Menu
By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis
The S&P 500 poked its head above 4,500 on Wednesday for the first time in history. The “sell in May” crowd now finds themselves 300 points behind. So much for conventional wisdom…
Is 4,500 finally the top? Not if we use recent history as a guide because the same was said about 4k, 4,100, 4,200, 4,300, and 4,400. Heck, even I thought 4,400 was getting a tad too far.
But as long as something keeps working, we have no choice but to stick with it. Maybe 4,500 is finally far enough. Or maybe 4,600 is just around the corner. Either way, we will know the answer soon enough. Until then, continue giving this unstoppable bull market the benefit of the doubt by moving our stops up and continuing to hold.
Headlines remain benign and we have a couple of weeks until Labor Day signals the traditional end of the slower summer trading season. But once we get into the heart of September, be on the lookout for signs the market’s mood is changing. Until then, enjoy the ride.
Signup for free email alerts if you want to be notified when these subtle, but market-changing developments start taking place.
Last week’s rebound in AMZN is progressing nicely and this trade is going according to plan as long as it remains above $3,200.
As I wrote last week:
As it turned out, AMZN was playing possum and looked the most hopeless moments before turning it around. While there are no guarantees this bounce will stick, for those that acted early and decisively, this bounce gave us a low-risk entry with a lot of upside potential.
For those that missed the buyable bounce, this stock is still trading at attractive levels, unfortunately, buying now requires taking on a little more risk than buying last week. But the risk/reward still favors buying this bounce.
If you find these posts useful, please return the favor by liking and sharing them!
Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.
What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours
Follow Jani on Twitter @crackedmarket
By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
Thursday started ugly when the S&P 500 gapped 0.7% lower at the open. The Fed disappointed investors Wednesday afternoon when it revealed they could start tapering bond purchases later this year. While not a dealbreaker by itself, it reminded investors this free-money gravy train isn’t going to last forever.
Wednesday’s disappointment spilled over to Thursday’s open, but as is often the case following large gap opens, supply dried up almost immediately. And within hours, the market was back in the green. So much for that ugly start.
Lucky for regular readers of this blog, they were prepared for the market’s sharp dip and bounce. As I wrote Wednesday:
But as good as things appeared in midday trade, the rebound stalled and the index ultimately closed only a handful of points in the green. While it is usually hard to get excited by a 0.1% gain, context is everything. More important than the trivial gain, the market tried to break this bull market and very few owners took the bait.
This continues to be a confident market and no matter what the cynics say about complacency, the one thing they always forget to mention is just how long complacency lasts before the fall.
While it would have been nice to see Thursday’s rebound close near the highs, the most important thing is the selling stalled and reversed. Confident owners still don’t want to sell and as long as the market isn’t pressuring them, these confident owners will continue holding for higher prices. Close green on Friday and this week’s tumble is already old news.
As for how to trade this, hopefully, you were using sensible stops and were able to lock in some nice profits Wednesday afternoon. Thursday morning’s gap and bounce gave us a very attractive entry point with a stop just under the early lows. Now we simply wait to see what happens next.
Stay above 4,370 and everything looks good. Close above 4,400 Friday afternoon, even better. But if the selling resumes Friday afternoon and we fall under 4,370, all bets are off and we wait for the next buyable bounce.
AMZN is ugly and getting uglier.
This larger pullback was kicked off by disappointing earnings last month. It is hard to avoid a big earnings gap like that and it happens to the best of us. But the inexcusable mistake is holding the subsequent dip under $3,300. That was our clear signal to get out and for the most adventurous to initiate a short.
These tumbles are rarely a one-day events and AMZN is proving that there is still downside left in this move. If $3,200 doesn’t bounce soon, then $3k is coming up. On the other side, a dip and bounce back above $3.200 is a buyable entry with a stop just under this level. This is acting like it wants to go lower, but it always does just before the bounce. In this case, have a trade ready for either way.
If you find these posts useful, please return the favor by liking and sharing them!
Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.
What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours
Follow Jani on Twitter @crackedmarket
By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
It’s been a choppy week for the S&P 500 as opening waves of selling attempted to knock the index from its record-high perch. But as has been the case all year long, dip buyers are never far away and the index stubbornly remains within a handful of points of those all-time highs.
As I often remind readers, how we start a day is far less important than how we finish it. And by that metric, the last two sessions have been constructive despite Tuesday’s 0.7% giveback. Monday’s early weakness bounce decisively and ultimately finished at another record closing high. Tuesday’s follow-up dip didn’t bounce quite as hard, but it was good enough to push prices back to what would have been a record close just a few days ago.
Eventually, we will come across a dip that doesn’t bounce, but so far this rally continues defying the skeptics and we have to give it the benefit of the doubt. At this point, we have two key levels to watch, Tuesday’s intraday lows near 4,420 and recent support near 4,400. Hold above these levels and we have nothing to worry about. Fall under and we must shift to a more defensive mindset.
Wednesday’s open and subsequent price action will give us a good hint about what’s coming next. Open in the green and rally from there, then the worst is already behind us. Start the day red and crash through 4,400 support and the selling still has a ways to go. Anything in between and we take a wait-and-see, with a close near the highs being more bullish and a close near the lows being more pessimistic.
But as I said, as long as we remain above 4,400, reports of this bull’s demise are grossly exaggerated.
TSLA crashed through $700 support yesterday following a government investigation into its Autopilot feature and the selling continued on Tuesday. Savvy traders lifted their stops near $700 and were locking in nice profits as this stock rolled over Monday morning. But that was then and this is now.
What comes next for this stock? Well as obvious as this sounds, either prices bounce or they don’t. For the moment, this isn’t on solid ground until it gets back above $700, but the most adventurous can buy Tuesday’s midday bounce with a stop under the early lows. Start small, get in early, keep a nearby stop, and only add to a trade that is working.
If prices fall under Tuesday’s lows, no big deal, get out and wait for the next bounce.
If you find these posts useful, please return the favor by liking and sharing them!
Sign up for FREE Email Alerts to get profitable insights like these delivered to your inbox every evening.
What’s a good trade worth to you?
How about avoiding a loss?
For less than $1/day, receive actionable analysis and a trading plan every day during market hours
Follow Jani on Twitter @crackedmarket
You must be logged in to post a comment.