Trade Alert: Buy “Power”
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CURRENT TRADING LANDSCAPE
As I biked through the quiet streets of my neighborhood and reflected on the emptiness of the streets, usually filled with school buses, kids on their bikes and caregivers pushing the strollers, I was overwhelmed with sadness. Moments later, sitting in my office and listening to accounts from Europe, of people not being able to even walk outside without permission slips, I suddenly felt blessed that I was able to bike to work today.
My middle schooler has a poster in her room, which says: "Life is not about waiting for the storm to pass, but learning how to dance in the rain," which my wife must have hung at some point, probably five years ago, and I just noticed tonight. How appropriate and timely that in the flood of negativity and sadness, you too are able to find some positivity in today's storm.
The markets were able to hold on to their gains after the disappointing unemployment stats and the news in regards to the decrease in the future oil supply numbers. Momentum behind the bulls is deteriorating and the markets are due for a pullback. The energy sector led late last week after President Trump initiated a dialogue with Russian President Vladimir Putin renegotiate a cut in oil production with Saudi Arabia.
My opinion has not changed. SPY was able to close above the key $230-240 level, which is December 2018 low. "BUY" signal based on the Aggressive Power Trader Portfolio for tomorrow is at $240 level using SPY and "SELL" signal is at $262 for short term traders. Markets are susceptible to retest the recent lows in the next 2-10 days.
Next 2 weeks will be crucial in terms of leveling off the number of new coronavirus cases, and confirming the bottom on SPY.
Please review Aggressive Power Trader Portfolio. Monthly predictions have been updated. SPY shows average price for May $264 and July $287. The model confirms the most optimistic scenario of "U" shape recovery as long as we can break through the $280 level by June-July.
I expect the market volatility and the five percent daily market moves to persist. At this point, I do believe we have set the bottom (market can overshoot support and resistance levels especially when VIX is high). I believe the worst part of the sell off is behind us. Please monitor VIX level as current levels are above historical average. As long as VIX at $40-70 level market can retest the recent lows. My strategy is to aggressively buy any market sell offs (10-15%).
The market (SPY) will trade in the range between $230 and $270 levels for the next 4 weeks. Worst case, SPY can sell off to $210 level. I am still hedging my positions using SPY puts.
I believe the market will recover back to $280 level sometime during summer as the spread of the virus will slow down in Europe and the rest of the world.
Please follow key support levels on TLT ($142), GLD ($145). As long as these support levels are intact, the market is prone for pull backs.
As the market tries to find its footing against the fluid stream of COVID-19 headlines, there is some constructive trading action occurring within the more defensive sectors. I am growing bullish on the power utility sector given the steep sell off these stocks have incurred and the lofty dividend yields they offer. They have been victims of heavy selling by index funds as they are components to most if not all index funds.
With Treasury yields trading between 0.06%-1.3% across the curve, the attraction of 3%-5% yields on qualified dividends comes into play for large fund managers. I believe from a fundamental standpoint dividend stocks will likely lead the market rebound in the months ahead followed by growth stocks.
Utility stocks are also trading low on the notion of weaker demand. Although demand for electricity is currently down from industrial, municipal and academic facilities, this is a temporary situation that will be quickly resolved when the people get back to work by what should be early summer. Utilities have no risk to the fluctuating dollar, maintain strong balance sheets with stable dividend payout ratios and should outperform going forward in a low interest environment as the economy comes back on line.
The best way to trade the utility sector is by way of the Utility Select Sector SPDR ETF (XLU), which is a great proxy for group. Shares of XLU trade like water, with average daily volume of around 20 million shares and a highly liquid options chain as well.
Below is a table of the top ten holdings that will be changed up weekly if not daily, depending on fast markets and corporate developments. The management team pays close attention to all the developments, both on a sector basis and individual stock basis to maximize and optimize the fund’s performance.
Shares of XLU are trading down to around $53 from $71 after putting in a reaction low of $43 on March 23 . I’ll be looking to work with this ETF in the weeks and months ahead as it presents an excellent risk/reward opportunity. When trading XLU and other stocks and ETFs I’m recommending, traders should employ dollar cost averaging into trades when dealing with a volatile market – keeping some powder dry at all times.
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TRADE OF THE WEEK
The top holdings within the XLU is NextEra Energy Inc. (NEE), formerly FPL Group. The stock comprises 14.49% of the XLU, twice the percentage of the next largest holding. NEE is the go-to name in the sector.
The company operates approximately 27,400 megawatts of net generating capacity. It serves approximately 10 million people through approximately 5 million customer accounts in the east and lower west coasts of Florida with approximately 75,400 circuit miles of transmission and distribution lines and 661 substations.
Our Seasonal Chart has turned bullish for NEE in the short-term (20 days) and well out to the next 50 days per our AI indicators.
The stock currently trades around $223 and well off its all-time high of $283 set back in early March. For traders, this stock is an excellent trading vehicle as its daily share price swings about 5-10 points. What’s nice about trading utilities is that in this market landscape, if you’re initially wrong on timing your entry point, you have a good shot at being right soon thereafter.
My AI-driven Stock Forecast Toolbox has a “B” Model Grade rating for NEE with a near-term predicted resistance target of $253.27 that implies a 20-point rally in store for the stock when the market stabilizes.
From the 1-year chart below, the stock has found support at the $220 level and it serves as a dual support/resistance level in the past year. Again, trading NEE should be done using a dollar cost averaging approach. Market volatility remains elevated and thus trades should be layered on until full conviction of directional momentum is confirmed.
In our primary trading service Aggressive Power Trader, I direct our subscribers through the “trade decision-making process” with the mindset of being in and out of trades within 24-48 hours with the objective of booking 30%-60% gains against the amount of capital at risk on each and every trade with 75% accuracy.
The major element of this service is that it provides tomorrow’s featured trades the night before so traders can analyze and work on how they might best want to participate. You get to examine stock candidates well ahead of when I’m going to execute my best ideas the next day. It’s my TOP STOCK watch list of trading candidates with the various parameters that I use to trade each trade with defined risk levels, entry points and projected exit prices.
Each day at 8:00 PM and 8:30 AM CST, we provide our Top Bullish and Bearish Stocks, each with an Entry Point and projected exit price. Our signals are meant to last 1-2 days. Below are actual recommendations with parameters found on our Aggressive Power Trader Watch List.
I’m only showing a few stocks and ETFs that made up our Thursday night Watch List, so, there are plenty of trading opportunities in stocks, and ETFs to put to work on a daily basis. There are typically 10-12 trading strategies to consider.
I also post details of our trading activity and updates on the Watch List at the bottom section of our daily blog. So, make sure to stay tuned in that service 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 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 a stock price. I target 75% accuracy using these signals.
Through the Aggressive 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 our trading instructions to a tee, a $100,000 initial investment when backtested may have grown to over $1.6 million dollars. This torrid track record is not produced by hitting a home run from time to time. It’s made possible by being right on every 3 out of 4 trades with an average profit of 24.09% per trade.
Once you’ve become a member to 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 archived in the event that they need to be viewed at a later time.
Our special introductory offer of $17 for the first 30 days should be your first trade of the week ahead. I sense the market is in the final stages of a retest and you’ll want to have our updated recommendations at the ready when its time to lean into the next rally.
Go to our website at www.yellowtunnel.com and make Aggressive Power Trader your default trading system where the AI that powers its watchlist has a record of winning 75% of the time and becomes a way of life for your trading experience. Growing wealthy is a process. What we offer is the science of trading from a proven method that will change the way you approach the market and how you build your net worth. I look forward to welcoming you as a new member, but it’s up to you to take us up on our offer and put ourAI to work.
Trading thoughts on our trading model :
Within our Aggressive Power Trader trading stock watch list, trades are recommended in our Tradespoon Live Trading Room the next day.
Aggressive Power Trader is purposed to deliver high-visibility sector strength where a cluster of leading stocks are identified, coinciding with what we call a “10-day prediction momentum trade”. When we recommend a stock, ETF, or related option strategy, our time horizon is same-day in-and-out and up to five days max, at which time in the majority of trades, would be closed out.