#1 Sterling Inflation 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.
Another week of white-knuckle market volatility, one where the Nasdaq Composite and Nasdaq 100 broke below their respective 200 DMA. The Russell 2000 broke its 200 DMA back in December, tried to regain it twice, and has since taken out the lows and is in a protracted downtrend and in need of a major catalyst to get it back on good footing. The Dow also pierced its 200 DMA, but can easily recover on any relief rally.
A flight to safety has bond yields retreating into the weekend, the 10-year Treasury yield down to 1.76%. Oil and commodity prices are also easing late in the week after posting strong gains for most of January. Sticky inflation, tighter Fed policy, and mixed earnings from the few companies that have reported are keeping traders in flux where stock and ETF picking is at a serious premium.
If the Nasdaq can right itself after Netflix Inc. (NFLX) fell by 23% on disappointing Q4 results, which will be a significant win for the broader market. In Friday's session, there was already some evidence of bargain hunting in the chip sector that is a welcome development for a market trying to find a bottom. That said, a lot of technical damage has occurred that will take some time and some bullish earnings to repair.
TRADING LANDSCAPE
Trader sentiment has been sorely damaged given the emphasis by the media on the carnage taking place in the very high price-to-sales stocks that are the poster children of the ARKK Innovation ETF (ARKK), which is down 52% from its high set back in February 2021. It plus the false breakout in the Russell 2000 in early November and a material breakdown in the junk bond market going back to October were early indicators that trouble was in store for the Dow, S&P, and Nasdaq. And it surely has played out that way so far in dramatic fashion.
The $SPY continued to trade lower, down another 1.2% at $441 and testing the 200 DMA. The value/reflationary closed lower, down 0.8%, approaching the 50 DMA. The technology sector ($QQQ) is below the 200 DMA, closed down 1.4%, hitting $354 and approaching the October low.
The $DXY is resuming its downtrend and approaching the key long-term breakout level of $94.5. The $TLT briefly reversed its vertical move down, up 0.7%, and closed below the 200 DMA. $TLT still is trading at the extremely oversold level. The $VIX traded higher, hitting the 28.50 level.
The $SPY short-term support level is at $440 (key medium-term support), followed by $430. The SPY overhead resistance is at $460.
The $QQQ, the second wave of the sell-off, is approaching the end and approaching the October low, the worst-case scenario marginal break of the October low, $350. I would be a seller of the high beta stocks into the rallies and continue rotating the portfolio into the value stocks ($XLE, $XLI, and $XLF). Since the DXY broke the long-term bull trend, I would accumulate $EEM, $XME, $SLV, $FCX.
The $VIX has never reached the "extreme" levels, and one should expect $SPY to reach the $440 level, which traded at $440.68 on Friday. Short-term, the $SPY is oversold and due for a rebound in the next few trading sessions.
I would consider rebalancing the portfolio and having an overall market BULLISH portfolio. I do expect the $SPY sell-off to come to an end in the next 1-2 weeks, followed by a rebound in the next 1-2 months.
"BUY" signal based on the Aggressive Power Trader Portfolio for Monday is at $446 level using SPY, and the "SELL" signal is at $458 for short-term traders.
If you are trading options, consider selling premium with March and April expiration dates.
Based on our models, the market (SPY) will trade in the range between $440 and $470 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 85% 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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Earnings Season is here and Microsoft (MSFT) will announce its earnings this Tuesday.
The last time we traded MSFT during Earnings Season we had a 46% return on risk.
Let me repeat that, we had a 46% return!
That's a pretty good return after holding the position for only 5 days!
Be prepared: Microsoft (MSFT) is scheduled to announce its earnings on January 25th.
This is my favorite time of year!
You’re Invited: Click Here
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TRADE OF THE WEEK
Commodities have been the center of traders’ attention for the better part of the month of January as the inflation trade is the most favored for bullish strategies. Of the many asset classes to trade within the larger commodity space, my AI indicators are quite bullish on silver and the prospects for further gains.
As the reflation story gains more traction with the diminishing of the Omicron phase of Covid-19, I’m looking to increase exposure to precious metals with an emphasis on silver as it has compelling application for industrial and consumer end markets in addition to being an inflation hedge and storehouse of wealth. Silver’s application in the manufacture of solar panels and electric vehicles makes for a compelling investment thesis alone, as both are strong secular growth markets.
Following a huge runup from the pandemic low in March 2020 to August 2020, the price of silver doubled, followed by a multi-month consolidation that is setting up the sterling metal to resume its upside breakout trend from a very attractive entry point, as can be seen in the 5-year chart below.
For traders looking to work outside the futures or physical market, the best proxy for trading silver is through the iShares Silver Trust ETF (SLV). From the description outlined in www.etf.com “SLV tracks the silver spot price, fewer expenses, and liabilities, using silver bullion held in London. As such, investors get exposure to spot silver (determined by the London Silver Fix).”
Liquidity is a major factor in volatile trading markets where spreads can really widen out in more thinly traded assets. SLV has an average daily volume of better than 10 million shares and tens of thousands of options contracts traded, which keeps the spreads tight, if not reasonable in fast markets.
The current rally in SLV is underscored by swelling upside volume, always a bullish accompaniment to an uptrend that has room to extend higher. The 1-month chart shows a powerful breakout move above $21.50 that triggered our AI platform that something big for silver was in the making.
When we apply our AI-driven Forecast Toolbox to SLV, we get a Model Grade “B” rating with confirmation of the current uptrend remaining in place for the next 10-day period.
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 and ETFs like SLV. 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 85.71% of all trades that we made with an average profit of 36.21% 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.
Traders seeking the most-timely directional trading strategies where historically over 85% of all trades were profitable to come alongside the Yellow Tunnel community and make one of our services your go-to AI trading platform for no-excuses Trading.
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Have a wonderful week ahead and let’s create some meaningful wealth together in 2022.