Power Trading and Markets – May 28, 2021
Vlad’s Big Dip Trade
Hi everyone and welcome to the Yellow Tunnel community, an aggressive short-term trading service dedicated to all classes of traders seeking to elevate their trading skills, market awareness, and trading profits.
The market has levitated higher on light volume in hopes of an infrastructure package getting through Congress and improving Covid-19 data that has provided some momentum for the reopening of the economy. While this is all well and good, there are bigger forces in place that could easily bring about a second wave of selling similar to what we saw in early May, and I’ll address this further in today’s blog.
CURRENT TRADING LANDSCAPE
Most of the 11 sectors that make up the total market are in short-term overbought territory and due for a normal technical pullback.
The $SPY continues to trade in the range between $410 and $425. Technology stocks underperformed and reflationary stocks led the market for the week.
The $DXY is reaching oversold levels and due for a rebound. The $TLT continues to trade higher. Short term the $SPY key support level is at $403-$410. The SPY overhead resistance is at $423. Even if the $SPY can trade above the $423 level, the market can only make incremental highs.
I would consider rebalancing the portfolio at this point to be more market-neutral. I expect the second wave of the sell-off to restart as early as this week or next.
Based on our models, the $SPY can pull back 10-15% from the all-time highs in the next 2-6 weeks. If you are trading options, consider selling premium with September and October expiration dates.
"BUY" signal based on the Aggressive Power Trader Portfolio for tomorrow is at $416 level using SPY and the "SELL" signal is at $422 for short-term traders.
Based on our models, the market (SPY) will trade in the range between $388 and $425 for the next 2-4 weeks.
NEW WEEKLY DYNAMIC POWER TRADER SERVICE
We recently launched our new Dynamic Power Trader service that we at Yellow Tunnel are very excited about. Each week, our expert traders use our AI Tools to provide the Top Bullish and Bearish Stocks, each with an Entry Price, Target Profit, and Stop Loss.
What makes this new service so special is that it offers real-time alerts via SMS and access to Vlad's live positions and orders. When I put together this system, I wanted to be in the fight with other investors. That’s why I don’t play on your emotions to sell newsletters - I put my money where my mouth is.
Every trade recommendation that I make using this system – comes straight from the list of trade recommendations I use myself.
Not only that but every trade I make is logged in detail for you to review at any time. You can see my entire trading history, updated LIVE so that you can see, learn from, and even copy my trading strategy.
Our Weekly Power Trader service continues to power up great trading profits. Each week on Sunday, our expert traders use our AI Tools to provide the Top Bullish and Bearish Stocks, each with an Entry Price, Target Profit, and Stop Loss.
Also, note that the Weekly Power Trader signals are meant to last for 5-10 days as long as the vector confirms the same direction as the original pick. We use a target gain of 2% for stocks and stop as 2% of the stock price.
Signals have averaged over 86% accuracy in my live trading since inception. Sometimes we hold positions for 2-5 days by using options (selling OTM BULLISH PUT spread) and targeting 1% target gain and 1% stop loss using stock price. The green color should be interpreted as a bullish signal and the red color as a bearish signal.
How To Use Our Signals
Once you become a member, I encourage you to review our Live Trading Room recordings to see how I trade Aggressive Power Trader signals in my account. A snapshot of how we produce our Live Trading Room Sessions shows how we pack in a lot of information that can be accessed from whatever device you’re driving.
As a reminder, consider buying near the "BUY" level with a "10 days prediction" higher than the close price. In our live trading room, I usually hold a position for 1-2 days.
I allocate less than 5% of my portfolio if the position is being held overnight. On average, less than 1% of the portfolio should be at risk, if you own a position for less than one day.
I enter a position at the predicted LOW (BUY) price or yesterday's close price. My stop loss is 1% and my target gain is 1% of stock price. I target 75% accuracy using these signals.
Few subscribers asked about Options trading using the signals provided. Please review live trading room recordings. I often sell OTM credit put spread using weekly options and collect 0.5% using stock price. For example, if the stock is trading at $100, I would sell OTM put (strike less than 100) with option BID price close to $0.5.
As the market will struggle to make any significant highs without clarity on Fed policy and further government stimulus, it’s my view that this light-volume rally will fade. But forget my opinion. My AI models are signaling that the second wave of selling is highly probable over the near term. As the dollar is set up for an oversold rally, it would pressure most of the reflation stocks, primarily the deep cyclicals that have been all the rage of the past month.
Our AI-driven Seasonal Chart is flashing a “Lower” reading for SPY over the next 20, 30, 40, and 50-day periods. This is an extremely bearish reading and should be warranted, especially with the VIX trading back down to 16.0 where it spiked from in the last market blow-off. When I get this kind of AI readout, it’s a big red flag.