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.
More hand wringing in the bond market as Treasury yields continue to push higher in anticipation of inflation, forcing the Fed’s hand to hike the Fed Funds Rate more than initially anticipated. Oil and commodity prices remain stubbornly high and the war in Ukraine is looking more protracted, which in turn keeps negative sentiment overhanging the stock market save for a few select sectors.
There is a counterintuitive trade happening. On the one hand, energy, fertilizer, soft and hard commodities, REITs, and insurance stocks are trading higher with interest rates and inflations, while consumer staples, utilities, and healthcare are also trading higher on the notion of a hard landing scenario later this year due to much tighter Fed policy.
We’re just a few days away from the first-quarter earnings season kicking off and this time around, it feels like traders are selling the rumor (soft earnings and weak guidance) that might give way to buying the news (earnings meet forecast and guidance is OK). It’s a hard call because of the algorithm-related buy-and-sell programs that dominate daily volume and key off many headlines.
A solid earnings season is just what this market needs to break the bearish camp’s hold on sentiment. Yes, bond yields have come up half of one percent, and 30-yr mortgage rates are now above 5%, but I seriously doubt 2.5% borrowing rates for Microsoft Corp. (MSFT) are going to impact the company’s business model that warrants the stock trading down 20% from its high.
CURRENT TRADING LANDSCAPE
As noted, the market has a gray cloud over it, given the most important and heavily weighted sectors to which the major indexes are pulling back. At present, there is highly concentrated market leadership, and that’s what has traders nervous. At the same time, the $SPY is holding its ground while the rolling correction runs its course.
As of this past Thursday, the $SPY closed higher 0.5%, at $448, below the key short-term support, but here again, it is dealing with the rate shock and the negative news out of Ukraine pretty well, all things considered.
The value/reflationary ($VTV) closed higher 0.5%, at $148, below the February highs. The technology sector ($QQQ) closed higher 0.2%, at $354, between the 50 DMA and the 200 DMA.
The $DXY closed higher, near the $100 level, at the June 2020 high. The $TLT closed lower 0.8%, at $127, and below the 2020 lows. The ten-year yield closed higher at 2.65%. The $VIX closed higher near the 22 levels, right above the historical average.
The $SPY short-term support level is at $440, followed by $425. The SPY overhead resistance is at $451 and then $465.
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.
The “BUY” signal based on the Aggressive Power Trader Portfolio for tomorrow is at the $444 level using SPY and the “SELL” signal is at $453 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.
Come Fly With Me: April 13th
Earnings Season starts Wednesday, and the first to announce its earnings is Delta Air Lines.
We previously traded Delta on July 2nd; we had a 28% return on risk.
Let me repeat that, we had a 28%** return!
That's a pretty good return after holding the position for only 1 day!
Be prepared: Delta Air Lines (DAL) is scheduled to announce its earnings on April 13th.
This is my favorite time of year!
As market sentiment has turned its attention toward defensive sectors as a way to insulate capital in a slowing economy, history is on the side of the telecommunications sector as being a go-to space for traders seeking safe-haven stocks to trade and their corresponding options.
One such ETF that is a preferred trading vehicle is the iShares U.S. Telecommunications ETF (IYZ). With $497 million in assets under management invested in 21 holdings, this ETF is a concentrated portfolio of the leading names in the telecom space. The top ten positions account for about 70% of total assets. The fund has had an average daily trading volume of 744K for the past 30 days.
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 IYZ, when we apply our AI-driven Seasonal Chart to this ETF, we get a bullish “Higher” probability reading for the next 20-day period.