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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 lost 0.34% on the first day back from the long holiday weekend. But more importantly, the index remains well above the psychologically significant 4,500 level.
Tuesday’s early selling found support near 4,510 and now that becomes our new canary in the coalmine. Anything above this level and all is fine and dandy. Slip under this level and we need to watch the price action with a more critical eye.
As we have seen all year, it is really hard for any dip to get started when so few owners are interested in selling. As much as conventional warns us about complacent markets, the critics always forget to mention just how long complacency lasts before the collapse.
I have no idea how much longer this rally can keep going, but at this point, it is not showing any signs of letting up. As much as I question the sustainability of this one-way strength, there is nothing to do other than follow the market’s lead. Until something changes, we operate under the assumption nothing has changed.
Near-term support is setting up near 4,510. Keep holding for higher prices as long as the index remains above this level. Slip under 4,510 and it makes sense to start peeling some positions off proactively. But like every other time we sell in an uptrend, we always turn around and start looking for the next buyable bounce, even if it happens a few hours later.
Remember, just because we harvest some profits proactively doesn’t mean we have to give up on a trade. As soon as this starts going up again, we need to be back in.
Tuesday was an ugly day for Bitcoin. The cryptocurrency floated above $52k this weekend ahead of El Salvador’s adoption of Bitcoin as a national currency. Unfortunately, the rollout was glitchy and that caused the cryptocurrency to tumble more than 10%.
Anyone that’s been trading for a while understands “buy the rumor, sell the news”. Is this what we are seeing in Bitcoin? It is certainly starting that way. As long as this remains under $50k, we have to be careful.
It makes sense to take some profits off the table and wait to buy back in after this reclaims $50k.
Buy low and sell high. Even bulls should be wishing for a larger pullback here so they can buy more at lower prices.
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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.
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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.
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