Vlad's Best Stock-ing Stuffer
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.
Bullish tailwinds returned this week as Wall Street took a more positive view on the pandemic burning out here, as has been the case in South Africa. There is a nascent but growing sense that this might be the third and final wave of Covid-19. Warmer temperatures across much of the nation are also helping to keep holiday spirits upbeat and hopeful. True to form, the Santa Claus rally was on full display this week.
The constant narrative is where is money to go if not in stocks? Cash has a negative return when factoring in inflation. Fundstradt’s Tom Lee has coined an acronym that is catching on – T.I.N.A – There Is No Alternative. And my all accords, short of another black swan event, he’s right. Central banks continue to pump tens of billions of QE into the global money supply even as the Fed and Bank of England wind down their programs. But until then, the liquidity spigot is still wide open.
It will be very interesting to see if inflation for December remains as elevated as in November. Bidding wars for homes and skilled workers has been a big part of the inflation equation, along with food and energy. Still, without more easy money from the Fed and the prospect of higher short-term rates in the offing, it stands to reason some of the fire under the CPI and PPI data might not burn so hot going forward.
In any event, bullish optimism has returned this past week, but the move higher was on light volume, especially for SPY, which calls into question whether the rally won’t submit to some back and fill next week. When trading is thin during holidays, markets can and will make exaggerated moves in both directions. Thankfully, this week was higher.
TRADING LANDSCAPE
As much as it would be so easy to state the market is going to trade up, a good deal of the price action leading up to this week’s light volume rally was geared toward large rotation into more defensive sectors. Before this week, there were strong capital flows into consumer staples, REITs, healthcare, and utilities – a very counterintuitive trade considering all the inflation narrative.
Big money, at least a portion of it, is convinced the Fed will overreact, pulling the punch bowl too rapidly and raising rates when in fact, the economy could start to cool heading into the summer months. It’s just too early to tell, but this was one notable reaction leading into this week’s considerably more positive tone and was supported by high volume. This all has to play out in the weeks ahead but is totally noteworthy.
The $SPY continued to trade higher and closed up 1.0% at $470, within 1% of the all-time high. The value/reflationary stocks traded higher and closed up 0.6% within 1% of the all-time high—the technology-led rally, up 1.2% and right above the 5- day moving average.
The $DXY traded lower and closed at $96 above the key breakout level of $94.5. The $TLT closed higher, at $150 and above the 50-day moving average. The $VIX traded lower, back to the 18 levels.
The $SPY short-term support level is at $461, followed by $455. The SPY overhead resistance is at $472. The short-term market is overbought, but the market breakout, through the overhead resistance of $472, is just a matter of time.
I would consider starting to start accumulating reflationary/value stocks ($XME, $XLI, $XLF, $XLB, and $XLE). I expect the market to have shallow pullbacks but most likely the $SPY will not break through the $455 level.
I would consider rebalancing my portfolio at this time and have an overall bullish portfolio. I believe it is only a matter of time for the market to break through overhead resistance.
If you are trading options, consider selling premium with February and March expiration dates. Based on our models, the market (SPY) will trade in the range between $450 and $490 for the next 2-4 weeks.
NEW EARNINGS POWER TRADER SERVICE
We recently launched our new Earnings 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.
This new service is special because 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.
Signals have historically averaged over 86% accuracy in my live trading since inception. Sometimes we hold positions for 2-5 days by using options (selling OTM Calls and Puts 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 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.
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SECTOR SPOTLIGHT
Within the market, there is a consensus that the least path of resistance for bond yields is higher, given the backdrop of the most recent inflation data, forward GDP projections, and hawkish Fed policy. Assuming this is an accurate trend, it bodes well for megabanks, regional banks, insurance companies, and brokerage firms – basically any business in the lending business of borrowing short and lending long.
To the point, shares of the Financial Select Sector SPDR ETF (XLF) are the go-to sector trading vehicle for professional money that doesn’t want a single stock risk. XLF represents a basket of the best-of-breed financial companies from fundamental and technical aspects.
The top components of XLF are truly in a very attractive zone of upside breakout potential. Most of these stocks have been consolidating for several months and are poised to emerge from classic consolidation patterns. Shares of XLF are trading at the same price as back in June following a big first half of the year rally. At this point, the 20, 50, and 200-day moving averages are all compressed at current levels that bode well for a big upside move higher in the weeks ahead.
TRADE OF THE WEEK
Of all the top ten holdings within XLF that make the grade, the most compelling stock I find to be the most opportunistic for upside profits is Goldman Sachs Group Inc. (GS).
As the most prolific investment banking firm on Wall Street, Goldman is easily the best-positioned megabank, asset manager, and deal maker to capture and profit from the hugely opportunistic business conditions that lay forward for 2022.
Investment banking and proprietary trading lead all profit centers for Goldman and yet they are the bank of choice to the uber-wealthy U.S. and international clientele that demand 24/7 pinstripe service to oversee their assets. Earnings for 2021 are forecast to vault to $59.75 from $24.74 per share in 2020, on a 31.5% increase in revenues to $58.6 billion. (source: www.yahoofinance.com)
Similar to the XLF chart, shares of Goldman have been consolidating since June, having tried to push higher before Omicron set in and crushed the early fall attempt to break out. Now, the situation looks much more compelling. If Omicron is the final phase of the chokehold on rising economic activity and higher rates to compensate for that prosperity, then shares of GS are set to trade higher.
Applying the Forecast Toolbox, we get a solid Model Grade “A” rating and a substantial upside Predicted Resistance price target of $401 for the next two weeks. From a short-term trading standpoint, that is a reliable and compelling setup trade for stock and options traders.
This is what our precision AI platform does for our members. It identifies, clarifies, and verifies high-quality trades like a clear and powerful uptrend in stocks like GS. By being a member of any one of our services, it’s these kinds of opportunities that our proprietary algorithms provide our members to look forward to every day, where they can put their risk capital to work on both long and short positions.
Through our services, we tie our Tradespoon Live Trading Room to manage the parameters of every trade. And we update our closed positions daily. Our AI platform works seamlessly to provide our subscribers with the most robust trading experience available anywhere in the market today.
The beauty of our AI-driven system is that we are always equipped to bring new trades ideas to our members. Trades in best-of-breed stocks and ETFs that are not yet recognized by the larger universe of traders.
We really pride ourselves on this kind of discovery process to bring trades with very high probability risk/reward parameters to members throughout each week. Our track record speaks for itself from the standpoint of a Winning Trades Percentage, Average Return Per Trade, and Net Gain.
Considering the choppy landscape of late, we’re taking advantage of market dislocation and valuation distortion. We’re striving to help our members ring the register all the time and this is why serious traders don’t trade without checking in with market-proven AI tools. Here are some examples of recently closed trades using our services.
The consistent performance of our services is just incredible. Our historical stellar performance is made possible by being right on 85.79% of all trades that we made with an average profit of 36.43% per trade on our collective trade recommendations. To my knowledge, this trading performance is one-of-a-kind that stands alone in the marketplace for superior trading advice where our numbers and results speak for themselves.
Once you’ve become a member of any of our services, I highly encourage you to view the instructional videos on how to best use your membership and participate in live weekly strategy roundtable workshops that are also archived in the event that they need to be viewed at a later time.
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Have a wonderful finish to the 2020 holiday season and let’s create some meaningful wealth together in 2022. I look forward to personally welcoming you aboard our mutual journey to trade our way to building our nest eggs to provide for all our needs and wants. Financial freedom is hugely liberating and it’s my ultimate goal to get us there.