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As for the stock market, the month of April is going on record as the worst month for the Nasdaq since March 2020. There have been some high-profile blowups in large index component stocks – Alphabet Inc. (GOOG), Netflix Inc. (NFLX), PayPal Inc. (PYPL), and Amazon.com Inc. (AMZN).
When looking at the subsectors of the Nasdaq -namely software and semiconductors – there are busted charts galore where a lot of technical work will have to take place in which to repair the uptrends of so many once-popular stocks. The chip sector remains weighed down by ongoing shortages of the components needed to manufacture finished products with forecasts of supply relief being constantly pushed out for some key companies that supply a vast array of consumer and industrial products.
The market as a whole is in need of some bullish headlines regarding inflation. There prolonging of the war in Ukraine, lockdowns in China, and supply chain constraints are certainly a drag on the global economy and market sentiment, but the primary narrative that could provide a bullish pivot to the bearish tone would be inflation data leveling off to where the Fed can dial back the hawkish rhetoric.
Fortunately for the domestic economy, the job market is very robust, affording consumer spending to remain healthy. This is the one silver lining among the storm clouds, but leave no doubt, some of these clouds have to clear out for the market to right itself.
CURRENT TRADING LANDSCAPE
Traders should not be fooled by violent bear market rallies, such as what we saw on Thursday. Investor sentiment hasn’t been this bearish since March 2009 during what was a complete set of different circumstances. Back then the Fed opened the spigot of fiscal stimulus and the market rebounded. This time around, the market is correcting while the Fed is set to raise short-term rates for the next three months.
As of Thursday’s close, the $SPY closed higher 2.5%, at $428, below the 50 DMA and the 200 DMA. The value/reflationary ($VTV) closed higher 1.5%, at $145, right at the 50 DMA. The technology sector ($QQQ) closed higher 3.5%, at $328, below the 50 DMA and the 200 DMA.
The $DXY closed higher, near the $103.5 level, approaching the March 2020 high. The $TLT closed higher 0.1%, at $121, and below the July 2019 lows. The ten-year yield closed higher at 2.83%. The $VIX closed lower, near the 30 levels, above the historical average.
The $SPY short-term support level is at $420 followed by $410. The SPY overhead resistance is at $435 and then $441.
The market correction started earlier than I anticipated. At this point, it is just a matter of time for the $SPY to break below the February lows.
I would be a seller of any rallies in the market and have a BEARISH 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 will not hold in the next 2-6 weeks.
"BUY" signal based on the Aggressive Power Trader Portfolio for tomorrow is at the $416 level using SPY and the "SELL" signal is at $430 for short-term traders.
If you are trading options consider selling premium with July and August 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 position 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 the 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 an OTM Put (strike less than 100) with an option BID price close to $0.5.
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As per my opening comments, the technical damage is pretty severe, not just for the major indexes, but also for so many leading stocks that lead the bull market for the past several years. There are material-technical breakdowns in GOOG, PYPL, NFLX, SBUX, DIS, and NVDA. And there are many, many more former Wall Street favorites that have just as bearish charts as these notable stocks.
To this point, the rolling correction looks to keep hitting all the great stocks that are considered the market generals. When stocks like Proctor & Gamble (PG) become the “go-to” names for fund managers, then it sends a red flag up the pole that investors should take seriously. Grant there are stocks that will buck the trend as is always the case in any market correction, but that number is narrowing with each day.
It's a good time to hedge portfolios in the event key technical support for the S&P at 4,150 is taken out. Investors should consider utilizing ProShares Short S&P 500 ETF (SH), a 1x inverse ETF. As I noted the long-term primary bull uptrend is in place for S&P, but that level is down at 3,500 with 4,100 being the next level of key support.
It’s this kind of number-crunching, always thinking, and always learning data that drives the course of our asset selection to take full advantage of both up and down markets.
This is a very high conviction setup for traders looking for a market hedge to work with. SH is one ETF that might be the right trade. It fits perfectly well in this market landscape, and we intend to put this ETF to work for our trading services in the week ahead. Readers of this column shouldn’t miss out and get in on our bullish strategy when we take action.
TRADE OF THE WEEK
Staying on theme, this week’s pick is the same as our Sector Spotlight security highlighted - ProShares Short S&P 500 ETF (SH). The problem I see with this market is that this is the third time in as many months that the SPY is testing the 4,150-4,200 level. My data is signaling that this time the lows might well be taken out. If you hit on something long enough, many times it breaks, and it starts to feel that way.
When we apply SH to our AI-driven Forecast Toolbox for the near term, we get a Model Grade “B” rating with a Predicted Resistance price target of $16.68 which is 14% higher than where SH currently trades. A move to $16.86 would be a new 52-week high and imply the market buckling once again. Hence, with each oversold bounce, investors can leg into SH and protect their portfolios from material downside risk.
Our AI indicators will signal in the next week when we should buy into this trade on a forecasted minor pullback. This is where our AI tools are so crucial in determining precise entry and exit points.
I’ll be looking to trade SH this week if downside momentum picks up speed and volume.