Greetings and a warm welcome to the YellowTunnel community!
This week, investors heard from Fed members and continued to receive alarming inflation data, which pushed markets lower to start the week. However, by the week's end, we saw a reversal that put all three major U.S. indices on track to finish the week in the green. Next week's employment data and the Beige Book should further illuminate current economic standings and provide guidance on how the Fed could act during the end of this month's Federal Open Market Committee meeting.
At home, as I prepared for my upcoming yoga retreat, I packed several books to take with me. The monthly book club I was in had just wrapped up its latest book, and I was already looking forward to what came next as well as discussing our current read -"Day of the Oprichnik."
"The Day of the Oprichnik" is a novel written by Russian historian and activist Vladimir Sorokin in 2006, prior to the invasion of Crimea. The book is a dystopian work of fiction set in 2030 Moscow, wherein the author references the Oprichnik, a special force created by Ivan the Terrible during the 16th century.
Sorokin depicts a future Russia that has remained on a path of totalitarianism, isolationism from the West, and loyalty to China. He describes the manipulation of religion, book burning, and sexual perversion as means to control and subjugate the masses.
Although a work of fiction, the book is relevant for traders and investors as it provides a glimpse into the possible future of Russia and its relationships with other nations. The ongoing conflict in Ukraine, the involvement of Russia and China, and the impact of sanctions on the global economy are all concerns for traders.
The book is X-rated and not suitable for all audiences, but for those interested in predicting the future or hedging their portfolios against black swan events, it may be worth reading. The story serves as a reminder of the importance of learning from history and the potential consequences of political and economic decisions.
In recent years, Russia's actions have had a significant impact on the financial markets. The conflict in Ukraine and the imposition of sanctions by the US and its allies have led to a decline in the Russian economy. The Russian stock market fell by 50% in 2014, and the ruble lost 40% of its value against the US dollar. The sanctions have also affected companies doing business in Russia, such as ExxonMobil, which had to halt its operations there.
Furthermore, the involvement of China in the conflict adds another layer of complexity to the situation. China's potential supply of weapons to Russia has raised concerns from the U.S., which has warned of severe sanctions against China if it provides lethal weapons. As these geopolitical situations continue to brew, I cannot help but make very obvious modern-day connections.
In conclusion, "The Day of the Oprichnik" is a thought-provoking novel that provides insight into the potential future of Russia and its relationship with other nations. Traders and investors should pay close attention to the ongoing conflict in Ukraine and the involvement of Russia and China, as these developments can have a significant impact on financial markets.
Conversations like these are what we strive for in our weekly webinars. Connecting the fundamentals of technical analysis with current market conditions and additional insights is what sets YellowTunnel apart from the rest. Not only do I bring a personal touch, combined with top-of-the-line A.I., but also key psychological pillars.
Our community is designed to provide you with a unique trading experience where you can benefit from our A.I. trading program and learn from other experienced traders.
YellowTunnel provides a 30-day risk-free trial that gives you full access to our platform and allows you to explore different trading strategies. You can test out our predictive software and trade intelligence platform and see for yourself the accuracy of our signals and the power of our trading tools. Our community is designed to provide you with the support and guidance you need to become a successful trader.
For more information on the YellowTunnel tools and our trading community, I suggest reviewing our latest Strategy Roundtable, which we hold weekly on YellowTunnel. I also recommend checking out our latest Roundtable webinar in its entirety below:
With the unpredictable nature of the market and the uncertainty ahead of us, I can’t emphasize enough how vital it is for our readers and members of the Yellow Tunnel community to keep referring to our Live Trading Room so as to maintain a close tie of how our I and my AI platform is navigating us in and out of select trades. It’s FREE and I highly encourage everyone to sign up to the Live Trading Room and keep checking in throughout the trading day.
Every Monday and Wednesday, I highlight our best strategies and potential trading setups via the DISCORD server. It’s the future of bringing together a trading community’s total services, educational products, live chat venues, support, news, how-to tutorials, webinars, live-trading demonstrations, and tons of market analysis. It is incredibly interactive and full of crucial and timely information. Just go to:
I also want to emphasize to traders how vital a stop-loss discipline is to winning and being successful in an unforgiving market. We employ specific stop-loss instructions with every trade. The buy and sell programs controlled by high-frequency related algorithms can create great profits or cause sudden losses, so it is imperative to maintain an element of controlling risk with each trade.
CURRENT TRADING LANDSCAPE
After a tumultuous start to the week, all three major U.S. indices are now poised to end in the green, thanks to an expansion in the services sector which investors are digesting. Although benchmark Treasury yields reached over 4% for the first time since November this week, they have now started to dip, giving investors some hope.
On Friday, the 10-year Treasury yield fell to 3.993%, down from its previous close above 4%. This fall in yields has been a boon to technology shares, which have surged as a result. An increase in bond yields reduces the present value of future cash, adversely impacting company valuations—technology companies particularly, as they rely on future profits.
The U.S. economy and interest rates are being closely watched by investors, who are looking for clues as to the direction they may take. On Friday, the Institute for Supply Management's (ISM) services index for February landed at a reading of 55.1, indicating an expansion, albeit slightly lower than January's 55.2 but higher than economists' expectations of 54.5. A reading above 50 indicates an expansion.
On Thursday, U.S. stocks experienced a rise in the face of an uptick in bond yields. This followed hawkish comments by Federal Reserve officials and economic data pointing to persistent inflation. Although this rise in bond yields can reduce the present value of future cash that composes company valuations, the 10-year Treasury yield closed at 4%, below the 4.073% it had risen to on Thursday, and below its November level. Meanwhile, the two-year Treasury yield hit a new 52-week high of 4.902%.
The Department of Labor reported that seasonally adjusted, initial jobless claims for the week ending February 25 landed at 190,000, indicating a still-resilient labor market. This was down from the 192,000 reported the previous week and below economists’ projections of 197,000.
Investors are also keeping a close eye on earnings reports from retail companies such as Kroger and Macy's, which were released Thursday. While Salesforce saw an 11.5% increase in stock price after posting better-than-expected fourth-quarter earnings, other retail earnings reports had mixed results; Lowe's beat expectations for the fourth quarter but saw a drop in its stock price, and Dollar Tree topped estimates but disappointed in its guidance, resulting in a minimal rise in stock price. Kohl's stock price declined by 1.7% after it reported a significant loss in the fourth quarter and missed analysts' estimates.
On Wednesday, the U.S. stock market experienced a decline following hawkish comments from Minneapolis Federal Reserve President Neel Kashkari. Kashkari suggested that a more significant interest rate hike was likely, and this sentiment was further compounded by the latest manufacturing data released by the ISM, which came in slightly worse than expected at 47.7—below economists' forecasts of 47.8—and a slight increase from January's reading of 47.4.
I am keeping an eye on SPY levels that should remain range-bound for the next two to eight weeks while advising investors to adopt a market-neutral approach and hedge their positions. The VIX is currently trading near the $21 level, which indicates moderate volatility. For the SPY, resistance levels are at $403 and $408, while support levels are at $395 and $390. See the $SPY Seasonal Chart below:
With some stronger-than-expected economic data and more hawkish rhetoric from Federal Reserve officials in recent days, investors continue to largely shrug off the news, and markets have remained relatively stable. However, there are concerns that the recent rise in bond yields coupled with a strengthening U.S. dollar may be signs of an impending recession, which would have a significant impact on the market.
The current state of the economy presents a mixed bag of contradictory signals. While there are fears of a steep decline, optimistic consumer and earnings numbers remain robust, pushing the narrative away from disaster. Nevertheless, this scenario may not last for long with the U.S. Dollar strengthening in February and the 2-year yield reaching a 52-week high. Unless the dollar and yield drop significantly, the market could be facing a difficult time ahead.
Despite the potential for a hard landing, there are still some bullish signs. The retail bull sentiment is not approaching extreme levels, and the market is approaching seasonally bullish periods. However, looking ahead, the SPY rally is likely to be capped at $430-440 levels, and the short support will be between 390-400 for the next few months.
The upcoming speeches by the European Central Bank and the Federal Reserve could bring some clarity to the market, but futures data already points to a high probability of a 50-basis point rate hike in Europe and the United States. Despite this, the markets are not yet factoring this in, and there is still a disconnect between the bond market and equity market; the two-year yield and 10-year Bund yield have broken to decade-high levels.
The recent retail earnings have shed light on higher wages and margin contraction, with earnings being weak across all retailers such as HD, KSS, and TJX. This indicates that the market is not as bullish as some had hoped. The market is likely to be volatile, with the best-case scenario being that it will reach the bottom in the first half of the year.
Looking at this data, I believe the bear market will continue this year. Likewise, there are already signs of this with China and precious metals selling off due to a stronger dollar. Weak performances from GLD and SLV have been observed in recent pullbacks.
In conclusion, the economy is in a state of flux, with contradictory signals from various indicators. It is best to remain market-neutral going into the summer until the next earnings season begins in April and May. With this in mind, I have identified a specific sector and symbol that I will be looking to get involved in within the coming days.
It’s been very difficult the last year…
It’s been difficult the last year. I am an American citizen, originally from Kyiv, Ukraine, and I have family and friends back home. Freedom to build a business, and especially freedom of the press, has been a blessing. Thank you for American values and for sharing them with my family and me. We appreciate your support and honor of our rights.
As a thank you, I would like to show you what I do (in real-time).
Every trade recommendation that I make using this system – comes straight from the list of trade recommendations I use myself.
Not only that but every trade I make is logged in detail for you to review at any time.
As the market changes with the first anniversary of the Ukrainian war, the ups and downs of inflation, and further global uncertainty…you can see my new trading updates LIVE so that you can Do-As-I-Do and even copy my trading strategy during these changing times.
From January 1, 2020, to today (March 3, 2023), my total return on risk is an astounding 632%. I’ve made 1777 trades since then, with 1506 of them have made money. **
(A portion of Yellow Tunnel sales will go to directly help the Ukrainian people)
The financial sector has seen some pressure due to rising interest rates and a fluctuating U.S. dollar. However, recent earnings reports from major banks have been positive, showing strong consumer spending and lending activity. With the Federal Reserve signaling continued rate hikes and an expanding economy, the financial sector may be poised for a rebound. Keep an eye on this sector as it could present an opportunity for investors in the near future.
If the financial sector is to go the way we believe, there is no better symbol to get involved with than my go-to financial ETF.
The SPDR Select Sector Fund - Financials ETF (XLF) tracks the performance of the financial sector within the S&P 500 index. This sector includes companies involved in banking, insurance, and other financial services.
The XLF ETF has performed well over the last year, benefiting from a growing economy and rising interest rates; however, it dipped over the last month. Even though there are worries about the potential impact of higher interest rates on the financial sector as well as the broader market, XLF has managed to thrive in a variety of market conditions.
Overall, the XLF ETF remains an important benchmark for investors looking to gain exposure to the financial sector. As with any investment, it is important to carefully consider the risks and potential rewards before making a decision. Let's review our A.I. data.
Sporting a model grade of "B," XLF is within the top 25% of our data universe for accuracy. Furthermore, looking at the 52-week range, XLF has eased off its high, providing us with room for upside. When reviewing our Seasonal Chart for the symbol we also see several encouraging signals. See $XLF Seasonal Chart:
XLF is showing two time ranges right off the bat that is flashing "higher" with impressive accuracy and forecast percentages. The gap between the Annual Seasonal price and Current Price has widened drastically over the last two months, which signals that the current year price could skyrocket. As we look ahead into the upcoming few months, I believe financials should prosper - and that starts with XLF.
If the financial sector blossoms, I believe there is one symbol primed for additional gains as well.
TRADE OF THE WEEK - Best Fast Trade: Big Bank Bounce-Back
Morgan Stanley (MS) is a global financial services firm that provides a wide range of financial products and services, including investment banking, sales and trading, wealth management, and asset management. With a history dating back to 1935, Morgan Stanley is one of the largest investment banks in the world, with operations in over 41 countries and a team of over 80,000 employees.
Morgan Stanley's stock, which is listed on the New York Stock Exchange under the ticker symbol "MS," has performed well over the past year, outperforming the S&P 500 index. In the past 12 months, MS stock has gained over 14%, driven by the strong performance of its wealth management and investment banking businesses.
Morgan Stanley's wealth management business has been a key driver of growth for the firm in recent years, with the company's asset and wealth management division accounting for nearly half of its total revenue. The division has benefited from a strong market environment and increased demand for wealth management services among high-net-worth individuals.
In addition, Morgan Stanley's investment banking business has also performed well, benefiting from a surge in IPO activity and increased demand for M&A advisory services. The company has also made a number of strategic acquisitions in recent years to strengthen its position in key markets, including its acquisition of E*TRADE Financial in 2020, which has helped to expand its retail brokerage and online banking businesses.
Buying MS stock now may be a good idea due to the oversold market and the fact that banks have held strong. This is not an investment call, but with a 1-2 month holding time, it may be a worthwhile consideration. Let's review our A.I. data.
MS stock has been given a "B" grade by our model, ranking it among the top 25% in accuracy within our data universe. With current market conditions indicating a drop in value, now is an ideal time to enter and capitalize on potential gains due to its price having pulled back from its 52-week high. When looking at our longer-range forecast tool, Seasonal Chart, MS is also showing several encouraging signs. See $MS Seasonal Chart:
MS is displaying remarkable accuracy and forecast percentages by highlighting three-time ranges that show higher values. Recently, the gap between the annual seasonal price and the current price for MS has significantly widened, indicating that the price for the current year will surge. Looking ahead to the upcoming months, I foresee a prosperous financial market, and MS is poised to lead the way.
This week, I’ll be adding $MS to my portfolio!
And our track record speaks for itself from the standpoint of a Winning Trades Percentage, Average Return Per Trade, and Net Gain.
The consistent performance of our services is just incredible. My historical stellar performance is made possible by being right on 84.75% of all trades that I made, with an average profit of 37% per trade on our collective trade recommendations. To my knowledge, this trading performance is one-of-a-kind that stands alone in the marketplace for superior trading advice where our numbers and results speak for themselves.
Go to our website at www.yellowtunnel.com and make one of our services your default trading system where the AI that powers my all-world, the proprietary platform, can help you make the first quarter of 2023 the best trading quarter of your portfolio yet!
Have a fantastic week, keep Ukraine in your thoughts and prayers, and let's make some great money together.
One more thing, I've had the opportunity to take additional action with a great organization supporting families in Ukraine directly. Gate.org is a foundation where fundraising is held for specific families, allocating funds to multiple families currently living in Ukraine. I am on the board of directors for this great initiative and encourage everyone to check it out and donate if possible. The war in Ukraine is escalating and families are being negatively impacted and displaced daily. To learn more about this initiative to help families, please see the link below:
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