Power Trading and Markets – February 9, 2020
Snapback Rally Plays Havoc With Short-Term Narrative
Welcome everyone to Yellow Tunnel. Each week our team has its sights set on the business of sharpening trading psychology, awareness and trading skills that generate consistent profits that compound week after week to make a material difference in the lives of the members of the Yellow Tunnel community. I and my team strive to provide the right set of tools and trade discipline the lead to real financial success within our trading portfolios while also having a lot of fun doing so.
CURRENT TRADING LANDSCAPE
The market has been volatile, and closed the gap as hope for the world economies to continue to grow is the current narrative despite the uncertainty with Coronavirus. The question on everyone's mind remains: if this is "V" shape recovery or continuation of range-bound market.
I expect market volatility to persist. However, underperforming sectors have rebounded and Technology and SPY continue to make new all-time highs. I believe the market will rally starting a few weeks earlier than I anticipated. Following Friday’s strong employment data, SPY was able to stay above $330 and though Friday was a risk-off session with Monday's session possibly set up to also trade down, the market is on track to resume bull trend. I would only expect shallow pullbacks from here out.
I remain bullish on the pullbacks, as long as the market is above/near 50 days MA on SPY. Please watch 330 support levels using SPY. Aggressive short-term buyers should consider buying near $330 on SPY and selling near $333.
This week’s focus is on the healthcare sector that has demonstrated excellent relative strength in spite of the rhetoric surrounding pricing for prescription drugs from President Trump in his State of the Union address and a strong showing by Bernie Sanders in the Iowa caucuses. Without question, there is a political agenda to bring down the cost of medicine, but the power lobbies that back the drug companies are sending a clear message of “not over our dead bodies”. It’s a hot topic in an election year for sure.
With that said, the healthcare sector is made up of more than pharmaceuticals. It packs in medical device makers, insurers, facilities operators, over-the-counter medical supplies and specialty products. A good way to cast a broad net over the sector is to own shares of Health Care Select Sector SPDR Fund (XLV).
The top ten holdings in XLV represent 51.6% of total assets with four Dow components occupying the top four spots with strong representation in the medical device space from Medtronic PLC (MDT), Abbott Labs (ABT) and Thermo Fisher Scientific (TMO), all of which are in powerful bullish uptrends.
Looking at the technical picture, shares of XLV are demonstrating excellent relative strength after a brief pullback with the broader market.
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TRADE OF THE WEEK
Coincidently, the top holding in XLV just happens to be the trade of the week. Shares of Johnson & Johnson (JNJ) are trading in a very bullish pattern of late. As far as healthcare stocks are concerned where the political narrative is more hostile, JNJ carries a much lower risk than other stocks in the sector.
The company is a free cash flow machine, never faltering during the recession with a rich history of raising its dividend and delivering steady earnings growth. 2019 revenues and earnings came in line and the forecast for 2020 is for sales to grow by 5.5%, which would be a strong showing boosted by expanding margins.
When applying my AI tools to JNJ, the Seasonal Chart shows the 20 and 30-day probability readings indicating higher prices for the stock over the near term. Trading JNJ from the long side should prove to be a profitable venture for those looking to walk the stock higher using short-term trading strategies.
From the one-month chart below, there is strong support for the stock at $151, just below where the stock currently trades. There is a chance this level will be revisited this week as the market consolidates recent gains, presenting a highly attractive entry point.
To trade JNJ effectively, make sure to sign on as a new member of our Aggressive Power Trader service to be ready to act when I give the green light. My tools afford traders the luxury of defining specific parameters with high degrees of probability to execute trades that generate fast profits.
In our new service Aggressive Power Trader, I walk 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.
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.
Vlad’s Notes: 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.
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Go to our website at www.yellowtunnel.com and put Aggressive Power Trader to work today as we move through this volatile market together where huge opportunities exist with the right set of tools and trading strategies. The greatest short-term potential for everyday profits is only found here at YellowTunnel.com.
OUR TRADING MODEL
Within our Aggressive Power Trader trading list, trades are recommended in our Tradespoon Live Trading Room as well as having access to my Watch List.
YellowTunnel 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.
When looking to execute recommended trades, 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 I usually allocate less than 5% of the portfolio if I hold a position overnight. On average, less than 1% of the portfolio should be allocated if you hold a position less than 1 day.
For the best results, I personally 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.