Power Trading and Markets – December 23, 2019
Power Trading and Markets – December 23, 2019
A warm holiday welcome to Power Trading and Markets (PTM), a service of YellowTunnel.com that works in close relation with Tradespoon.com to bring readers a higher level of trading awareness and discipline backed by AI-driven research and the most advanced trading algorithm available to individual traders.
A winning trading formula is born out of the sophistication of my platform's underlying algorithm. Our models take into account options volatility, statistical correlations with indexes and proprietary technical and fundamental analysis conducted in real-time, among other factors.
We leverage advanced artificial neural networks that constantly self-learn in order to apply the best-fitting models to a particular stock or ETF in order to generate highly accurate signals. The power of a robust AI is platform is fully on the trader’s side.
In each issue, we give a tight summary on the trading landscape, highlight a top performing sector that we’re actively trading in and spotlight at least one stock or ETF that is demonstrating strong short-term performance. We also provide a look ahead as to what the traders should focus on so as to be watchful for timely set ups.
OUR TRADING MODEL
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”.
Within our Aggressive Power Trader trading list, trades are recommended in our Tradespoon Live Trading Room are all featured in my Watch List.
When we publish signal on 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.
CURRENT TRADING LANDSCAPE
Markets continue to make new all-time highs after secretary Mnuchin confirmed progress in signing Phase one agreement. Technology, REITs and Energy sectors have drawn fresh attention and have led the past couple trading sessions. Better-than-expected earnings from Conagra (CAG) also provided bid under the consumer staples sector, but the broader bias has been to rotate into more cyclical sectors as the narrative of a global economic pickup in 2020 is spreading.
Micron Technology (MU), considered a bellwether for the commodity chip and memory space, reported a slight EPS beat for Q1. Micron's management was optimistic about the outlook, but it should be acknowledged that the chip industry was expected to rebound sharply during the second half of 2019. Instead, expectations for a meaningful recovery are being pushed forward into 2020.
Micron's report has served as a supportive element for the group, but about ten components of the SOX index traded lower due to the understanding that a lot of good news has already been priced into the index. Pullbacks in the semiconductor sector should be used trade the strongest names from the long side. (NVDA, NXPI, KLAC, LRXC, ASML, QRVO, AMAT, MU)
Certain blue-chip software stocks continue to draw trader’s attention on strong upside momentum (MSFT, ADBE, ADSK, CRM).
Payment systems processors, financial data providers and private equity operators are exhibiting upside momentum as well as recent gains in the megabanks have money rotating into the fintech stocks with (MA, V, GPN, IT, MSCI, BX, CG) as notable movers to the upside.
Within the REIT sector, cell tower stocks (AMT, CCI, SBAC) have caught a powerful bid and should be considered a long-side trade on the next pull back.
Energy is probably the most unloved and mistrusted sector among traders, but certain high-quality stocks (PXD, EOG, HAL, SLB) have spiked of multi-year lows, punching up and through their respective 200-day moving averages and should be considered as trades if not put on a trader’s watch list.
WTI crude is trading above the psychological $f60/bbl for the first time since September. The advance bears watching for confirmation as each attempt at this level to trade higher has failed as global crude supplies rapidly flood the market. Risk/reward is not attractive at current levels.
I expect shallow corrections in the next two weeks and bullish trend to be intact. Please watch 309 and 315 support levels using SPY. My opinion that market will continue to make new highs in the last weeks of December/first weeks of January.
SECTOR SPOTLIGHT
Falling poll numbers for Elizabeth Warren and Bernie Sanders lit a fire under the healthcare sector this past month, sending shares of the S&P 500 Healthcare Sector SPDR ETF (XLV) higher by a 10%+, catching most traders off guard and scrambling to get long the ETF itself and some of the key components that are just ripping higher on the notion that “healthcare for all” and “universal price controls” are years off.