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.

Earnings season is triggering some early consternation over the strength and sustainability of an economic recovery as COVID-19 re-emerges in several states, threatening to force governors to reinstate stiff restrictions, just as the unemployment checks are about to run out. Congress is trying to fast-track another stimulus bill     but is running into opposition about how it is     structured.

This past week saw a rotation of capital flows out of growth stocks and into value stocks that is generally a bullish development in that money isn’t leaving the market, but instead moving to low PE stocks with dividend yields. It’s a healthy rotation that gives the big cap tech and healthcare stocks a chance to consolidate while allowing the market to broaden out.


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.


SPY is trading in a well-defined consolidation pattern between $218 and $224 after better than expected June retail numbers and in line initial job claims. Value stocks (Industrials, Financial, Energy and Transportation sectors) continue to outperform the growth stocks. 

U.S. Dollar continues to sell off (bullish for emerging markets and commodities). NFLX dropped as much as 13% in the aftermarket hours after the earnings announcement. Work from home stocks and technology stocks are trading in a short-term correction phase.

The short-term bottom is at $293 and potentially can be retested in the next two weeks. SPY longer term overhead resistance is at $325. The market       has started the July correction phase     and can retest $293 level in the next 14 days. 

At this point, I do not think the market will break $293 level as FXI (China large-cap       stocks), and value stocks continue to outperform.   Earnings season started last week.

"BUY" signal based on the Aggressive Power Trader Portfolio is at $316 level using SPY and "SELL" signal is at $326 for short-term traders

I expect the market volatility and the two percent daily market moves to persist. SPY top is set at $325 and the market can potentially break this level in the next 2-4 weeks. The market       can overshoot support and resistance levels when VIX is elevated. Short term support is set at $293. My strategy is to buy 5-10% market corrections.

Based on our models, the market (SPY) will trade in the range between $293 and $330 for the next 4 weeks.   


One bullish takeaway from this past week has been the rising tide of relative strength within the small caps. The Russell 2000 is making an attempt to clear its 200-day moving average as several key components are breaking out. The move higher is still early in the making     but is gaining credence with each trading session.

Shares of the iShares Russell 2000 ETF (IWM) are the smartest way to trade the index for those that want to get involved with a super-liquid ETF and options chain. The nice thing about trading shares of IWM is that this ETF isn’t concentrated in just a few names like most sector ETFs.

The top ten holdings within the IWM comprise only 2.78% of total assets, where if a component gets knee-capped, it doesn’t seriously impact the performance of the ETF and thus smooths out the trading volatility so some extent.

Applying my AI tools to the IWM trade, we get a very bullish forecast for the next 20, 30, 40 and 50-day periods – making for what should be a very good trading vehicle to work with over the next several weeks. It’s not every day I get four “higher” readings from our indicators and I’ll be looking to utilize this bullish scenario for our Weekly Power Trader members with short-term trading strategies in the days ahead.

This new-found momentum for the Russell is great news for the bulls that supports a sustainable bull trend going forward. Knowing the market is broadening out will only draw from fund flows from the sidelines. It also raises my confidence about pressing our trading capital utilizing our signals within our Weekly Power Trader advisory service.


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One of the hottest and leading companies within Russell 2000 index is big-box       retailer BJ’s Wholesale Club Holdings Inc. (BJ). Consumers bent on maintaining a large inventory of home goods, sundries and foods that are subject to shortages are flocking to the warehouse club stores for bulk purchases at deep discounts.

BJ's operates as a warehouse club on the East Coast of the United States. It offers perishable, edible grocery, general merchandise, and non-edible grocery products. The company also sells products through its website and mobile app. The company operates 217 clubs and 145 BJ's Gas locations in 17 states.

In fiscal Q1, ended May 2, 2020, BJ's reported a 103% increase in operating income on a revenue increase of 21%. Net income grew 167%, and diluted EPS grew 176% over the same period last year, showcasing the leverage in the business model, which has substantial fixed costs.

The model allows the company to grow income much faster than revenue as the company sells greater dollar volumes of merchandise per store, increasing revenue, but keeping fixed store costs the same.

BJ's has done a nice job paying off long-term debt, leading not only to less risk for equity holders but also decreasing interest expense, which directly translates to more earnings and greater cash flow for the company and shareholders. Interest expense in Q1 2020 was $20 million, down from $28 million Q1 2019. This number will continue to get smaller.

Lastly, shares of BJ’s valuation compare favorably to that of its competition. With a forward PE of about 20x, the stock trades at a steep discount to Walmart and Costco while growing earnings at a faster clip.

Applying our AI tools, the Stock Forecast Toolbox is bullish on for the next 10 days as momentum for the stock picks up rotation back into value plays that lead the rally.