Top Trade For Treasury Bond Short Squeeze
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.
It’s been an interesting week for the stock market in that the much-anticipated inflation data didn’t come in nearly as hot as some had feared, bond yields continued to decline to levels not seen since February, crude oil rose above $70/bbl and more high-profile cyber attacks put the market on guard as to what might be the next big target of hackers.
The pullback in bond yields has helped the growth stocks recover and resume their long-term uptrends whereas many of the leading deep value and cyclical stocks have taken a pause. The trading landscape is getting decidedly more of a stock picker’s market, which is fine with us as this is exactly when our AI models shine most.
The month of June can be very iffy for the market as a whole because end-of-the-quarter window dressing, ETF portfolio rebalancing, and vacation-light volume can all have sway on the short-term direction where volatility really picks up. But so far, the VIX has moved lower as trader sentiment seems to take on a more complacent tone.
The Fed still has the market’s back via QE and some form of an infrastructure package is forthcoming along with what will be a very strong second-quarter earnings season in mid-July. All this said, there is always a headline risk of triggering a sharp sell-off, namely a widespread cyber attack on a public utility or communications network comes to mind.
CURRENT TRADING LANDSCAPE
The $SPY continued to trade in the narrow range today. The short-term trading range remains between $410 and $425. The value stocks sold off today (XLF, IYT, XLI). The technology stocks led the market on stronger $TLT.
The $DXY has retested the recent lows. The $TLT continued to trade higher.
The $SPY short-term support level is at $403-$410. The SPY overhead resistance is at $423. Even if the $SPY is able to trade above the $423 level, the market can only make incremental highs.
I would consider rebalancing the portfolio at this point to be more market-neutral. I expect the second wave of the sell-off to restart as early as this week or next.
Based on our models, the $SPY can pull back 10-15% from the all-time highs in the next 2-6 weeks. If you are trading options consider selling premium with September and October expiration dates.
"BUY" signal based on the Aggressive Power Trader Portfolio for tomorrow is at $421 level using SPY and the "SELL" signal is at $428 for short-term traders.
Based on our models, the market (SPY) will trade in the range between $388 and $425 for the next 2-4 weeks.
NEW WEEKLY DYNAMIC POWER TRADER SERVICE
We recently launched our new Dynamic 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.
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.
Our Weekly Power Trader service continues to power up great trading profits. Each week on Sunday, 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.
Also, note that the Weekly Power Trader signals are meant to last for 5-10 days as long as the vector confirms the same direction as the original pick, for stocks we use a target gain of 2% and stop as 2% of the stock price.
Signals have averaged over 86% accuracy in my live trading since inception. Sometimes we hold positions for 2-5 days by using options (selling OTM BULLISH PUT 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.
SECTOR SPOTLIGHT
One of the more crowded trades of late was that of shorting long-dated bonds. It seems everyone and their brother has convinced
the least path of resistance for Treasury yields was higher once the 10-yr hit 1.75%. There was widespread consensus the next stop for the 10-yr was 2.0% and inevitably 2.5% by mid-year.
Well, that “you can bank on it” trade never materialized, at least not yet. For those that took the other side of that trade, namely going long Treasuries made out extremely well as it would be. This is a really counter-intuitive move by the bond market considering the torrid rally in commodity prices and macroeconomic data that reveals a strong uptick in inflationary pressures is underway.
The question most traders are asking is whether the Fed is spot on about their view that inflationary pressures are transient and will fade if the economy fully normalizes. This is a wide-open debate that is more of a wait-and-see scenario for the time being. However, with nearly every data point that is released, it is followed by another pop in bond prices and a move lower in yields, and for those fighting this trend recently has been a very costly wager.
At Weekly Power Trader, we apply our custom proprietary AI algorithms to all market trends and scenarios where even when it appears the conventional thinking is in the right position, it can turn adversely against the herd mentality in a hurry, just as has happened recently.
TRADE OF THE WEEK
For those savvy traders that did take the bullish side of the bond trade, they likely bought share or call options on iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT) in what has been a winning trading strategy of late.
TLT tracks a market-weighted index of debt issued by the US Treasury with remaining maturities of 20 years or more. Shares of TLT act the same as an actual bond in terms of its relationship between price and yield. As interest rates go down, the TLT will go up in price - which is why the TLT has risen over much of the last 10 years.
Correspondingly, TLT would therefore move lower as interest rates move higher. Shares of TLT are highly liquid and have very fluid option chains with tight bid/ask spreads, making for excellent option trading tools. Additionally, iShares 20+ Year Treasury Bond ETF pays an annual dividend of $2.16 per share, with a dividend yield of 1.52%.
When we apply our AI-driven Seasonal Chart to TLT, we get a very bullish readout of “Higher” probability for the next 20, 30, 40, and 50-day periods.
This is what our precision AI platform does for our members. It identifies, clarifies,
and verifies high-quality trades like TLT. By being a member of Weekly Power Trader, it’s these kinds of opportunities that our tailor algorithms provide our members to look forward to every day they put their risk capital to work on both long and short positions.
Our Weekly Power Trader advisory service takes positions in only blue-chip stocks and ETFs that are green-lighted by my proprietary AI tools, and when confirmed, are added to the portfolio with my investment capital invested as well.
Through the Weekly Power Trader service, we tie our Tradespoon Live Trading Room to manage the parameters of every trade. And we update our closed positions daily. The two platforms work 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 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 a standpoint of a Winning Trades Percentage, Average Return Per Trade, and Net Gain.
Our AI platform delivered profitable trading opportunities for most of the members. Considering the mid-month market pull-back this short-term performance is what makes our hard work so gratifying. We’re ringing the register all the time and this is why serious traders don’t trade without market-proven AI tools.
The consistent performance of our service is just incredible. Our 2021 YTD stellar performance is made possible by being right on 86.37% of all trades with an average profit of 36.22% per trade. 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 over 86% of all trades are profitable should take action and come alongside the Yellow Tunnel community and make one of our timely services your go-to AI trading platform for no-excuses performance.
Our AI platform crunches all the data, generating a constant stream of trades with the highest probability of generating incredibly profitable returns available to the beginning, retail, and professional traders anywhere in the marketplace today.
Go to our website at www.yellowtunnel.com and make one of our services your default trading system where the AI that powers my all-world, always thinking platform and make 2021 the best year on record for your trading portfolio.