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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.
2020 has proven to be a year where there is never a dull moment for traders. Just as the market was looking to challenge the early September highs, news of President Trump contracting COVID-19 created a fresh speed bump. But a speed bump might be all that this pause turns out to be. The tech sector has re-asserted itself as stocks of choice for traders seeking profits from the long side of the market.
FAANG and MAGA stocks got pretty overextended in late August and were very much due for an intense bout of consolidation – and that’s exactly what occurred the first three weeks in September. Having fully digested their summer gains, MEGA tech stocks have regrouped and have begun their year-end march higher when tech tends to outperform.
It was reported Friday that the SoftBank “Whale” is back at it, buying call options on Facebook, Netflix, Alphabet and Amazon.com valued at $200 million in each trade. The Nasdaq has enjoyed a very strong pop higher in the past week, and some of the moves could be attributed to this influx of widespread call buying in heavily weighted names.
Regardless of the SoftBank activity, traders are generally quite optimistic about third-quarter earnings season that will kick off in earnest next week. Businesses have done a masterful job adjusting and modifying to operate efficiently within the pandemic environment and technology has proven to be the most adaptable of all sectors.
According to FactSet - To date, more S&P 500 companies are issuing positive earnings guidance than average. At this point in time, 66 companies in the index have issued EPS guidance for Q3 2020. Of these 66 companies, 22 have issued negative EPS guidance and 44 have issued positive EPS guidance. The percentage of companies issuing positive EPS guidance is 67% (44 out of 66), which is well above the 5-year average of 32%.
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 at 2% of the stock price.
Signals have averaged over 76% 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
Whatever makes them happy, said my daughter’s friend, Mom, while I thanked her for giving my 14-year-old a ride home from Brunch. Like what? Who brunches at 14? And heck no, not whatever makes her happy. That did not resonate well with me, as you can tell. Do you know what would make my kids happy? Sitting on the couch, watching their phones and eating ice cream all day long, oh and I guess going to Brunch.
Of course, I want them to be happy, but my idea of happiness does not often coincide with theirs. Because what I really want for them is to be happy in the long run, which often makes them semi miserable in the meantime. Don‘t feel too bad for them - I promise they have been to the happiest place on earth, at least once or twice, which should definitely count for something.
The market continued to push higher and the SPY has retested the $339 level once again. The technology sector continues to make incremental highs and stocks like TWLO, NFLX and PTON are in a strong uptrend. The DXY continued to print new lows today. The SPY should retest and break the $342 level in the next two weeks.
The September unemployment numbers came in light of forecast, but imply more Fed and government stimulus is on the way, which could potentially break the SPY from $320-344 range. The probability of retesting recent lows is low. Monitor home builders as this is the sector (XHB) that will be the first one to make new all-time highs.
On the downside, the $318 level on the SPY is the bottom for the market until the elections. The SPY should break the $342 level in the next two weeks.
I would be a buyer using any short-term corrections and use a dollar-cost averaging strategy to accumulate positions at this level.
"BUY" signal based on the Aggressive Power Trader Portfolio for tomorrow is at $328 level using SPY and "SELL" signal is at $338 for short-term traders.
The SPY should continue to rebound in the first two weeks of October with shallow corrections. Based on our models, the market (SPY) will trade in the range between $318 and $360 for the next 4 weeks.
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
As noted above, the technology sector has moved back into its leadership role after a short hiatus. Like the old saying of “it’s hard to keep a good man down”, the same could be said for the mighty tech sector. The modern domestic and global economies run and depend on the vast applications that software, semiconductor, networking, hardware and device companies bring to manage governments, businesses and consumers.
The Technology Select Sector SPDR (XLK) is an ideal way to trade the sector as a whole. Sporting a market cap of $31.7B, this ETF trades several million shares per day and has a very liquid options chain with tight spreads. The top ten holdings of the fund make up just over 69% of total assets.
What’s gets our attention is how XLK shows up within our AI models. The Seasonal Chart has four “Higher” probability readings for the next 20, 30, 40 and 50-day periods. I get pretty inspired when our AI platform puts out a forecast like this, as it lays a solid trading thesis for us to work with over the next several weeks.
From a purely technical standpoint, shares of XLK pushed back up through their 50-day moving average, setting up nicely for a run back to previous highs.
Trading at around $116, I would expect maybe another week of tight range trading for XLK shares and then for bullish momentum to start moving back into the stock on rising optimism about upcoming earnings releases that have shown to be broadly ahead of Wall Street estimates for most of the year. It would behoove 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 holds the title of being the most coveted company in the world among those with Swiss bank accounts is Microsoft Inc. (MSFT). I am sure this claim is up for debate by holders of other obvious stocks, but considering the array of businesses within the umbrella of Mr. Softie, it’s not hard to argue its case.
The company is best known for its Windows 10 operating system and Office 365 suite but is also a massive player in cloud computing through its Azure division, a huge force in the labor market through its LinkedIn division, remote work platform Microsoft Teams, gaming platform Xbox and computing device division Surface.
These are just the most familiar parts of the company. Microsoft has dozens of subdivisions within the company addressing a wide swath of markets, organizations and enterprises managed by over 163,000 employees with a market cap of $1.54 trillion.
The company is forecast to grow revenues in 2020 by 9.6% to $157 billion and accelerate by 11.50% next year to $175 billion. Earnings for 2020 will increase by 12.1% to $6.50 this year and rise by 13.7% next year to $7.35 per share.
Shares of MSFT got well ahead of its 50-day moving average back in August, pulled back sharply with the market and are now in the process of setting up for re-taking the high ground where a challenge of the previous high is not out of the question.
When we apply our AI tools to MSFT, we get a broadly bullish set of indicators pointing to higher share prices ahead for the immediate and intermediate time frames. This chart coincides with the XLK in that MSFT is the top holding, and therefore trading the stock with a high level of confidence.
By being a member of Weekly Power Trader, you’ll be sure not to miss out when we move in and out of this powerful tech titan. This is a great time to consider joining, as market volatility and the promise of a robust earnings season make for a trading landscape where steady profits can be achieved with regularity.
Our Weekly Power Trader advisory service takes positions in only blue-chip stocks and ETFs that are “green lighted” by my proprietary AI tools, and when confirmed, are added to the portfolio with my investment capital as well. .
Trading Thoughts: 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 and allocate no more than 5% of trading capital to any single trade.
I allocate less than 5% of my portfolio if I hold a position overnight. On average, less than 1% of the portfolio should be at risk if you hold a position less than one day. I personally look to enter a position at predicted LOW (BUY) price or yesterday's close price. For Weekly Power Trader, my stop loss for stocks is 2% and my target gain is 2%. . I target 75% accuracy using these signals.
Through the Weekly Power Trader service, we tie our Tradespoon Live Trading Room to manage the parameters of every trade. And we update our closed positions daily. The two platforms work seamlessly to provide our subscribers with the most robust trading experience available anywhere in the market today.
For those that have followed since inception, a $100,000 initial investment when backtested may have grown to over $1.9 million dollars. This stellar performance is made possible by being right on over 76% of all trades with an average profit of 24.98% per trade. This kind of performance stands alone among all other trading services.
Once you’ve become a member to any of our service – Weekly Power Trader or Aggressive Power Trader, 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.
Traders seeking the most-timely directional trading strategies where 3 of every 4 trades are profitable should take action and come alongside the Yellow Tunnel community and make Weekly Power Trader and Aggressive Power Trader your go-to AI trading platform for no-excuses performance.
Our AI platform crunches all the data 24/7, generating a constant stream of trades with the highest probability of generating incredibly profitable returns available to the beginning, retail and professional traders anywhere in the marketplace today.
To to our website at www.yellowtunnel.com and make the Weekly Power Trader service your default trading system where the AI that powers my all-world, always thinking platform.