Vlad's #1 Trade: Building Profits

Published Dec 17, 2021

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.

A very volatile week for the stock market resulted from the pre-FOMC meeting anxiety and the post Fed-policy statement that triggered waves of buying and selling that took the S&P and Nasdaq down to test key technical support levels. All this comes with Friday being triple witching options expiration for December, which only exacerbates stock price volatility.

The market is adjusting to the Fed’s plan to double the monthly taper to $30 billion from $15 billion and be done with it by March. Traders are also pricing in the possibility of three quarter-point hikes in the Fed Funds Rate next year, providing a strong bid for industrials, energy, and financials while crushing technology and growth stocks.

Oddly enough, all the talk of inflation, the need to speed up the taper due to strong economic activity, and higher rates haven’t impacted bond yields. In fact, they have declined, the 10-yr Treasury yield falling to 1.4% after touching up against 1.7% last week. There’s definitely a lot of cross currents and plenty of trading opportunities.

TRADING LANDSCAPE

With two weeks left in the year, the last half of December is historically bullish for stocks and the market as a whole. This year could surprise to the downside, but watching Friday’s tape gave me the impression the brunt of the selling has run its course. End of the quarter window-dressing, portfolio rebalancing, and tax-loss selling are domination the trading landscape.

That and some lower guidance from leading software companies Adobe Inc. (ADBE), Salesforce.com Inc. (CRM), Autodesk Inc. (ADSK), DocuSign Inc. (DOCU), and Veeva Systems Inc. (VEEV) impacted what has been bullish sentiment in the software space. It set the table for a broad selloff in the hyper-growth, no-P/E stocks that ensued these past two weeks where some popular names have lost as much as 50%-60% of value.

The $SPY pulled back and closed right at the key short-term support, down 0.9% at $466. The value/reflationary stocks traded higher and closed up 0.7% at the all-time high. The technology sector gave up all of the gains from mid-week, down 2.5%, and retested the 50-day moving average.

The $DXY traded lower (Britain raised rates), and closed at $96 above the key breakout level of $94.5. The $TLT closed lower, at $149, and below the key overhead resistance at $152. The $VIX traded higher, closed right at the historical average, 20.

The $SPY short-term support level is at $461, followed by $457. The SPY overhead resistance is at $472. The short-term market is oversold and due for a rebound in the next few trading sessions.

I would consider starting to accumulate reflationary/value stocks ($XME, $XLI, $XLF, $XLB, and $XLE). I expect the market to pull back again, but most likely, the $SPY will not revisit the $450 level and then the rebound will continue toward the end of December.

I would consider rebalancing my portfolio at this time and have an overall bullish portfolio. I believe that it is only a matter of time for the market to break through overhead resistance.

If you are trading options, consider selling premium with February and March expiration dates.

"BUY" signal based on the Aggressive Power Trader Portfolio for Monday is at $466 level using SPY and "SELL" signal is at $474 for short-term traders.

Based on our models, the market (SPY) will trade in the range between $450 and $490 for the next 2-4 weeks.

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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 86% 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.

Every trade recommendation that I make using this system – comes straight from the list of trade recommendations I use myself.

Signals have historically averaged over 86% 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.

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Dear Subscriber,

Instead of telling you what to do (after I trade)…

I will show you what I do (in real-time).

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.

As a Lifetime Subscriber, you can see my trading updates LIVE so that you can Do-As-I-Do and even copy my trading strategy.

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SECTOR SPOTLIGHT

Within the market, there is heavy rotation into the industrial sector, a natural beneficiary of inflationary tailwinds that reward higher pricing for goods and portend of faster economic growth in the year ahead. Traders are flocking to sectors more leveraged to the economy that is trying to get past the coronavirus, looking for a significant uptick in business conditions once the pandemic is exhausted and supply chain issues resolved.

The Industrial Select Sector SPDR ETF (XLI) represents a basket of the best-of-breed industrial companies from fundamental and technical aspects.

Shares of XLI have been trading in a 7-month base and now look poised to emerge from this base and push higher. This latest pullback is providing traders a very attractive entry point for a move to the $110 level and higher from there.

TRADE OF THE WEEK

Traders looking for a single stock recommendation within the industrial sector should consider working with Ingersoll Rand Inc. (IR). The company fits the bill for owning and trading a diversified industrial company that owns over 40 brands of products that serve the general manufacturing, construction, mining, power generation, transportation, logistics, oil, paper, aerospace, industrial gases, hydrogen, chemicals, plastics, rubber, electronics, semiconductor, environmental, food, beverage, military, plastic recycling, and waste treatment. It’s a strong lineup of top-tier subsidiaries.

Shares of IR have a market cap of $24.2 billion and are liquid, with an average daily volume of around 2 million shares. The options are fairly liquid, but the spreads are slightly wide, so limit orders are highly recommended for trading calls and puts.

According to Yahoo Finance, of the 14 analysts that cover the stock, Morgan Stanley is the most recent to update their rating on the stock with an Overweight on December 15.

The stock has a very bullish chart formation, having just completed the right side of a textbook “double-bottom, higher-low” formation that almost always results in a fresh move higher. In this case, a move to $65 looks imminent, assuming market conditions cooperate. It’s a good-looking setup.

Applying the Forecast Toolbox, we get a substantial upside Predicted Resistance price target of $70 that implies the potential for a 17% rally from its current price of $59.

This is what our precision AI platform does for our members. It identifies, clarifies, and verifies high-quality trades like a clear and powerful uptrend in stocks like IR. By being a member of any one of our services, it’s these kinds of opportunities that our proprietary algorithms provide our members to look forward to every day, where they can put their risk capital to work on both long and short positions.

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Considering the choppy 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 don’t trade without checking in with market-proven AI tools. Here are some examples of recently closed trades using our services.

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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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