How do I hedge my bank positions?
Don’t Bank On This ETF!
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.
What a roller coaster ride for the week. Huge pent-up anticipation of the FOMC meeting revealed some policy changes that have fund managers and traders fiercely repositioning their portfolios.
The tale of the tape clearly shows the value trade is off and the growth tech trade is back on. Traders perceive that commodity prices have peaked and second-quarter earnings for cyclical companies will also be as good as it gets.
Nobody knows what is the reality of all this, but current perception is all that matters and that view is embracing a slower growth environment that favors tech.
The market is in a seasonally weak time that extends from this week through the second week of July.
Additionally, St. Louis Fed President Bullard commented this morning he expected the Fed to start raising short-term rates next year, going against the Fed statement released Wednesday.
This just stokes confusion which explains the extended selling pressure following the FOMC meeting and sets up for what could be a negative tape for the next 2-3 weeks until second-quarter earnings season begins.
CURRENT TRADING LANDSCAPE
Does Florida have the worst drivers in the US? Asking for a friend. But for real, what is going on? I am wondering if there are some different standards for the driving test.
There are two types of drivers in Florida and yes, of course I am generalizing. The first type drive at least ten miles under the speed limit, slowly rolling onto the intersection, like they are just waiting for the light to turn red. The second type are self-hating, masochistic maniacs that choose to ignore all the rules of life and road, attempting to either murder themselves or those around them with their vehicle.
They will cut you off, and drive you off the road, leaving you in complete disbelief of what just happened and how you survived. I am sure Floridians have some sort of an undisclosed driving rule book, is it possible to get that with the car rental next time?
Back to the Markets:
The $SPY is able to trade above the short-term support at $420. The next level of the support is at 50 day moving average, $416. All sectors sold off precipitously today with the exception of the technology stocks. The technology stocks are sitting at the 52 weeks high.
The market correction has already started in the reflationary stocks (energy, banks, materials, commodities, industrials). It is only a matter of time for the Technology stocks to follow the rest of the market. The $XLF and $GLD approaching oversold levels and due for a quick rebound in the next few trading sessions.
The $DXY has broken through $90.60 resistance and has confirmed it break out. The next level of resistance at $93. The $TLT mirrored the price action in the U.S. Dollar and next level of overhead resistance is at $148.
The $SPY short-term support level is at $416, followed by $404. The SPY overhead resistance is at $425. Even if the $SPY is able to trade above the $425 level, the market can only make incremental highs.
I would consider rebalancing the portfolio at this point to be more market neutral. The second wave of the sell-off has started this week.
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 $417 level using SPY and "SELL" signal is at $422 forshort-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 order. 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 position 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 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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SECTOR SPOTLIGHT
The market has taken a decidedly negative turn on the popular financial sector this week. Conventional thinking would conclude the Fed pulling forward their dot plot plan and raising their outlook for inflation in 2021 would have bond yields spiking and bank stocks popping higher.
But the counter-intuitive trade has taken shape where commodity prices are in steep decline from recent highs and bond yields are trading at new month lows on the perception that inflation, is in fact, transitory, with the long end of the yield curve in falling on the notion that growth in the second quarter will represent peak GDP growth.
Leading up to the FOMC meeting, fund flows into the bank sector was huge with traders locked and loaded to make big profits on a jump in yields when the Fed had to admit to higher inflation and the need to raise rates and taper QE earlier than their prior statement policy.
Talk about getting sucker punched! The bond market has reacted completely opposite of what was set up to occur and now the race to unwind a crowded bank trade is on. Shares of the widely held Financial Select Sector SPDR ETF (XLF) have buckled, and broken short-term support. The ETF is dominated by 10 holdings that make up 55% of total assets where the selling could really pick up speed if big funds start dumping.
The 6-month chart shows XLF at a very key support level that could open the way for considerable downside selling pressure if violated on rising volume. More clarity on this trade will unfold the week ahead, but this is not an ETF to bank on at this time!
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
The sudden move down in bond yields is like a trap door for the financial sector and provides an opening to short the banks when it’s as if someone yelled “fire” in a theatre with only one exit. Given how far bank stocks have rallied, there is ample room to the downside before any semblance of significant technical support emerges.
Those seeking an appropriate trading instrument to short the bank stocks should consider the ProShares Short Financials ETF (SEF) as an alternative to outright shorting of stocks. This inverse ETF is highly concentrated with only 7 positions that make up 100% of total assets, comprised of swaps on leading global banks.
From the 6-month chart below, shares of SEF have broken above both the 20 and 50-day moving averages, setting up for either a further upside move or possibly a similar head-fake rally that was seen back in late January.
This is where our AI models do the heavy lifting for our trading community. Our proprietary AI tools crunch the data needed to make that distinction, creating a strong read as to whether to put this trade on or not. Our Forecast Toolbox is currently net positive on adding SEF as a trade to short the banks, but we’ll have more updated confirmation in the week ahead about the level of conviction our AI platform has.
Our AI-driven Seasonal Chart shows the next 20-days being a period of back and filling, followed by three “Higher” upside readings for the next 30, 40 and 50-day periods, making for what will be a stellar repeat trading instrument to profit from.
There is excellent profit potential for this trade in that if the upside breakout is for real, shares of SEF could be a great trade when our AI indicators flash us a buy signal.
This is what our precision AI platform does for our members. It identifies, clarifies and verifies high-quality trades like SEF. 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.
Trading Thoughts: 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 and allocate no more than 5% of trading capital to any single trade.
I allocate less than 5% of my portfolio if I hold a position overnight. On average, less than 1% of the portfolio should be at risk if you hold a position less than one day. I personally look to enter a position at the predicted LOW (BUY) price or yesterday's close price. For Weekly Power Trader, my stop loss for stocks is 2% and my target gain is 2%. I target 75% accuracy using these signals.
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 trade 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.