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 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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