Dec 11

Why the bulls keep winning

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 finished Monday’s session 0.4% higher, putting even more distance between the index and prior resistance at 4,600.

Lucky for readers, Monday’s gains were expected. As I wrote in last Friday’s post titled, “Bears Have Been Warned”:

The index is not going anywhere fast, but more up than down means there is only one way to trade this. Lift stops above recent lows, and see where this takes us.

We finally broke resistance, and these things usually go a bit before stopping. Keep expectations in check, but stick with what is working.

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The economy continues down the “just right” path. Not hot enough to keep inflation elevated and not weak enough to threaten employment and push us into a recession.

How much longer this “just right” lasts is anyone’s guess, but savvy traders focus on what the market is doing, not what could happen. At this point, 4,600 resistance is no longer a barrier. In fact, resistance often turns into support, so Monday’s confirmation further boosts the bull’s case.

The explosiveness in this move was used up weeks ago, meaning we are left with this slow grind higher. There is nothing wrong with that. We are stuck with what the market gives us. If we want to make money, this is how we do it. And making money sure beats what the bears are doing right now…

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Dec 08

Bears have been warned

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 closed above 4,600 resistance on Friday for the first time in over a year and a half.

Bears fighting “too high, too fast” keep giving away money, but this doesn’t surprise readers. As I wrote on Thursday:

Something that refuses to go down will eventually go up. At this point, bears are losing the argument, and it will likely get worse for them if they continue fighting this market. If the November rebound was going to fail, it would have happened by now.

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The index is not going anywhere fast, but more up than down means there is only one way to trade this. Lift stops above recent lows, and see where this takes us.

We finally broke resistance, and these things usually go a bit before stopping. Keep expectations in check, but stick with what is working.

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Dec 07

Why bears are losing the argument

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 added 0.8% Thursday after Wednesday’s bearish intraday reversal turned into a lot of nothing.

One day’s down becomes the next day’s up, and so far, the market doesn’t seem interested in doing anything meaningful. November gave us a huge rebound; now it is time to rest.

That said, holding all of the recent gains confirms these levels are real and the index is not teetering on the edge of a collapse. If stocks were fragile and overbought, one of these waves of selling would have kept going. Instead, most owners shrugged and kept holding.

Stocks don’t have the strength to keep charging higher, but the longer we hold these levels, the more real they become. Something that refuses to go down will eventually go up. At this point, bears are losing the argument, and it will likely get worse for them if they continue fighting this market. If the November rebound was going to fail, it would have happened by now.

Bigger trading opportunities are coming our way, but it will take time. Stay patient and resist the temptation to overreact to this intraday chop.

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Dec 05

Why smart money is sitting on their hands

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis:

The S&P 500 finished Tuesday’s session essentially flat as Monday’s wave of selling turned into a lot of nothing.

As I wrote Monday evening, the market is consolidating November’s gains under 4,600 resistance. This makes recent price action meaningless at best, and outright deceptive at worst:

Far and away, the hardest thing to do in the market is to not trade. We have opinions, and the market is always doing something, but at this stage, every trading signal fizzles and reverses hours later. Just ask all of the bulls that bought Friday’s strength, only to watch those profits turn into losses Monday morning.

This is a consolidating market, meaning we can’t read anything into these intraday gyrations. Something will happen, but this isn’t it. Keep waiting and watching.

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This market is an equal opportunity humiliator, zinging both the bulls and the bears. Optimists who bought Friday’s pop are sitting on losses, and now we can add cynics who aggressively sold Tuesday’s poor open. More interesting trading opportunities are coming, but these are not them.

At this point, it is a tossup between stalling under 4,600 resistance or resting before the next leg is higher. This remains a sentiment trade, meaning anything is possible. The best we can do is wait for the market to reveal its intentions. Until then, smart money is sitting on their hands.

I’d love to be making money right now, but it’s been a fantastic year of trading, and there is no reason to force a bad trade here for nothing more than the impulsive need to be trading. Better opportunities are coming. We just have to be patient.

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Dec 04

Why Monday’s selling doesn’t mean anything: Part II

By Jani Ziedins | End of Day Analysis

Free After-Hours Analysis: 

The S&P 500 slipped 0.5% Monday as the index continued consolidating November’s big rebound under 4,600 resistance.

The market has been stalled for a couple of weeks, but this was expected. As I wrote early last week:

Calm markets are bullish, and the path of least resistance remains higher, but I’m not excited to hold all of the risk underneath us for another few points of upside. That means I will keep watching this develop from the sidelines after collecting big profits before the Thanksgiving break. But if this strength persists and we are setting up for another pop through in overhead resistance, I will be happy to jump back in. But we’re not there yet.

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Well, here we are a week later, and not much has changed.

Far and away, the hardest thing to do in the market is to not trade. We have opinions, and the market is always doing something, but at this stage, every trading signal fizzles and reverses hours later. Just ask all of the bulls that bought Friday’s strength, only to watch those profits turn into losses Monday morning.

This is a consolidating market, meaning we can’t read anything into these intraday gyrations. Something will happen, but this isn’t it. Keep waiting and watching.

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