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.
Friday’s employment report disappointed in more than just the soft headline number. It showed twice the hourly wage gains forecast on fewer jobs created, implying stagflation pressure. There is tremendous demand for highly skilled workers and many companies are having to pay 20% more for new hires in specialty jobs compared to a year ago. The job market is undergoing some uneven changes brought on by COVID-19 and it's starting to show up in the data.
On the flip side, the July jobs data was revised firmly higher, making the Fed’s job of trying to formulate a policy statement at the upcoming FOMC meeting on September 22 that much more difficult. Inflation is looking more than just transitory. While commodity inflation ebbs and flows, wage, and services inflation is longer lasting and harder to contain. The concern is the Fed will have to tighten before their full employment objective is reached.
What this unsettling employment report for August does is put further pressure on Congress to pass the infrastructure bill to create thousands of good-paying jobs for much-needed repairs. And I would expect to see some real progress on this front over the balance of September where the passage of the bill comes to be. But it also means that stock picking is at a premium and where the power of AI models in our Weekly Power Trader advisory service becomes so valuable.
The $SPY continued to lose momentum and reached the $453 level. The value/reflationary stocks led the market today (Energy outperformed). Technology stocks closed slightly lower.
The $DXY has broken above $90.60 resistance and has confirmed its breakout. The next level of resistance is at $94. The $TLT was trading at a 50-day moving average.
Based on the steep correction in the reflationary stocks, strong dollar, and overbought technology stocks, the market will continue the correction in September. The $SPY short-term support level is at $445, followed by $441. The SPY overhead resistance is at $455. I expect the next stage of correction to resume this week or next. I would be a buyer of value stocks on corrections and sell technology stocks on rallies.
I would consider rebalancing the portfolio at this point to be more market-neutral. The second wave of the sell will continue for the next 2-4 weeks. Market corrections are never a one-way trade.
Based on our models, the $SPY can pull back 3-5% from the all-time highs in the next 2-4 weeks. If you are trading options consider selling premium with October and November expiration dates.
"BUY" signal based on the Aggressive Power Trader Portfolio for tomorrow is at $450 level using SPY and the "SELL" signal is at $455 for short-term traders.
Based on our models, the market (SPY) will trade in the range between $425 and $455 for the next 2-4 weeks.
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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.
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 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.
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The beauty of artificial intelligence is that it isn’t biased, emotional or persuaded by current events that are fed to our trading psyche. Sometimes when traders have all but written off certain sectors due to negative developments, they get priced to such deep discounts that a case for a technical recovery can be made.
My AI models are flashing some buy signals in the Chinese ADRs and specifically the iShares China Large-Cap ETF (FXI). With $4.95 billion in assets, FXI is a leading market barometer for China’s market. Recent regulatory controls on China’s biggest tech companies by the Chinese Communist Party have weighed heavily on all the Chinese market indexes, shaving upwards of 20% off the February highs.
The top ten holdings in FXI account for 57% of total assets and provide for a good proxy to China’s master plan to convert the economy to a more consumer-based GDP dependent than export-dependent one.
Trading a highly liquid ETF like FXI eliminates single stock risk and captures bullish fund flows into the sector on a broad basis. In addition, the options chain for FXI is very active and provides for tight bid/ask spreads.
When we apply our AI-driven Forecast Toolbox to FXI we see that over the next two weeks, the shares have the potential to trade up to the Predicted Resistance price point of $46.02 or about 11% higher. The Model Grade “C” rating is neutral given that the shares rallied from $38 to $42 this past week, but we want to buy the next pullback when our signals indicate to do so.