5G SURPRISE: EPIC GAINS
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.
The month of September is playing out pretty much to the script I’ve outlined during the past couple of weeks. Rotation out of mega tech stocks into value, industrial, materials and transportation stocks continued throughout the week.
Because the FAANG stocks plus other big tech names like Microsoft and Salesforce.com make up so much of the Nasdaq and S&P, it is no surprise that the Nasdaq has broken its 50-day moving average and the S&P is testing its 50-day m.a.
Quarter-end rebalancing of portfolios is a natural occurrence and now several leading tech stocks have entered oversold territory that will invite a bounce. The selling in tech is broad-based and the severity of it shows just how crowded this trade was coming into September.
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
The SPY was able to bounce off the 50-day moving average. The technology and the growth stocks sold off and are on their way to retest the 50-day moving average again this week or next week. Values stocks (Energy, Transportation and Industrials) continue to outperform and will retest its June overhead resistance shortly.
On the downside, I still expect the technology and the SPY marginal breakthrough 50-day moving average sometime in the next two weeks.
The TLT and the DXY continue to trade in the range and do not show any signs of the market reversal. The market dynamics support the reflationary trade where the value stocks will outperform the growth stocks.
The value stocks will continue to outperform technology stocks and should provide SPY with short-term support at $330-335. Short-term, the SPY overhead resistance is at $342 and will retest $330 level probably this week again or next week if bulls are unable to push the SPY above $342 level.
The SPY new top is now set at $360 and potentially can be retested again only at the end of September or early October. SPY short term resistance is at $342. I would be a buyer using any short term corrections and use dollar-cost average to accumulate positions at this level. I will short the SPY once it approaches $360.
"BUY" signal based on the Aggressive Power Trader Portfolio for tomorrow is at $328 level using SPY and "SELL" signal is at $337 for shor-term traders.
The SPY potentially can overshoot 50 days moving average next week and stage rebound toward the end of September, the start of October.
Based on our models, the market (SPY) will trade in the range between $325 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
Among the selling pressure occurring within the tech sector, there is one theme that we don’t want to lose sight of – namely the rollout of 5G technology. This powerful and transformation trend is only in the first year of a massive three-year growth period.
The installation of 5G capability among the major carriers AT&T, Verizon and T-Mobile is almost at full scale with 5G capable smartphones already hitting the market. The much-anticipated launch of the iPhone 12 is set for sometime in the next few weeks that will trigger a huge upgrade cycle.
The Defiance 5G Next Gen Connectivity ETF (FIVG) offers traders an attractive way to play the 5G sector in a way that reduces single stock risk, and yet holds the most central names that are leading the 5G super cycle.
The top 10 stocks with FIVG account for 38.40% of total assets. Since having gone public in early 2019, the chart below shows shares of FIVG hitting a recent peak in earlier this month, coinciding the high in the Nasdaq. A rising 20-week moving average (blue line) gives a nice picture of where underlying support for the sector is.
Once there’s a selling climax in the tech sector, the opportunity for a low-risk entry point will emerge – and as swift as this market moves, it could be very soon.
TRADE OF THE WEEK
The big name in the entire 5G experience is in my view Qualcomm Inc. (QCOM), the primary provider of the chip technology that powers wireless 5G devices. The company’s line of Snapdragon chips will be found in most lines of 5G-capable devices from all makers of 5G products. They are the arms dealer in the 5G war for customers.
The bull case for Qualcomm is rooted in their lucrative stream of royalties flowing from the licensing of their technology. After several years of legal hurdles, the company settled with Apple earlier this year on withheld royalties.
Sales and earnings are set to accelerate in 2021. For 2020, revenues of $21.09bil will be up 8.7% from 2019 and then soar by 31.6% to $27.7bil next year. Earnings of $3.92 per share this year will jump by 63.3% to $6.40 per share in 2021.
Qualcomm had a similar dispute with Chinese smartphone maker Huawei that was also settled last month, taking the stock to a new all-time high of $123.92 before pulling back with the market and semiconductor sector. The stock has a rising 50-day moving average that comes into play right around $107.50.
With the stock trading at $113, there looks to be about 5 points of downside risk and 40 points of upside potential over the intermediate-term. Buying the stock right for trading purposes means applying our proprietary AI tools. The Stock Forecast has a Model Grade “B” rating with a probable trading range of $110.80 - $118.37.
The Seasonal Chart is also bullish on QCOM, with 3 out of 4 probability readings posting “Higher” readings going out 40 days.
Our AI tools we apply to each trade are crucial to determining how we should view trades when they might appear cheap, and when both of our primary tools are on the same page, then we have a quintessential trading candidate.
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 $18 million dollars. This stellar performance is made possible by being right on over 76% of all trades with an average profit of 24.80% 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 daily trip to the bank.
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Go 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.