Vlad's Trade-of-the-Month: DE-lightful
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 ferocious reopening rotation picked up speed this past week, with high-beta stocks getting sold off aggressively in favor of money flowing into deep cyclical, value and energy sectors. The market was going through the equivalent of a wash cycle in the latter part of February and now the pure growth stocks are going through the rinse cycle that will culminate when they go through the spin cycle that is now unfolding.
The change in sentiment has been stunning. Stocks like Tesla Inc. (TSLA) that characterized the meteoric rise of ETFs like the ARK Innovation ETF (ARKK) are getting sold off to the tune of 30%+ in just the past two weeks. Many stocks very priced to perfection, the market absorbed some of the biggest IPOs in history like Airbnb Inc. (ABNB), Snowflake Inc. (SNOW), Palantir Technologies Inc. (PLTR) and Door Dash Inc. (DASH), among others.
As the market got too extended, the potential for a sizeable pullback grew with the notion of a massive stimulus plan that fueled inflation sentiment that pricked the Nasdaq bubble – and now some air is being let out. The market is going to return to its bullish ways once this corrective process has run its course, and traders that are in sync with our Weekly Power Trader service will make a lot of money when the market turns.
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
So, I literally ran to tell you this. My daughter needed a driving permit, so I obviously dreaded going to the DMV. This dates me, right? OK, the Secretary of State’s Office. I received an email from her driving school that you now needed an appointment to even enter the DMV, so I tried to make one, with no appointments available.
But do not fret. I quickly figured out that the new appointments open up at 8 am and slowly disappear throughout the day, however, on Tuesday, I was able to make an appointment for Thursday, at any time that I pleased. We showed up at the DMV at the appointment time of 3:40 and it was like I died and went to heaven. No chairs, no crazy lines, efficiency like I haven’t seen since my trip to Japan.
Explaining my excitement to my 15-year-old was no joke, she looked at me like I was nuts and I had to be really mature and say “well, have you been here before and seen what this was like, no, so there.” We were in and out, including her actually taking the permit test, in 45 minutes!!!! OK now, I cannot believe it took a pandemic for them to finally come to their senses and do this, but run to get your real id, in case they change their minds.
The SPY sold off precipitously across all asset classes except the Energy (extreme volume in QQQ and extreme level for VIX). Short-term, the SPY range remains between $368 and $395. The SPY is reaching extreme oversold levels and QQQ reached a support level that dates back to September 2nd. The DXY rallied after Powell's speech (reason values stocks sold off). The TLT is in the process of building a bottom.
The bottoming process has started and the worse part of the sell-off is now behind us. The market will finish the bottoming process in the next two weeks and will resume bullish momentum by the end of March.
I would be a buyer using any short-term corrections and use dollar-cost averaging strategy to accumulate positions. If you are trading options consider selling premium with April and May expiration dates.
"BUY" signal based on the Aggressive Power Trader Portfolio is at $375 level using SPY and "SELL" signal is at $389 for short-term traders.
Based on our models, the market (SPY) will trade in the range between $368 and $395 for the next 3 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 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 the stock is trading at $100, I would sell OTM put (strike less than 100) with option BID price close to $0.5.
As the correction runs its course, it is imperative for traders to take notice of where the market will direct its attention against the evolving trading landscape. That means looking to buy and trade cyclical and value stocks from the long side. Particularly, industrials are most likely to emerge as the favorite go-to sector where opportunities for trading profits are most significant.
The Industrial Select Sector SPDR ETF (XLI) is the best way to trade the sector for those wanting to leave out the stock-picking aspect of trading industrials. The top ten holdings in XLI make up 41.77% of total assets with the bluest of blue-chip stocks as the leading components.
Applying our proprietary AI platform to XLI, the Seasonal Chart has XLI looking very bullish for the next 10 and 20-day periods following this swift correction. Our data goes back to 1998 when measuring XLI, which carries an 85% Correlation, making it a very strong candidate for us to trade when our signals flash to do so.