Trade Alert: Black Gold!
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.
The bearish camp held sway over the bulls as options expiration last Friday tallied over $1 trillion in derivatives being closed out or expiring worthless. There was further downside pressure being applied to technology, led lower by the semis, as the QQQs closed down 2.3%. QQQ has now retraced roughly 60% of the March gains and is oversold per my indicators.
Energy and commodities remained firm after WTI crude turned positive later in Friday’s session following reports that European officials are formulating a ban on Russian oil imports. Up until now, this measure has been met with stiff resistance because of the risk of higher oil prices such action could bring, but a draft looks forthcoming and WTI closed up 2.6% to $106.95/bbl.
Natural gas is also on the move, trading to $7.30/MMBtu, a level not seen since 2006. The almost certain need for major gas exports to Europe this year to replace Russian gas is at the heart of this rally, which bodes very well for the Liquified Natural Gas (LNG) stocks the traders should consider keeping a shortlist of.
In light of strong inflationary pressures reflected in higher bond yields (2.83% 10-yr T-Note) and rising commodity prices, the U.S. consumer is on solid footing as March retail sales showed a month-over-month gain of 1.1%, above the consensus of 0.9%. Weekly jobless claims stayed near historical lows and consumer sentiment for April popped higher to 65.7, ahead of the 58.8 forecasts, reflecting a higher future expectations data that consumers believe gas prices will moderate in the second half of the year.
This all comes as the war in Ukraine drags on, China has a Covid-related lockdown in Shanghai and supply chain constraints persist around the globe. Let’s just say more of the same on the macro front, while earnings season kicks into high gear the week ahead, with the early reports looking pretty healthy. From my standpoint, Friday’s market decline had the feel of the market reaching a level of capitulation in the tech, transportation, financial and consumer discretionary sectors.
Only time will tell, but given how strong the consumer, housing and labor markets are, the market is in a position to reverse higher on any indication that peak inflation is here and now. Traders and investors always have to remember the market is a forward discounting mechanism, where the market looks six to nine months out in pricing assets. Under this scenario, it stands to reason the yields will level off, commodity prices will ebb and growth stocks will have a very strong fourth quarter.
If so, then we’ll keep making money in strong sectors like energy and look to pounce on big-cap tech when my AI indicators signal an “all clear” sign that we will take action.
CURRENT TRADING LANDSCAPE
The $SPY closed down 1.2% at $438 and just below the 50% retracement between the recent highs and lows. The value/reflationary ($VTV) closed down 0.4%, at $148, near the all-time highs. The technology sector ($QQQ) closed lower by 23%, at $338, and below the 50 DMA and the 200 DMA.
The $DXY closed higher, near the $100.50 level, at the June 2020 high. The $TLT closed down 2.5%, at $121, and at the July 20219 lows. The ten-year yield closed lower at 2.83%. The $VIX closed higher near the 23 levels, above the historical average.
The $SPY short-term support level is at $438, followed by $420. The SPY overhead resistance is at $445 and then $451.
Assuming the geopolitical risks in Ukraine have reached the status quo, it is reasonable to assume that the $SPY February low is set and the pattern of higher highs and higher lows will continue in the next two to six weeks. The market has reached extreme oversold levels and is due for a rebound in the next few sessions.
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 but might be retested in the next few months.
"BUY" signal based on the Aggressive Power Trader Portfolio for tomorrow is at the $435 level using SPY and the "SELL" signal is at $443 for short-term traders.
If you are trading options, consider selling premium with June and July expiration dates.
Based on our models, the market (SPY) will trade in the range between $415 and $470 for the next 2-4 weeks.
NEW EARNINGS POWER TRADER SERVICE
We recently launched our new Earnings 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.
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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SECTOR SPOTLIGHT
As my opening comments highlighted, traders should stay with what’s working until it doesn’t. That would mean sticking with the energy trade for the week ahead on the bullish price action displayed by both crude and natural gas. My favorite way to trade the sector is through the use of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).
With roughly $5.7B in total assets invested in 63 holdings, XOP is an excellent way to cast a net over the sector loaded with the best companies and avoid single stock risk at the same time. The top ten holdings make up just over 25% of total assets, with no single position occupying more than 3%. I really like this mix and balanced weighting.
Top Ten Holdings
Source: etf.com
Our trading system relies heavily on artificial intelligence, our proprietary algorithms that power our AI platform and its tools provide traders with a major edge in determining the level of conviction one can have on long and short trades. In the case of XOP, when we apply our AI-driven Seasonal Chart to this ETF, we get a bullish “Higher” probability reading for the next 20, 30, 40 and 50-day periods with a 90% historical correlation going back to 2006.
This is a very high conviction set up and for traders looking for a hot sector to work with, XOP might be the right fit. It fits perfectly well in this market landscape, where we intentionally 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 this trade when we do.
TRADE OF THE WEEK
From our perspective, oil and gas services company Schlumberger Ltd. (SLB) is poised to rally in the days ahead. SLB can be considered the biggest technology company in the energy industry, providing equipment and services to leverage the exploration of resources, manage oil and gas wells and fields and house data for the future delivery of crude oil and natural gas to buyers.
The stock carries a $58B market capitalization and is forecast to generate about $24B in revenues and $1.70 per share in earnings, according to www.yahoofinance.com. With the stock trading at around $43, shares of SLB have a current P/E of about 25x, a very reasonable valuation relative to the company’s forecasted earnings growth rate of 45% for 2022.
Technically, the stock is breaking out of a three-month ascending pennant formation that almost always indicates a very bullish move higher over the near term.
The stock is in the midst of a new and powerful uptrend and looks to continue higher in the days and weeks ahead as momentum builds. When we apply another of our AI tools, the Seasonal Chart, we get a bullish probability reading of “Higher” momentum for the next 20, 30 and 50-day periods. This is broad confirmation from our algorithm that it should be considered a high-conviction trade.
Following a big snapback rally this past week, 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 SLB this week to trade it from the long side, given its amazing breakout that confirms the stock is beginning a new bullish uptrend.
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 1-2 days position 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 have a position for less than one day. I 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.
We tie our Tradespoon Live Trading Room to help you manage the current inflationary wave. And we update our closed positions daily. Our AI platform works 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 ideas 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 the standpoint of a Winning Trades Percentage, Average Return Per Trade and Net Gain.
Tradespoon Live Trading Performance
Data from January 1, 2020, through April 15, 2022,
Our Live Trading Room Performance Details As of April 15, 2022,
|
Average Return Per Trade: |
37.33% |
|
Total Gain Per Share: |
$1,506 |
|
Winning Trades |
1218 |
|
Losing Trades |
204 |
|
Breakeven Trades |
5 |
|
Winning Trades Percentage |
85.35% |
|
Backtest Initial Capital |
$100,000 |
|
Backtest Final Capital |
$551,886 |
|
Backtest Net Gain |
$451,886 |
* Backtest Results assumes starting with a $100000 trading account and trading each Tradespoon Live Trading Room Trade since January 2020 with 300 shares of stock or 3 options contracts per trade.
* The performance data is for educational purposes only and the opinions expressed are those of the presenter only. All trades presented should be considered hypothetical and should not be expected to be replicated in a live trading account.
Considering the volatile landscape of late, we’re taking advantage of market dislocation and valuation distortion. We’re striving to help our members ring the register all the time and this is why serious traders should not trade without checking in with market-proven AI tools.
The consistent performance of our services is just incredible. Our historical stellar performance is made possible by being right on 85.35% of all trades that we made, with an average profit of 37.33% per trade on our collective trade recommendations. 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 historically over 85% of all my trades were profitable to come alongside the Yellow Tunnel community and make one of our services your go-to AI trading platform for no-excuses Trading.
Our AI platform crunches and analyzes thousands of proprietary performance indicators to help identify the next big trades to help you supercharge your portfolio!
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, the proprietary platform, can help you make 2022 the best year on record for your trading portfolio.
Have a wonderful week ahead, continue to embrace the people of Ukraine in your thoughts and prayers, and let’s create some meaningful wealth together in 2022.