Vlad's Best Hedge: TLT, Here is why…
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.
This week, the market saw a nice rebound supported by positive economic reports as well as the latest minutes from the Federal Open Market Committee meeting, which appeared eager to support the economy as best it could. Having just raised interest rates by 75 basis points, the Fed discussed another such rate hike in the upcoming July meeting, as well as the possibility of a 50-point hike in the September meeting. This, in turn, shifted market focus to Friday's major labor reports which included the unemployment rate, average hourly earnings, and labor force for the month of June.
Friday's June job market data showed employment has continued to expand at a strong rate, exceeding expectations and forecasts. With 250,000 new jobs expected in the month of June, the newest report showed a total of 372,000 jobs added. Weekly unemployment ticked up on Thursday, however, the monthly data was mostly unchanged. These positive results supported U.S. markets as all three major U.S. indices booked multi-day streaks and finished the week in the green.
With unemployment near a 50-year low and the jobs market showing robust strength, market sentiment in the next few weeks will depend on the upcoming Q2 corporate earnings results. Next week, major banks, retailers, and airlines will headline earnings reports. Also dictating market direction will be the latest CPI data and Fed Beige Book, both scheduled for Wednesday the 13th.
Another key market indicator is the long-term U.S. bond yields. After turning slightly lower last week, the 2-year, the 10-year, and the 30-year note all turned higher this week with yields above 3%. Inflation remains at the forefront of investors' minds and most likely combatting it will take time; which raises the prospect of stagflation setting in and causing a recession that is large in some areas.
source: barchart.com
To this point, I can’t emphasize how vital it is for blog readers and members of the Yellow Tunnel community to participate in our Live Trading Room and see how I am navigating us in and out of select trades. It’s FREE for all.
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I also want to emphasize to traders how vital a stop-loss discipline is to winning and being successful in an unforgiving market. We employ specific stop-loss instructions with every trade. The buy and sell programs controlled by high-frequency related algorithms can create great profits or cause sudden losses, so it is imperative to maintain an element of control over risk with each trade.
CURRENT TRADING LANDSCAPE
As of Friday, the 5-day chart shows the $SPY was trading 3% higher, near $388, and above the key long-term support – $380. The technology sector ($QQQ) also saw a weekly boom, up 5.3% over the last five trading sessions, at $293, impressively above its 50 DMA.
source: barchart.com
The $DXY traded lower on Friday, near the $107 level, but still managed a positive week. The $TLT also traded lower on Friday, near $112 level, and facing the key long-term resistance.
As previously mentioned, the ten-year yield closed higher at 3.09%, below the key short-term support - of 3.20%, while the 30-year note stood at 3.27%. The $VIX, having traded higher most of the week, retreated on Friday toward the $25 level.
Taking a closer look at the statistics, I'd be a seller into the rally and have a NEUTRAL portfolio right now. The market is presently oversold and in the process of bottoming.
The "BUY" signal based on the Aggressive Power Trader Portfolio is at the $380 and then $362 level using SPY and the "SELL" signal is at $396 and then $409.
If you are trading options consider selling premium with November and December expiration dates.
On the upside, our Stock Forecast Toolbox forecasts an upward trend in the coming few sessions, with a range of $392 to $384 as seen above. Similarly, the 6-month forecast, shown below, depicts a rising trend that is accelerating quickly in the near term while tapering off afterward. The 6-month support and resistance levels offer great insight into where we will look to make our next move in the market.
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. Click here to learn more.
Signals have historically averaged over 85% 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 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 Earnings 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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Earnings Season starts Wednesday, July 13th and the first to announce its earnings is
JP Morgan Chase.
Last earning season I traded JP Morgan Chase on April 13th and I had a 25.8%** return.
Last earning season I traded JP Morgan Chase on April 13th and I had a 25.8%** return. Let me repeat that, we had a 25.8%** return!
That's a pretty good return after holding the position for only 4 days!
And that is not the first time I traded this JP Morgan Chase stock:
October 12 to 14, 2021 – 68.57% (2 days)
October 28 to 29, 2021 – 137.96% (1 day)
November 23 to 29, 2021 – 199.05% (6 days)
December 14 to January 4, 2022 – 51.52% (19 days)
Goes on...
Be prepared: JP Morgan Chase (JPM) is scheduled to announce its earnings on July 13th.
This is my favorite time of year! Join me on the trading floor as we trade live.
You’re Invited: Click Here
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SECTOR SPOTLIGHT
With the latest labor data supporting markets and focus now turning towards the upcoming earnings season, I am looking towards a familiar sector to provide a timely hedge. It is my opinion that the market, in the short term, is overbought but heading higher in the long term.
Taking into consideration the previously discussed support and resistance levels for the SPY, I am seeing $TLT, iShares 20+ Year Treasury Bond ETF, as a perfect hedge.
The ETF looks to track investment results of U.S. Treasury Bonds, with remaining maturity greater than twenty years. TLT is currently comprised of 33 holdings that fit this standard and stands at a 3.31% average yield to maturity.
The Federal Open Market Committee in their latest minutes plotted the narrative for a slower growth economy, and I expect interest rates to peak out with a return to large-cap growth industries. The dollar should see some forward momentum and therefore I am looking to go long on $TLT, as these two typically trade hand in hand. Once again, in the current short-term, I believe the market is overbought but is heading higher long-term.
Looking at TLT’s Seasonal Chart, best used for long-term trend identification, we see a wide gap from the current year, marked in the blue line above, as compared to the annual seasonal data, marked in the green line.
TRADE OF THE WEEK
Traders looking for a strong hedge trade should highly consider the 20+ Year Treasury Bond ETF (TLT) as a go-to ETF this month.
source: barchart.com
When considering TLT’s Seasonal Chart, there is a sizable gap between the annual seasonal line and the current year price. This, along with the symbol’s 10-day forecast, provides a great hedge opportunity. Coupling the predicted data and trends of TLT along with our current reading of the market, I believe there is an upside in this treasury ETF to be used as a strong hedge.
As I outlined above, I expect the market to continue the short-term rally for the next couple of weeks and I am watching SPY overhead resistance levels at $396 and $409, as well as support levels at $380 and $362.
This is exactly where our AI tools are so crucial in determining precise entry and exit points. I’ll be looking to trade $TLT this week as a hedge. It is one of the really great ETFs to trade from the long side when short-term rallies are in the offing, even during protracted downtrends such as the present.
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 trade 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.
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 85.01% of all trades that we made, with an average profit of 37.21% 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.
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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.