The S&P 500 finished last week in the red, snapping a four-week winning streak.
That said, retreating a barely noticeable 0.13% doesn’t count as a meaningful loss. In fact, this dip ended up being highly constructive for the index.
Everyone knows stocks cannot go up every single day and periodic down days (and weeks) are inevitable. As is usually the case, how we finish counts a lot more than how we start. Stocks slipped on Monday and Wednesday’s mid-week bounce fizzled and retreated. But when it mattered, the index rallied decisively on Friday and closed within a whisper of all-time highs.
This strong close turned a weekly loss into a very bullish development. As I often write, something that refuses to go down will eventually go up. If the bears couldn’t kill the bull market this week with the wind at their back, chances are good they won’t be any more successful next week.
Stick with what has been working, which is holding for higher prices with stops under the weekly lows near 4,120.
Far less constructive was the post-IPO trading on Coinbase (NASDAQ:COIN). After last week’s eye-popping initial pricing, the stock has retreated six of the last seven trading sessions and finds itself down 32% from the frenzied IPO highs.
But that’s the way this usually goes. The more hyped the IPO is, the bigger bust it turns out to be. (I will dig into the psychology behind this phenomenon another time. That said, it is fairly intuitive if you think about it.)
That said, COIN might be getting so bad it is starting to looking good. Now, this is nothing more than a short-term trade, but this stock is on the verge of bouncing hard. If not Monday, then over the next few days. Buy the bounce with a stop under the lows and be ready to take profits quickly.
As for investing in this stock, if a person is patient and waits a few more weeks, prices will get even more attractive.