Oil Stock With Gushing Profits
Just like the market, life itself is filled with unexpected twists and turns, presenting us with dips and rallies that shape our experiences. As I sit here, reflecting on the past week, I find myself confronted with both sadness and gratitude. It has been a difficult time for me as I bid farewell to my beloved grandmother, Yelizaveta, who peacefully passed away at the remarkable age of 97.
Yelizaveta's life was a testament to resilience and courage. Her journey began with unimaginable challenges, even at a very young age. At 8, she endured the heart-wrenching separation from her father, who was unjustly sent to Siberia on fabricated charges - something too common in the old Soviet Union for marginalized groups. Tragically, he succumbed to the hardships of forced labor shortly after. When World War II erupted, Yelizaveta, now 14, found herself in the Ural mountains, shouldering the responsibility of caring for her three sisters and newborn brother. She braved the perils of the time, tirelessly probing for food and taking on any work she could find to keep her family afloat.
Yet, despite the adversities she faced, Yelizaveta maintained an indomitable spirit. She married and welcomed my mother into the world in 1946, spreading love and happiness despite the lingering shadows of the past. However, life continued to test her fortitude. Her husband was unjustly taken away to prison, leaving her to navigate the challenges of single parenthood. Nevertheless, her love endured, and her husband returned a few years later.
In 1986, when the Chernobyl disaster struck, Yelizaveta found herself once again grappling with uncertainty. I can vividly recall being a 10-year-old, joining her on a train filled with panicked passengers seeking safety from the looming threat of nuclear exposure. But amidst the chaos, I cherish the memories of our travels together, just the two of us, where she showered me with unconditional love and spoils. Despite the hardships of her life and our situation at the time she was always an encouraging and loving spirit. As the world continued to challenge her she always found the time to be supportive of her family. She encouraged my athletic endeavors, going as far as rewarding me for my running achievements.
Yelizaveta's life took another turn when, at the age of 65, she relocated to the United States in search of a peaceful existence. It was here that she finally found solace and serenity, living a life she richly deserved for over three decades. Her unwavering spirit never faltered, even at the age of 97. Through her songs, she recounted tales of World War II, and recited poetry with remarkable clarity, reminding us of the strength and resilience that defined her generation.
As I bid farewell to my beloved grandmother, I am reminded of the importance of counting our blessings, living with purpose, and expressing gratitude for all that life bestows upon us. Yelizaveta's memory and her endless stories of wartime horror serve as a constant reminder to appreciate the present, for it is a gift we must embrace.
May my dear grandmother find eternal peace alongside God's embrace, watching over us from above. In her memory, I look forward to continuing on this journey and keeping her spirit alive, drawing strength from the resilience she exemplified throughout her remarkable life.
Wishing you all peace, strength, and prosperity.
Recent Trade Review
In this section of our newsletter, let's delve into a recent trade that took place in our Earnings Power Trader (EPT) services. We focused on a market-neutral iron condor strategy involving the renowned technology company, Oracle Corporation ($ORCL). If you missed it, you can find a detailed account of this trade in Tuesday's recording (no membership required) of our live trading room here: https://yellowtunnel.com/live-trading-room-recordings#live-trading-room-recordings.
The EPT model quickly identified $ORCL as a compelling opportunity to capitalize on elevated implied volatility and collect additional premium. By strategically selling out-of-the-money (OTM) options and holding the position for a couple of weeks, we aimed to secure a return in the range of 0.5% to 1%.
When seeking trades, we prioritize liquid names with weekly options available. This preference enables us to take advantage of shorter time frames and capitalize on the accelerated time decay of these options. Notably, approximately half of the option volume comprises weekly options and those expiring on the same day (0 DTE).
Selling premium through the combination of OTM put options and call spreads is one of the most popular strategies in a bear market. By implementing this strategy, we aim to benefit from time decay and diminish implied volatility. This allows us to collect premiums upfront, providing a cushion against adverse market movements.
The iron condor strategy, as employed in the $ORCL trade, involves simultaneously selling an OTM put spread and an OTM call spread. This four-legged approach allows us to create a defined risk-reward profile, mitigating potential losses while still collecting premium. In a neutral market environment, this strategy can be particularly advantageous, allowing us to profit from a range-bound stock price.
As we executed the $ORCL iron condor, we diligently monitored the trade, mindful of any material changes that could impact its profitability. Our prudent risk management approach ensures that we are prepared to adjust or exit positions should the need arise.
The recent $ORCL trade exemplified our commitment to seeking out opportunities in the options market. By capitalizing on elevated implied volatility and employing the iron condor strategy, we aimed to collect premium and achieve a healthy return. As we continue to navigate market conditions, we remain dedicated to identifying high-probability trades that align with our strategies.
CURRENT TRADING LANDSCAPE
U.S. markets saw a nice boom this week as good CPI data was followed by good PPI data which then led to the latest Federal Open Market Committee rate decision. The three concurrent events boosted market confidence and sentiment going into the final weeks of Q2. All three major U.S. indices finished the week with gains, with the S&P seeing a 10% gain despite Friday’s slight selloff.
As we assess the current state of the market, it becomes evident that we are traversing a sideways trading environment with bouts of turbulence and potential shifts on the horizon. The second half of this year is expected to bring increased volatility, demanding vigilance and strategic decision-making from investors. Reviewing my A.I. data, I still believe the SPY rally will be capped at $440-450 levels and short support is $400-430 for the next few weeks. See SPY Seasonal Chart:
Recent events, such as the decisions made by both the European Central Bank (ECB) and the Federal Reserve, have impacted global markets this week. The Fed's stance leaned toward a more hawkish outlook, hinting at a potential pause in interest rate hikes, but with the possibility of further rate increases in the summer based on inflation data. This announcement influenced market sentiment and provided insights into the central bank's view on the state of the economy.
Meanwhile, the cryptocurrency landscape experienced its own tremors, as Bitcoin faced a pullback due to regulatory investigations surrounding platforms like COIN and Binance. This scrutiny prompted investors to reevaluate their positions and explore alternative avenues, leading to a rotation into value stocks and a gradual cooling off of the technology sector.
Within the market, we observed marginal rebounds in small caps, represented by the IWM index, as well as gains in the banking and industrial sectors. However, it is important to note that the market's overall support seems to be concentrated in a narrow leadership, with only a fraction of the 500 companies driving the significant 20% gain in the SPY index.
Shifting our focus to global developments, China recently took measures to stimulate its weak economy by lowering interest rates. This decision, coupled with other supportive actions, contributed to a rally in the Chinese stock market, providing a glimmer of optimism amidst broader economic uncertainties.
Reflecting on this week's market activities, the major U.S. stock indices displayed gains on Monday, propelled by the tech sector. The Federal Reserve's two-day monetary policy meeting took center stage, with investors eagerly awaiting the outcome. While expectations leaned towards a pause in interest rate hikes, the release of inflation data on Tuesday held the potential to alter the central bank's decision. Nonetheless, the market's optimistic sentiment pushed the S&P 500 to reach a fresh 52-week high on Monday.
Notably, oil prices experienced a decline early in the week due to concerns surrounding global demand. Both Brent crude, the international benchmark, and West Texas Intermediate, the U.S. standard, faced consecutive weekly declines.
Regarding inflation, the Consumer Price Index, a vital measure of price changes for goods and services, rose 4% for the year ending in May. Although this figure marked a slight pullback from April's 4.9%, it remained above economists' expectations. Additionally, the Producer Price Index revealed a cooling trend in wholesale-level inflation, showcasing a moderate increase of 1.1% for the 12 months that ended in May, compared to the 2.3% bump recorded in April.
Against this backdrop, the Federal Reserve's decision to maintain interest rates without immediate increases was met with a positive response from the stock market. Investors interpreted this as a favorable development for the ongoing economic recovery. The Fed hinted at a potential rate increase in July if inflation surpasses expectations, yet the stock market appears confident that most of the rate hikes are now behind us. Conversely, the ECB's decision to raise its key interest rate indicated a divergent approach to monetary policy, leading to a retreat in European shares.
On the economic front, retail sales data for May provided encouraging signs of consumer resilience. Contrary to expectations, retail sales surpassed projections, reflecting a year-over-year increase of 1.61% and a monthly uptick of 0.3%. This consecutive upswing in spending reinforces market confidence and suggests that consumers remain actively engaged in supporting economic growth.
Furthermore, jobless claims remained relatively steady, with 262,000 new claims matching the previous week's figure. Continuing claims rose less than anticipated, indicating a degree of stability within the labor market.
Considering the current market outlook, it is essential to navigate with caution. The Federal Reserve's more hawkish stance, coupled with the regulatory scrutiny on cryptocurrency exchanges, poses potential challenges. Furthermore, the historical strength of the U.S. Dollar and the possibility of a hard landing scenario warrant a cautious approach. As we move forward, I urge investors to remain mindful of these factors, be prepared for further market volatility, and consider adjusting their strategies accordingly.
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SECTOR SPOTLIGHT
In this edition of our Power Trading Markets, we turn our attention to a crucial sector that plays a pivotal role in global economies. This sector has been a focal point of discussions and is closely watched by investors due to its significance in energy production and consumption. With its far-reaching implications, it has the potential to sway market sentiments and influence economic landscapes. As suggested by our latest A.I. reading, we will delve into the current dynamics, trends, and future outlook of a sector that has captivated both seasoned professionals and astute observers alike. So, fasten your seatbelts as we shed light on one of the most vital sectors shaping our world today.
The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) is a popular exchange-traded fund that provides investors with exposure to the oil and gas exploration and production sector. Launched by State Street Global Advisors, XOP aims to track the performance of the S&P Oil & Gas Exploration & Production Select Industry Index. The ETF comprises a diversified portfolio of companies engaged in various activities related to the exploration, extraction, and production of oil and gas reserves.
XOP offers investors an opportunity to gain exposure to the broader energy industry, specifically focusing on companies involved in the upstream segment. These companies are typically involved in the exploration and extraction of oil and gas reserves, making them highly sensitive to fluctuations in commodity prices and geopolitical events that impact the energy markets.
The ETF's holdings encompass a range of market capitalizations, from large multinational corporations to smaller firms operating in niche segments of the industry. XOP's portfolio composition offers investors a glimpse into the evolving landscape of the oil and gas exploration and production sector, providing exposure to companies that are at the forefront of technological advancements, operational efficiencies, and potential growth opportunities within the industry.
Investors who are bullish on the long-term prospects of the oil and gas sector may find XOP to be an attractive investment option. The ETF's performance can be influenced by various factors, including global demand and supply dynamics, geopolitical events, environmental concerns, regulatory changes, and shifts toward renewable energy sources. With the latest levels in the market and our A.I. reading of XOP, I believe oil is due for a good run.
Amidst the ongoing rotation into value stocks and the recent surge in oil prices, investors are eyeing opportunities within the energy sector. One such option worth considering is the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). The sector is witnessing increased interest as market dynamics continue to evolve. Recent statements from Russian President Vladimir Putin, who emphasized the depoliticized nature of the decisions made by the OPEC+ group to cut oil production, have added a sense of stability to the market. Furthermore, OPEC data signals indicate that Saudi Arabia's output cuts will significantly tighten the oil market. Against this backdrop, XOP presents a potential investment avenue for those seeking exposure to the oil and gas exploration and production industry. As the sector gains momentum, investors may find value in exploring XOP as part of their diversified portfolio strategy.
The model’s 10-day predicted data, seen above, shows a strong and positive vector trend towards the upside which is exactly the type of forecast I look for in a symbol I believe has legs for a bullish run. Considering this, I will be looking into a specific symbol within the oil world that should perform well in the coming days.
TRADE OF THE WEEK - Oil Stock With Gushing Profits
Schlumberger Limited ($SLB) is a leading multinational oilfield services company that specializes in providing technology, expertise, and solutions to the global energy industry. Founded in 1926 and headquartered in Houston, Texas, Schlumberger has established itself as a key player in the oil and gas sector, with a strong presence in more than 120 countries worldwide.
With a comprehensive portfolio of services, Schlumberger offers a wide range of solutions to its clients, including reservoir characterization, drilling, production, and processing. The company's expertise spans the entire lifecycle of an oil or gas field, from exploration and appraisal to development and production optimization.
Schlumberger is renowned for its advanced technologies and innovative approaches that help maximize hydrocarbon recovery while minimizing environmental impact. The company invests heavily in research and development to develop cutting-edge tools, software, and systems that enhance efficiency, reduce costs, and improve operational performance in the energy sector.
As a trusted partner to major oil and gas companies, Schlumberger operates across various segments, including drilling services through its subsidiary, Schlumberger Drilling, as well as reservoir evaluation and production services. The company's integrated approach enables seamless collaboration and integration of different services to deliver tailored solutions to its client's specific needs.
In addition to its operational excellence, Schlumberger is committed to sustainable practices and social responsibility. The company actively promotes environmental stewardship, safety, diversity, and inclusion initiatives across its operations.
With its long-standing expertise, global reach, and dedication to technological innovation, Schlumberger continues to play a vital role in advancing the energy industry's capabilities and contributing to the exploration and production of oil and gas resources worldwide. And exactly the type of symbol that fits the bill for what we are looking for.
Despite an initial negative vector, SLB is showing a steady and positive vector trend similar to that of XOP. With our reading of the market, and my A.I. systems forecast, I am confident in SLB going forward.
This week, I’ll be adding $SLB to my portfolio!
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The consistent performance of our services is just incredible. My historical stellar performance is made possible by being right on 85.13% of all trades that I made, with an average profit of 37.30% 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 2023 the best trading year of your portfolio yet!
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:
Wishing you a week filled with resilience, growth, and prosperous opportunities!