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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:
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:
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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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
December 23rd
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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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
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:
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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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:
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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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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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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What’s a good trade worth to you?
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