Microsoft Outlook #1 Trade
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A better week for traders all around as optimism returned to equity markets amid lower fears of the omicron variant and inflation, which came in hot, but not as hot as many had feared. November Core CPI came in at 0.5%, meeting expectations, and down from 0.6% in October. The bond market reacted in muted fashion, the yield on the 10-yr Treasury slipping marginally to 1.46%.
Rotation remains pretty fast and furious. Broad selling pressure returned in the hyper-growth stocks with exorbitant price-to-sales ratios and virtually no PE ratios. Even though the inflation data checked in as expected, it is still running at the highest rate in a generation and reinforces the Fed’s directive to taper faster and consider raising the Fed Funds rate starting in 2022.
Wholesale inflation data in the form of the PPI report will be released Tuesday and here too, the market is expecting a hot number. But to see how well traders are absorbing what is invariably an up-rate market environment down the road, it’s encouraging but is also seasonally a strong time for the market. The latter half of December and all of January is historically bullish for stocks thanks to quarter-end window dressing and heavy pension funding in January.
TRADING LANDSCAPE
We’re in a fast market for sure. Heading into Thanksgiving week, S&P was trading at 4,750 and overbought. A week later and 5.2% lower, the S&P was oversold. After a strong current week of gains, it could be argued the S&P is once again short-term overbought and yet only getting back up to 4,700 before sellers showed up.
On Thursday, the $SPY reversed some of its recent gains down 0.7% and closed within 2% of an all-time high. The value/reflationary stocks closed lower, down 0.2%, and closed right above the 50-day moving average, $VTV at $143. The technology sector led the market to the downside, a lower 1.5%.
The $DXY traded higher and closed at $96 above the key breakout level of $94.5. The $TLT staged a rebound, at $149 and below the key overhead resistance at $152. The $VIX traded lower, back to the historical average, closed at 22.
The $SPY short-term support level is at $464 followed by $450. The SPY overhead resistance is at $472. Volatility can persist for the next couple of weeks. The short-term market is overbought and due for a pullback in the next few trading sessions. The most important news will come from CPI data tomorrow and the Fed rate decision next week.
I would consider starting accumulating reflationary/value stocks ($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 the portfolio at this time, raising cash, and having an overall bullish portfolio.
If you are trading options consider selling premium with February and March expiration dates.
"BUY" signal based on the Aggressive Power Trader Portfolio for tomorrow is at $463 level using SPY and the "SELL" signal is at $469 for short-term traders.
Based on our models, the market (SPY) will trade in the range between $445 and $480 for the next 2-4 weeks.
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What makes this new service so special is that 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 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 color 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 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 OTM put (strike less than 100) with option BID price close to $0.5.
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SECTOR SPOTLIGHT
The big correction in the high-beta tech stocks spilled over into the blue-chip software stocks, making for a compelling long-side opportunity in the best-of-breed names. The iShares Expanded Tech-Software Sector ETF (IGV). The stocks that make up the top ten holdings account for almost 54% of total assets with the top five holdings being the real workhorses of the software sector.
When we input IGV into our proprietary AI platform, the Forecast Toolbox gives IGV a Model Grade “A” rating and a Predicted Resistance price target of $513, implying a sharp and smooth path higher from its current price of $404.