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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 skidded over 1% Tuesday morning as gas prices and interest rates continue climbing. But rather than trigger a bigger wave of follow-on selling after the index undercut 5,200 support, most owners shrugged and kept holding. The absense of reflexive selling put a floor under prices, and the market recovered nearly half of those early losses by the close.
If stocks were grossly overbought and vulnerable to a collapse, prices would have tumbled a long time ago. The market rarely gives us this long to sell the top, so odds are good this is not the top.
While a few hours of constructive trade Tuesday afternoon was great to see, by itself, that doesn’t kill the selloff. That makes Wedensday’s early trade is critical. If we survive that, the bears are in trouble.
Unless Wednesday morning turns into a dramatic waterfall selloff, this is simply another buyable dip on our way higher. That’s the way I’m trading it. I bought a partial long position Tuesday afternoon with a stop under the early lows.
If the rebound continues Wednesday afternoon, I add more and lift my initial stops up to my entry points. If the selloff resumes, I get out of my partial position at my stops for a small loss, no big deal.
To be honest, part of me hopes this selloff continues even though I’m holding a partial position. The lower this goes now, the bigger the profit opportunity the market will be giving us. Unfortunatly, I don’t think I will be that lucky and most likely, Tuesday’s selloff won’t amount to much. That’s why I’m already buying.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 shed 0.2% on Monday as this sideways snooze-fest continues.
The index rallied in the second half of last week, meaning it was time for the pendulum to swing in the other direction. This simple reversal explains most of Monday’s trivial losses: One day’s ups become the next day’s downs.
Nothing meaningful is changing in the financial headlines, which is why the price action is so benign. Bulls are staying bullish, and Bears are staying bearish. This will inevitably change at some point, but we need a big and unexpected headline to shake things up and get the market moving. Until then, expect this slow, choppy grind with a slight upward bias to continue. Better trading opportunities are coming, but they are not here yet.
I will let the day traders fight over these nickels and dimes while I wait for better profit opportunities. Maybe that will happen later this week, or maybe it will take a week or two. But the next trade is coming because it always does, and it will be here when we least expect it. Until then, my goal is to avoid losing money overtrading this meaningless chop and that means sitting on my hands.
Remember, long-term success in the markets doesn’t come from our winning trades but from not giving those profits back in our follow-up trades. Often, the best trade is not trading.
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By Jani Ziedins | End of Day Analysis
Free After-Hours Analysis:
The S&P 500 ended a three-session losing skid on Wednesday, bouncing 0.9% as the index recovered most of its prior losses.
Little changed between Wednesday, Tuesday, or even last week. The market is comfortable at these highs, and few owners are interested in selling. But at the same time, those with cash are reluctant to chase prices even higher. This draw between bulls and bears leaves us mostly treading water above 5,200 support.
Prior momentum is clearly higher, and that means all ties go to the bulls. If prices were grossly overbought and vulnerable, stocks would have tumbled by now. As long as we keep getting more of the same headlines, I don’t expect anything to change. One bad headline can flip sentiment in an instant, and if that happens, there is a lot of air underneath us, but we need to get that bad headline first. Until then, expect this back and forth to continue, but with a little more up than down.
If this market was going to break down, it would have happened by now.
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