Jun 10

What’s bad for me is good for you

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 popped 0.5% Thursday even though inflation came in at the highest level in modern history. But anyone who’s been to the grocery store knew this was coming, so this report didn’t catch anyone off guard.

Inflation is turning into one of those Goldilocks things. Too high and it would have threatened further fiscal and monetary stimulus. Too low and it shows economic stagnation. Instead, the economy threaded the needle between these extremes and investors cheered the “just right” news.

As has been the case all year, this remains a half-full market and most investors continue finding the positives in every headline. While this cannot last forever, the market’s mood doesn’t look like it will change anytime soon.

Cynics believe they’re smarter than everyone else, but those that want to make money have been following the market’s lead. Telling people to embrace a long-established rally sounds like the most brain-dead and uninteresting thing ever, but hey, if it works, who cares?

We are so far into this rally, it is getting hard for me to think of anything new and interesting to say that I haven’t already said. Lucky for you, what’s hard for me has been good for readers that stuck with this rally.

Everything is still on track for a run to 4,300 over the next week or two. From there, 4,400 is easily within reach.

Until the market gives me a reason not to, stick with what has been working.

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Jun 09

Why boring indexes are bullish, plus what it takes to hold GME and AMC

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Wednesday was another quiet session for the S&P 500. The index finished in the red, but it is hard to read much into a minuscule, 0.18% dip. More important than red or green is the index remains within a whisper of all-time highs.

Nothing much is going on in the financial headlines and that is allowing the market to do what it wants to do, which is to rally to record highs. Sentiment remains half-full and stock owners are not letting any fear-mongering get in their way.

While this bull market will die like all of the others that came before it, this is not that time. We’ve been stuck near 4,200 for a couple of months and it is getting ready for the next leg higher. A market that refuses to go down will eventually go up.

This slow grind higher is boring, but that’s the way most successful trades go. While it is fun to ride a bolt of lightning, we only get a few of those per year. The rest of the time we are stuck with these slow-motion moves. That said, I’d rather be bored while making money than excited and losing money.

Maybe something more interesting will happen tomorrow, but probably not. That said, don’t take this calm for granted. One day soon we will be looking back at these calm days longingly. Until then, lookout above.

Nothing makes sense about GME and AMC, but it doesn’t have to. As I’ve been saying for weeks, stupid is prone to getting even stupider and that is the case here.

It would be foolishly reckless to rush into these trades now, but for those that were paying attention and bought the early breakout, we can keep holding for higher prices. That said, stay close to the exits. As quickly as these things rallied, they will fall even faster.

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Jun 08

Why more of the same is good for stock bulls, plus how to handle Bitcoin’s latest dip

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

Tuesday was another do-nothing session for the S&P 500 as it finished up 0.02%, which for most of us counts as exactly where it started.

But as has been the case for a while, a market that refuses to go down will eventually go up. 4,200 resistance has transitioned to 4,200 support and the slow grind higher continues. No doubt 4,200 will soon turn into to 4,300 and even 4,400 over the next few weeks.

Bears had their chance to break this market and they failed miserably. What they couldn’t finish will soon reward those that have been giving this bull the benefit of doubt.

There is nothing to do here but keep holding for higher prices with stops near last week’s lows.

Bitcoin is getting hammered and back near $30k support. Bounce off of this level and that is a buyable entry. But I’m not so sure bulls will get that lucky this time. Retesting the lows so soon after bouncing off of them a couple of weeks ago, especially in the middle of a well-established downtrend, is not a good sign.

We can buy this initial bounce off of $30k support, but stay near the exits because this will get ugly if it slips into the $20k’s.

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Jun 07

Why the S&P 500 will be at 4,400 soon enough and advice for owners and prospective buyers of AMC and GME

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 opened Monday morning almost exactly where it ended Friday afternoon. Nothing happened over the weekend that changed anyone’s mind and the index continues holding near record highs.

There was a 0.2% midday slump that gave a few people second thoughts, but a one or two tenth move in either direction is as normal as breathing for the market. A little wiggle here and there is not meaningful.

More significant is the index continues hovering near all-time highs. Sideways markets almost always favor the prior trend and there is no reason to think this time is any different.

After resting near 4,200 for nearly two months, it is almost time for the next leg up to 4,400. As I often say, a market that refuses to go down will eventually go up. It is almost time.

The meme stocks are back and this once again proves stupid is prone to getting even stupider. AMC and GME are ownable as long as they remain above their recent breakouts. Breakout buyers that got in early are in great shape. Those that missed the initial move are best waiting for another entry because buyers at these dizzying levels are likely to see pretty big losses in the process of holding for higher prices.

FB is the rockstar of the FAANG group and it is making record highs again. Things that are high tend to get even higher and FB definitely fits that description. Keep holding for higher prices and see where this goes.

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Jun 06

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.

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Jun 03

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.

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Jun 02

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.

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