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Traders enjoyed a strong relief rally this week into a triple options expiration Friday where the major averages were able to close up against overhead technical resistance that will be a big test for the markets next week. Hopes of a cease-fire or progress in brokerage one by China is supporting a more positive tone, but at this point, it is all political rhetoric as Russia continues to bomb Ukraine with no signs of letting up.
Commodity prices reversed higher late this week after a healthy correction, with WTI crude trading back above $103/bbl as of early Friday. Talk of further restricting Russian oil to world markets was the catalyst, and yet there is no evidence from China that they are willing to support sanctions. Soft commodities such as wheat, corn, and soybean prices were resuming their upside bias, exacerbating what is already hot inflation.
The Fed’s actions this week to raise the Fed Funds Rate by a quarter-point and guide to six rate hikes was hawkish, and an admission that they were behind the inflation curve that has proven more persistent and threatening to the economy than they had assumed. But the market was on board with the notion that the Fed was being proactive to rein in inflation with a known forward action plan to where the market embraced the policy plan and rallied thereafter.
CURRENT TRADING LANDSCAPE
The rally into Friday was as much mechanical as it was anything related to lower valuations that brought in buyers. There was widespread shorting by hedge funds and professional traders looking for the market to take out the February 24th low for the SPY of $411. When that level held and the Fed meeting adjourned, the shorts had to cover and the market was rewarded with a big oversold bounce.
The $SPY closed higher 1.2% on Thursday, at $441, right above the January downtrend line. The value/reflationary ($VTV) closed higher 1.2%, at $147, above the 50 DMA. The technology sector ($QQQ) closed higher 1.2%, at $345, above the January downtrend line.
The $DXY closed lower, near the $98, at the June 2020 high. The $TLT closed lower 0.7% and near the March 2021 lows. The ten-year yield closed higher 2.16%. The $VIX closed lower near the 25 levels.
The $SPY short-term support level is at $430 (key long-term support) followed by $420. The SPY overhead resistance is at $445 and then $460.
Assuming the geopolitical risks in Ukraine have reached the status quo, it is reasonable to assume that the $SPY February lows are set and the January downtrend will be reversed in the next one to two weeks.
I would be a buyer of the low beta stocks into the pullbacks and have a market BULLISH portfolio at this time.
I do not expect the $SPY to post new all-time highs in the first half of this year. There is a high probability that the $SPY main long-term support at $415 is now set. All eyes are on the geopolitical risk in Ukraine.
"BUY" signal based on the Aggressive Power Trader Portfolio for tomorrow is at $431 level using SPY and the "SELL" signal is at $444 for short-term traders.
If you are trading options, consider selling premium with May and June expiration dates.
Based on our models, the market (SPY) will trade in the range between $415 and $470 for the next 2-4 weeks.
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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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My opening commentary regarding the geopolitical situation as it relates to the energy sector argues strongly that crude prices will remain elevated, with further risk of supply shocks quite possible. That and the fundamental supply/demand equation that was already skewed to higher prices before the invasion of Ukraine by Russia was firmly in place. This past week WTI crude traded up to $130/bbl in a panic spike and has since pulled back to close out Friday at just above $109/bbl.
Of the sectors trades really focus on when conditions improve is that of the semiconductor stocks. They have proven to be great trading assets over time, demonstrating strong performance as chips are essential to almost every industry and line of products made for business and consumers. Chips are in everything, and with the advancements in AI, IoT, 5G, robotics, industrial applications, smartphones, cloud computing, big data, gaming, and PC computing, there is no denying the vitality of this space and why it attracts so much attention.
Many traders prefer to work with the VanEck Semiconductor ETF (SMH) as the go-to trading vehicle. In doing so, it removes single stock risk without compromising volatility that traders want to take advantage of short-term moves that have decent price action in terms of the price range. The top 10 holdings make up just over 63% of total assets.
This trade for SMH sets up well as there is good confirmation from our AI-driven platform where the Seasonal Chart shows “Higher” probability readings for the next 30, 40, and 50-day periods following a short-term bout of consolidation – a very bullish development.