Vlad’s Money-In-The-Bank Trade!
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.
As I write this column on Black Friday, I was pondering what would be an appealing topic to highlight that readers could find to be a bargain on America’s biggest shopping day. After all, Black Friday is all about bargains – and what I’m seeing is that there are plenty in the financial sector. More on this in a minute, but first let’s look at the market.
NEW WEEKLY POWER TRADER SERVICE
We recently launched our new Weekly Power Trader service that we at Yellow Tunnel are very excited about. Each week on Sunday, 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.
Also, note that the Weekly Power Trader signals are meant to last for 5-10 days as long as the vector confirms the same direction as the original pick, for stocks we use a target gain of 2% and stop as 2% of the stock price.
Signals have averaged over 75% accuracy in my live trading since inception. Sometimes we hold position 2-5 days by using options (selling OTM BULLISH PUT spread) and targeting 1% target gain and 1% stop loss using stock price. Green color should be interpreted as a bullish signal and Red color as a bearish signal.
CURRENT TRADING LANDSCAPE
Am I the only one who is utterly confused about COVID-19? So many things just do not make sense. Illinois has, once again, closed almost everything.
There is a 10 pm curfew, meaning that it is a lot more likely to get sick after 10 pm? No, I get it. People are less likely to get together and party if they have to be home by 10, but no one canceled brunches. Inside restaurants are closed, but outside tents, that have virtually no insulation, are open because they are “outside.”
Gyms can remain open, but fitness classes and kid’s sports are canceled. Have you tried working out in a mask? I just attempted to run in a mask and decided that this will be my first and last time, don’t do it. I guess I am back to my Peloton, I will miss my orange theory points though.
The SPY was able to stage a broad-based rally and testing the $365 level. Growth stocks outperformed the value stocks. Both Technology (QQQ) and Value (VTV) stocks are facing major overhead resistance levels. The best part of this year's rally is behind us and the market is due for a shallow pullback back to the $350 level in the next 2-3 weeks ($345 worst-case scenario).
The $350 level is key support for the bulls. I expect short term corrections to be shallow and the bull rally to continue.
As long as the SPY is trading above the $350 level, the SPY will break out from the current range to the upside and potentially can reach the $370-$385 level by end of the year.
The U.S. Dollar ($DXY) is trading below the $94 level and U.S. Treasuries (TLT) continued to trade in the downward channel. Value stocks continue to outperform and the breadth of the recent rally is impressive.
My opinion has not changed. The bull market has resumed its rally and will retest recent highs in November. I would be a buyer using any short-term corrections and use dollar-cost averaging strategy to accumulate positions at this level. 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 $361 level using SPY and "SELL" signal is at $366 for short-term traders.
Based on our models, the market (SPY) will trade in the range between $318 and $370 for the next 4 weeks. Based on the aggressive trader monthly predictions, the market will break through the $360 level in December of 2020/first quarter of 2021.
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 your 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 OTM put (strike less than 100) with option BID price close to $0.5.
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SECTOR SPOTLIGHT
The Black Friday deal for 2020 is the financial sector, and specifically the large banks and investment banks. Some of these global powerhouse companies are trading just above, at or even below book value. In a market where zero interest rates have all but eliminated all regard for price-earnings ratios, the banks and investment banks remain one of the most attractive values in the stock market today.
The most direct way to play the financial sector is through the purchase of the Financial Select Sector SPDR Fund (XLF). The top ten holdings account for over 52% of total assets and are composed of an attractive mix of banks, brokerage firms, investment banks and asset managers.
After lagging for months, if not years, the XLF is rising up as on the back of interest rates ticking higher, a strong lending market fueled by a surge in home buying and refinancing and strong trading operations thanks to a bull market in stocks and bonds. As I see it, this newfound love towards the financial sector instill in the very early stages of a powerful breakout that will carry right through the front end of 2021.
Applying our AI platform to XLF we see that short-term XLF is a bit overbought and then over the next 30-40 days the shares should be bought on a pullback.
This is where our timing of our AI tools is so valuable. I intend to trade the sector, but not until our AI-driven system triggers a buy signal. Having our Weekly Power Trader service will get us in and out at just the right times.
TRADE OF THE WEEK
Within the XLF, one of the top holdings that gets my attention this week is investment bank Morgan Stanley (MS). While Goldman Sachs is a member of the Dow and tends to be in the spotlight more, Morgan Stanley is actually quite a big bigger than Goldman. Morgan Stanley has a market cap of $104 billion while Goldman sports a $76 billion market cap. I think new money flowing into the sector will opt more for the bigger name.