Stimulus stock to soar

Published Oct 10, 2020

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.

I feel like Rod Serling from the Twilight Zone should be contributing to this column today following the surreal week of on-again, off-again stimulus negotiations, debates, NFL games, reopening efforts and late-stage vaccine trials.

In the case of what is being hailed as the most important elections of our lifetime, the market seems to not be spending a lot of energy worrying how the process will play out. Expectations of a terrific earnings season and the eventuality of fiscal stimulus are of more importance this week.

Grant it this might change toward the end of the month as we get closer to Election Day, but for now, the bullish tone is prominent and building on itself with each day.

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

My wife suffers from a serious health condition known as FOFR, commonly known as FOMO. Translated into English it means fear of future regret or fear of missing out. And before you say that it is not a health condition and I shouldn’t equate it to such, you obviously don’t have the same wife.

I realized this today as I watched her shopping at Aldi. Aldi, the sad, unpretentious store, that charges for bags and carts, has become a bit of an unhealthy obsession. She told me to wait in the car because she only needed two things. Twenty minutes later I watched her drowning underneath all the crap she needed to buy.

And why, you ask, did she NEED to buy those things? Because of her FOFR aka FOMO health condition. What if she really, really, really needs that cute Halloween table cover and it will be three times the price? Or worse, what if it will no longer be there?

I watch her barely make it to the register, but only to put down all the stuff. As the clerk begins to ring her up, she continues to run through the aisles, grabbing last-minute items that we don’t need. Admit it, she needs help.

The SPY continued to make incremental highs and trying to stage a breakout of the main overhead resistance at $342. We had broad-based rally, fueled by energy and financial stocks, which is positive for the bulls.

The US Dollar, DXY, were trading in the narrow range.

On the downside, the $318 level on the SPY is the bottom for the market until the elections and potentially can still be re-tested prior to the elections (low probability event).

Currently, the key support level is at $335. As long as the SPY is trading below $342-344 level, key overhead resistance, expect additional volatility.

I would be a buyer using any short-term corrections and use dollar-cost averaging strategy to accumulate positions at this level.

"BUY" signal based on the Aggressive Power Trader Portfolio for tomorrow is at $342 level using SPY and "SELL" signal is at $348 for short-term traders.

Based on our models, the market (SPY) will trade in the range between $318 and $360 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 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 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 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

Fresh reports that President Trump wants to “go big” on a new version of a stimulus plan fueled a strong move higher for stocks heading into the weekend. Talk of a $1.8 trillion plan being offered by Republicans narrows the gap that has kept both parties at bay. This time around looks like a deal may well get inked in the days ahead.

Industrials are taking this latest stimulus offer to heart, trading solidly higher on the prospect of huge spending for infrastructure. The Industrial Select Sector SPDR ETF (XLI) is breaking out led by America’s finest companies in this space.

What’s gets our attention is how XLI shows up within our AI models for the short-term. The Seasonal Chart has four “Higher” probability readings for the next 20 and 30-day periods. When our AI platform puts out a forecast like this, it has about a 75% probability of being money good.

From a purely technical standpoint, shares of XLI pushed back up through their 20 and 50-day moving averages, setting up nicely for higher highs for the next week or two.

Trading at around $81, it would bode well for readers of this blog to join up today to Weekly Power Trader and be ready when we act on this trade.

TRADE OF THE WEEK

The one stock that is a pure-play on heavy equipment is Cummins Inc. (CMI) a manufacturer of diesel and natural gas engines, products worldwide. It operates through five segments: Engine, Distribution, Components, Power Systems, and New Power.

The company markets diesel and natural gas-powered engines under the Cummins and other customer brands for the heavy and medium-duty truck, bus, recreational vehicle, light-duty automotive, construction, mining, marine, rail, oil and gas, defense, and agricultural markets.

Earnings are forecast to rebound by roughly 30% in 2021 to $12.50 per share and that was before any notion of an infrastructure stimulus plan was on the table. And the stock is breaking out to the upside on the newfound optimism.