Healthcare Stock Set To Soar
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.
Wall Street and investors are celebrating a very upbeat third-quarter earnings season, the probable outcome of gridlock in Washington, the hopes of a forthcoming vaccine by year-end, a dovish Fed policy and hopes of a bi-partisan stimulus package.
It’s a lot to get excited about, and the 7%-8% move higher for the major averages this past week shows that investors not only voted last Tuesday but they also voted in favor of the bullish camp all week. Even as COVID-19 data deteriorates, the market has elected to turn a blind eye to any perceived impact of softer economic data going forward, opting to bet that what we're seeing electorally will be the eventual outcome.
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 75% accuracy in my live trading since inception. Sometimes we hold positions 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 continued the rally as market participants realized the senate most likely will be controlled by Republicans and the balance of power will continue. The SPY has broken through the main overhead resistance at the $340-345 level. The $340-344 level is key support for the bulls. The SPY is overbought and prone for correction tomorrow or next week (October Unemployment numbers will be announced tomorrow).
As long as the SPY is trading above the $342-345 level market is range-bound between $342-$360 till the end of the year. The U.S. Dollar ($DXY) is trading below $94 level and U.S. Treasuries (TLT) staged a strong rebound as stimulus package size and timing are uncertain.
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 $346 level using SPY and "SELL" signal is at $353 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 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 stock is trading at $100, I would sell OTM put (strike less than 100) with option BID price close to $0.5.
GOP control of the Senate greatly reduces the risk of “healthcare for all” legislation that would most certainly pressure the healthcare sector as a whole. Large providers would go by way of the Canadian health insurance companies and cease to exist. Drug companies would see federal funding for cheaper pricing to address the masses of uninsured and illegal alien populations and research and development monies would be diverted to basic healthcare procedures.
The Healthcare Select Sector SPDR ETF (XLV) is the proxy for trading the sector as a whole with the best-of-breed companies making up the top holdings. In fact, the top ten holdings account for just over half of total assets.
From a purely technical standpoint, shares of XLV have demonstrated tremendous resilience this past week. After testing its 200-day m.a., XLV powered to a new 52-week high on the notion of a GOP win in the Senate.
Trading XLV in a new bullish pattern will be a go-to trading candidate in the days and weeks ahead. I highly encourage 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
One of the two top holdings within XLV is Dow component and sector leading UnitedHealth Group Inc. (UNH), the nation’s largest healthcare insurance provider. The company has a market cap of $228 billion with annual sales of $256 billion for 2020. Revenues are forecast to grow by 6% this year and increase by 8% in 2021 to $278 billion. Earnings will grow from $16.70 this year to $18.35 per share in 2021.
Similar to XLV, shares of UNH vaulted off their 200-day m.a. to new all-time highs this past week when it became apparent to traders that it was business-as-usual for UNH following the elections. Trading volume swelled by three times to 10 million shares on the upside breakout.