors are always looking forward and they make their trades in anticipation of the next big move. Any sensible investor gets in before the move, not after it. That means most of TSLA’s index buying occurred over the last several weeks. Anyone waiting until today to buy the stock is weeks late and hundreds of dollars short.

What comes next? That’s harder to say. This stock is not obeying any sort of logic or reason so we cannot use logic or reason to figure out what comes next. This is a pure momentum play, plain and simple. It will keep going up until it stops, nothing more and nothing less. When that happens is anyone’s guess, but just because we cannot predict the future doesn’t mean we cannot form a sensible trading plan around this stock.

If we know this will keep going up until it stops, that’s a fairly straight forward trading opportunity. We hold the stock with a trailing stop and see where this goes. Buying the bounce off of $400 was a great entry point and now that the stock is above $600, we can place our trailing stop under recent lows. As long as the stock remains above this level, keep holding and see where it goes. If prices retreat, get out and wait to buy the next bounce.

There is nothing more criminal than hitting a home run, only to allow greed to cause us to hold too long and let all of those profits escape. We only make money when we sell our winners and we always need to have a plan to take profits.

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Dec 18

Weekly Analysis: How to respond if volatility picks up next week

By Jani Ziedins | Weekly Analysis

Free Weekly Analysis:

It was another decent week for the S&P 500. The index finished 1.3% higher and it continues grinding its way into record territory.

Stocks are trading well despite the political bickering going on in Washington. Our “leadership” is struggling to agree on a stimulus bill and just as important, a funding bill to avoid a very unhelpful government shutdown. That said, this gamesmanship is S.O.P. for how things get done in D.C. and every agreement looks like it is going down in flames moments before it gets passed.

At this point, the market is trading really well. That said, we are quickly approaching the lull between Christmas and New Year’s. Don’t expect much meaningful to happen over the next two weeks because most big money managers have already left for Florida or Aspen. If these institutional investors wanted to make any portfolio adjustments before year-end, they already did it and we should expect stocks to coast into 2021.

While the gap between Christmas and New Year’s should be quiet, things can get a little choppy when retail investors take control. But even if we see volatility pick up next week, ignore it. These impulsive little traders run out of money quickly and any move they trigger stalls and reverses not long after.

Trading opportunities will definitely get more interesting after the calendar rolls over to 2021. Until then, relax and take a moment to stop and enjoy the holidays. It’s been a great year for trading and we should be very thankful to be as fortunate as we are!

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Dec 17

My 2021 Prediction

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

‘Tis the season for making predictions about next year. While these things are mostly pointless because any number of unknowable things will occur over the next 12 months (can anyone say COVID!), I figured I’d get an early start on mine since the financial press is already bugging me about it.

The funny thing about most of these “forecasts” is they look awfully similar to what happened in the current year. If it was a rough year for stocks, most of these predictions will be very subdued. If it was a great year, expect most pundits to forecast another banner year for stocks.

Unfortunately, the stock market doesn’t work that way. In fact, most of the time the stock market does something entirely different next year. That means a good starting point for predicting next year is eliminating what happened this year from the list of possibilities.

That’s great news because I don’t think anyone could handle another year of pandemic! But more seriously, it was an amazing year for stocks all things considered. In fact, it was a good year for stocks period with YTD gains of 15%. But looking ahead to next year, that means we cross “good year” off the list of possibilities for 2021.

That leaves us with great year, not so good year, bad year, and really bad year. I’m torn between “great year” and “not so good year”. Maybe Covid stops being a concern this spring and everyone goes on a spending spree after having been cooped up for the last 12 months, setting the economy on fire. Or maybe the stubborn 6% unemployment becomes a persistent drag on the economy and we fall into a very conventional recession.

To be honest, I could easily see either scenario play out. And why should we be forced to choose one when we can have both! Therefore, my 2021 prediction is a strong start to the year as we conquer COVID followed by a second-half realization a lot of people are still unemployed and that’s not good for the economy. After producing very respectable midyear gains, I expect stocks to stumble in the back half of the year and finish either flat or slightly negative.

And next year at this time we can come back to this post and laugh at just how wrong I was.

If anyone wants to see what I predicted for 2020, check out this post from last year. Spoiler alert: I failed to predict a health crisis would crush the global economy and stocks would rally to all-time highs as a result.

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Dec 16

How high can Bitcoin go?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis

Bitcoin is making headlines again, this time for smashing through the old highs. But anyone who’s been reading this blog knew this breakout was coming.

Back in October, I commented on the cryptocurrency’s noteworthy bounce off of $10k support:

I’m not a big fan of virtual currencies by any stretch, but as long as this holds above $10k, it is doing everything it needs to do to earn our respect.

And then a couple of weeks ago when Bitcoin first challenged $19k, I said:

These huge rebounds almost never touch the old high and then simply give up. Even if the bubble eventually bursts, we are going to smash through the old highs before that happens. Maybe the top is $25k or maybe it is $30k. Either way, this latest buying frenzy is far from over.

As I write this, BTC is already $3k higher and pushing toward $22k. So far everything is going according to plan.

I don’t expect this buying frenzy to cool off anytime soon. As I said a few weeks ago, maybe the top is $25k, maybe it is $30k. Or maybe we keep going to $40k. Who knows. But when something moves this fast, the only choice we have is to grab ahold and see how far it goes.

This is a strongly directional move and we can (and should) follow this higher with a trailing stop. Right now $20k is a good level to protect our profits. When prices get up to $25k, we move our stops up again. $30k, ditto.

We let the price-action tell us when it is time to lock-in profits. And if we get stopped out prematurely, no big deal, we just jump back in when the dip proves to be a false alarm.

This is easy money and the only people who will screw it up are the ones that hold too long. Don’t let greed cause you to make that mistake. Come to this with a plan and then follow that plan.

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Dec 15

AAPL is rested and ready to go

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

AAPL popped 5% Tuesday after rumors leaked out the company is increasing iPhone production next year by nearly 30%.

This move breaks the stock out of a four month long consolidation and is the highest the stock’s been since early September.

As I often write, a stock that refuses to go down will eventually go up. That’s definitely the case with AAPL here. After a four month cooling off, this stock is finally ready to make its next move. And given the size of Tuesday’s pop, there is a lot of enthusiasm for this name.

AAPL is buyable as long as it remains above $120 and expect it to challenge the old highs over the next few weeks. And this one won’t just kiss the highs, it will smash through them.

But as always, maintain a sensible stop because there are no guarantees in the market. That said, this one looks as good as it gets.

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Dec 14

What to expect headed into the holidays

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 opened Monday morning with solid gains after the U.S. began distributing the first Covid vaccine this weekend. Unfortunately, investor enthusiasm was short-lived and the index skidded into the red by the close.

The Covid vaccine rollout quickly turned into a “buy the rumor, sell the news” event, but this shouldn’t surprise anyone. The U.K. approved the vaccine last week and drug trial headlines have been pointing to this result for months. Any investor that wanted to buy a successful vaccine launch did so weeks ago and very few people were holding out for the confirmation this weekend.

Failing to go up on good news is always a concern because it often signals exhaustion. That said, I’m not overly worried about not rallying on something as obvious and telegraphed as these vaccine headlines. This approval has been coming for a while and to the forward-looking equity market, it already priced this in weeks ago.

Thus far, November’s post-election surge is running out of momentum in December. But at the same time, downside vulnerability seems equally muted with most dips bouncing within hours.

By this point, most investors are content with their existing positions headed into year-end. If they wanted to buy or sell the election or Covid, they made those portfolio adjustments weeks ago. Maybe stocks float a little higher over the next few weeks or maybe they drift back to near-term support. Either way, I’m not expecting anything dramatic or meaningful until the calendar rolls over to 2021.

Sideways chop is one of the most frustrating things to trade. Directional moves are easy to grab ahold of and ride higher or lower with trailing stops. These grinding periods are far more likely to trigger our stops prematurely.

But that’s the way this goes. Sometimes it is easy to make money. Other times we are left twiddling our thumbs. But as long as our gains are larger than our give-backs (and that should have been really easy to do this year), then everything is going according to plan.

I don’t see a lot of potential in either direction and most likely the next great trading opportunity won’t come until after the holidays.

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Dec 11

Weekly Analysis: Is this the best bears can do?

By Jani Ziedins | Weekly Analysis

Free Weekly Analysis:

It was a relatively quiet week for the S&P 500 as the index slipped a modest 1% over the last five trading sessions. What’s even more noteworthy is the minuscule size of the decline when you consider four of the last five sessions finished in the red.

These almost inconsequential down-days tells us there is very little selling pressure in the market. Given the size of the run from the November lows, quite predictably, we exhausted a huge chunk of demand. But on the flip side, very few owners are interested in locking in profits at these all-time highs.

This continues to be a very complacent market. Most equity owners are holding for higher prices and that keeps supply tight. While we always hear warnings about complacent markets, the thing the critics fail to mention is complacency can last a very, very long time before the fall.

No doubt this rally will end like all of the other rallies that came before it. But given how weak the selling pressure has been lately, this is clearly not that time.

The index very easily could slip and test 3,600 support or even 3,500. But until something dramatic changes investor sentiment, expect any dip to be modest and bounce quickly.

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Dec 10

Should we be worried about this rally?

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 slipped for the second day in a row. But rather than devolve into a mad dash for the exits like we would expect from a fragile and grossly overbought market, supply dried up within minutes and prices bounced back near breakeven. So much for this selloff, we barely got to know ya.

Of course, this stubborn resilience shouldn’t surprise anyone. This is how every down-day since the November lows ended. (And almost every down-day since the March lows.)

While it sounds sophisticated to argue against a strong trend because only sheep jump aboard something this easy and obvious, the truth is, a trend is far more likely to continue than reverse.

There have been 190ish trading sessions since the March lows. And in those 190 days, exactly zero have been the start of the next big pullback. But hey, maybe the 191st time is the charm and bears will finally get what they’ve been calling for. But…probably not.

I’m not suggesting we hold blindly. Every savvy trader has been following this rebound with a trailing stop. But until something changes, we keep giving this bull market the benefit of doubt. Maybe the index slips back to 3,600 support. Or maybe even 3,500. But until further notice, we treat every dip as a buying opportunity.

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

What’s a good trade worth to you?
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Follow Jani on Twitter @crackedmarket

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