Power Trading and Markets – December 23, 2019
A warm holiday welcome to Power Trading and Markets (PTM), a service of YellowTunnel.com that works in close relation with Tradespoon.com to bring readers a higher level of trading awareness and discipline backed by AI-driven research and the most advanced trading algorithm available to individual traders.
A winning trading formula is born out of the sophistication of my platform's underlying algorithm. Our models take into account options volatility, statistical correlations with indexes and proprietary technical and fundamental analysis conducted in real-time, among other factors.
We leverage advanced artificial neural networks that constantly self-learn in order to apply the best-fitting models to a particular stock or ETF in order to generate highly accurate signals. The power of a robust AI is platform is fully on the trader’s side.
In each issue, we give a tight summary on the trading landscape, highlight a top performing sector that we’re actively trading in and spotlight at least one stock or ETF that is demonstrating strong short-term performance. We also provide a look ahead as to what the traders should focus on so as to be watchful for timely set ups.
OUR TRADING MODEL
YellowTunnel is purposed to deliver high-visibility sector strength where a cluster of leading stocks are identified, coinciding with what we call a “10-day prediction momentum trade”.
Within our Aggressive Power Trader trading list, trades are recommended in our Tradespoon Live Trading Room are all featured in my Watch List.
When we publish signal on a stock, ETF, or related option strategy, our time horizon is same-day in-and-out and up to five days max, at which time in the majority of trades, would be closed out.
When looking to execute recommended trades, 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 and I usually allocate less than 5% of the portfolio if I hold a position overnight. On average, less than 1% of the portfolio should be allocated if you hold a position less than 1 day.
For the best results, I personally 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 the stock price. I target 75% accuracy using these signals.
CURRENT TRADING LANDSCAPE
Markets continue to make new all-time highs after secretary Mnuchin confirmed progress in signing Phase one agreement. Technology, REITs and Energy sectors have drawn fresh attention and have led the past couple trading sessions. Better-than-expected earnings from Conagra (CAG) also provided bid under the consumer staples sector, but the broader bias has been to rotate into more cyclical sectors as the narrative of a global economic pickup in 2020 is spreading.
Micron Technology (MU), considered a bellwether for the commodity chip and memory space, reported a slight EPS beat for Q1. Micron's management was optimistic about the outlook, but it should be acknowledged that the chip industry was expected to rebound sharply during the second half of 2019. Instead, expectations for a meaningful recovery are being pushed forward into 2020.
Micron's report has served as a supportive element for the group, but about ten components of the SOX index traded lower due to the understanding that a lot of good news has already been priced into the index. Pullbacks in the semiconductor sector should be used trade the strongest names from the long side. (NVDA, NXPI, KLAC, LRXC, ASML, QRVO, AMAT, MU)
Certain blue-chip software stocks continue to draw trader’s attention on strong upside momentum (MSFT, ADBE, ADSK, CRM).
Payment systems processors, financial data providers and private equity operators are exhibiting upside momentum as well as recent gains in the megabanks have money rotating into the fintech stocks with (MA, V, GPN, IT, MSCI, BX, CG) as notable movers to the upside.
Within the REIT sector, cell tower stocks (AMT, CCI, SBAC) have caught a powerful bid and should be considered a long-side trade on the next pull back.
Energy is probably the most unloved and mistrusted sector among traders, but certain high-quality stocks (PXD, EOG, HAL, SLB) have spiked of multi-year lows, punching up and through their respective 200-day moving averages and should be considered as trades if not put on a trader’s watch list.
WTI crude is trading above the psychological $f60/bbl for the first time since September. The advance bears watching for confirmation as each attempt at this level to trade higher has failed as global crude supplies rapidly flood the market. Risk/reward is not attractive at current levels.
I expect shallow corrections in the next two weeks and bullish trend to be intact. Please watch 309 and 315 support levels using SPY. My opinion that market will continue to make new highs in the last weeks of December/first weeks of January.
Falling poll numbers for Elizabeth Warren and Bernie Sanders lit a fire under the healthcare sector this past month, sending shares of the S&P 500 Healthcare Sector SPDR ETF (XLV) higher by a 10%+, catching most traders off guard and scrambling to get long the ETF itself and some of the key components that are just ripping higher on the notion that “healthcare for all” and “universal price controls” are years off.
Within the sector, leading big-cap stocks like BMY, AMGN, UNH and TMO have made stunning moves higher over a very brief period and have fund managers chasing this trade for being woefully underinvested in this space. Below is a list of the top 10 holdings of XLV that fully explain the torrid outperformance of the past two months.
Leave no doubt, healthcare as a sector is back and we’ll be trading it aggressively as my AI indicators provide us with the best and timely trades available. After being so out of favor and mired in a three-year basing formation, the healthcare sector is under-owned, under-appreciated by sell-side analysts and will be a focus of professional money accumulation and positive fund flows going forward.
TRADE OF THE WEEK
Most of the healthcare stocks noted above, as well as the XLF itself are either near or overbought and should be allowed to back and fill. However, as is with any broader sector advance, there are individual stealth bullish breakout patterns that traders can depend on for short-term profits.
Merck & Co. (MRK) is one of those stocks. As a Dow component and one of the most widely-held names among institutions, Merck is a name that is just now setting up for a strong move higher in the days and weeks ahead.
The major catalyst for Merck is their blockbuster cancer drug Keytruda used in immunotherapy that targets melanoma, lung cancer, breast cancer, head and neck cancer, Hodgkin lymphoma and stomach cancer. Keytruda is being partnered with other compounds to address an array of other cancer-related diseases and will easily be Merck’s largest selling drug of all time.
Sales of Keytruda have mushroomed from $55 million in 2014 to $7.2 billion in 2018, an overall growth rate of 130x, and an average annual growth rate of 334%. Sales soared 62% in the third quarter of 2019 to $3.1 billion. Wall Street is only now just waking up to this phenomenal growth rate and shares of MRK recently broke out of a quadruple top pattern at $87.50 that opens the way to a new upside move to $100 in good time.
My Stock Forecast Toolbox has a 10-day price resistance target of $93.89 that looks very doable in what is a market that is already favoring the sector.
We are also getting further confirmation from the Tradespoon Seasonal Chart that is generating a “higher” indicator for the next 20 days. When I get both AI tools to validate a bullish trade like MRK, it is as close to money in the bank as it gets.
Yellow Tunnel is a truly hands-on system and personal approach that lends itself to building a high level of confidence for grooming traders with constant coaching and my guiding of each trade using the tools I’ve created.
In our new service Aggressive Power Trader, I walk our subscribers through the “trade decision-making process” with the mindset of being in and out of trades within 24-48 hours with the objective of booking 30%-60% gains against the amount of capital at risk on each and every trade with 75% accuracy. Each day at 8:00 PM, we provide our Top Bullish and Bearish Stocks, each with an Entry Point. Our signals are meant to last 1-2 days. Below are actual recommendations with parameters found on our YellowTunnel Watchlist.
Through the Aggressive Power Trader service, we tie our Tradespoon Live Trading Room to manage the parameters of every trade and how to properly trade the recommendations. And we update our closed positions daily. The two platforms work seamlessly to provide our subscribers with the most robust trading experience that exceeds that of an institutional proprietary trading shop.
For those that have been trading alongside us for the past three years, their lives may have been changed forever. A $100,000 initial investment when back tested could have grown to over $1.6 million dollars. Yes, it takes real dedication and personal discipline to accomplish these kinds of gains, but this is the mission of us here at YellowTunnel.com – to train retail investors to hone the skills of a master trader empowered by the cutting-edge AI tools I’ve created and refined over the past decade.
We also provide instructional videos on how to best use your membership and invite our members to participate in live weekly strategy roundtable workshops that are archived in the event that they need to be viewed at a later time.
Our algorithms are second to none on the Street and being we at YellowTunnel are targeting the retail trader as our audience, it is a special situation that gives every trader a serious advantage never offered before anywhere. And for our special introductory offer of $17, it should the first financial priority for 2020 of accelerating financial success.
Go to our website at www.yellowtunnel.com and get real-time serious about banking daily aggressive trading profits in your portfolio. With 75% accuracy on all trades is a system that has delivered real wealth creation where I and my team do all the work and with the click of your mouse, you too can experience the same wonderful journey to financial security and get great enjoyment doing it.