This past week, I took a trip down to Miami in an effort to rent out my apartment in Florida. With inflation on the rise, I was hoping to capitalize on the current market conditions, cut costs and potentially make a small profit. However, to my surprise, the demand for rental real estate was much softer than it had been in the past two years, and prices were dropping rapidly!
This experience resonated with me as a clear sign of the stagflation theme we are currently experiencing. As we wait for the latest FOMC decision, services inflation data, and earnings results, it's evident that people are becoming increasingly cautious with their spending. They're not only keeping a close eye on their entertainment expenses but also their food and housing costs.
Stagflation and the looming possibility of a new recession are key themes in today's market. We see it everywhere and it's clear the bear market has resumed. This is a stock picker market, and investors need to be vigilant about risk management. Volatility continues to increase and recession odds are on the rise. It's more important than ever to have expert guidance, tools for risk management, and a trading expert to review, explore, and dissect trading ideas during these changing times.
At Yellowtunnel, we offer a range of tools for risk management and trade validation, with models based on macro and micro conditions. Our team of experts provides expert opinions that can help investors navigate the challenges of today's market. If you're looking for a community that can help you make informed investment decisions, Yellowtunnel is here for you.
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.
Recent Trade Review
In our Earnings Power Trader services, we recently identified a great opportunity to collect an extra premium on $GOOGL due to elevated implied volatility. Our EPT model spotted this trade during our live trading room session last Wednesday, which you can review here:
By selling out-of-the-money premium and holding the position overnight, we were able to collect a 0.5-1% return. We were specifically looking for liquid names with weekly option availability, as half of the volume of options are weekly and 0 DTE options. Selling OTM puts and call spreads is one of the most popular strategies in a bear market.
The model results have been impressive, and we've seen a significant difference between our paid and free services. Our paid services come with SMS messages that provide timely alerts for when to get in and out of a trade.
If you haven't already, be sure to check out our live trading room recordings for valuable insights and expert analysis. Our team is dedicated to helping you navigate the complexities of today's market, and we're always here to provide the guidance you need. For more Trading Room recordings follow this link, no payment is required just create a free account to review recordings!
CURRENT TRADING LANDSCAPE
As another week of earnings comes to a close, investors are keeping a close eye on the Federal Reserve’s preferred inflation measure, the core personal consumption expenditures price index. Stocks initially fell on Friday but recovered as investors absorbed the latest wave of earnings and a higher-than-anticipated reading from the inflation measure. All three major U.S. indices ended the week in positive territory.
Big Tech earnings supported the wider market earlier in the week, with strong reports from Meta, Alphabet and Microsoft. Uncertainty over the outlook for Amazon's cloud business caused its shares to drop 3.6%. Snap earnings also disappointed, leading to a close to 20% decline in the Snapchat owner’s stock. Still, there are some alarming signs starting to come out. For example, First Republic Bank reported a significant drop in deposits, leading to a 30% drop in its shares on Wednesday, following a 49% drop on Tuesday.
The core personal consumption expenditures price index, which excludes food and energy, rose 4.6% YoY in March, exceeding economists' expectations of 4.5%. Though this was a deceleration from February's 4.7% rise, it indicates that the Federal Reserve may need to take further action to control rising prices. Friday's inflation report may give the Fed the pretext to hike interest rates by 25 basis points at the May meeting, although there are growing concerns about the economic impact of such a move.
Federal funds futures reveal that traders are increasingly betting the Federal Reserve will raise the benchmark rate by 25 basis points at the Federal Open Market Committee’s May meeting. This is a significant change from a month ago.
On Thursday, the US stock market rallied following strong earnings reports from Big Tech companies, with the Dow Jones, S&P 500, and Nasdaq all ending the day in positive territory. Meta Platforms saw its stock surge 14%, while other companies such as Comcast and Eli Lilly also witnessed a rise in their stock prices following strong earnings reports.
The slower-than-expected GDP growth rate of 1.1% for the first quarter of 2023, lower than the forecast of 1.9% and the previous quarter’s 2.6%, is partly due to the Federal Reserve’s interest rate increases that have lowered demand to reduce inflation. Private inventory investment also dipped, as businesses prepare for a weaker consumer outlook. The news has raised concerns about a possible recession, leading to a fall in Treasury prices.
The market has been continuing to trade sideways and is expected to experience more volatility during this first half of the year. As the earnings season unfolds, certain pullbacks have started: small caps, regional banks in China, and semiconductors have broken April lows and started their pullback already. The latest GDP and PCE data, along with UPS numbers and diesel prices, are all indications of a decelerating economy. We are going through a top-building process in all indexes, and the pullback has already started. Depending on the earnings' forward-looking guidance, the pullback will accelerate in the next few weeks.
The 2-year and 10-year yields have dropped below multi-month support, and the 10-year yield is being watched at 3.5%. If the 3.2%-3.5% yield does not hold, it is likely that we have seen the top in the market for the next couple of months, and users are encouraged to sell into any further rallies.
Money Market Funds are at historical levels, and cash deposit outflows are at a multi-year high. As a result of that, and when MMF pays an average of 4.8%, investors are incentivized to move money from equities to MMF and bonds. Retail investors continue to move cash into Money Market Funds, and this has a long-term negative effect on lending, bank earnings, and deposits.
To confirm the recession theme, gold and silver are breaking to new highs, with gold knocking on the door of all-time highs. Small caps, IWM, banks, and industrial posts had a marginal bounce back this week from the recent sell-off. The market is only being supported by a 20% gain in the SPY, which has been in 20 out of 500 companies. Therefore, there is narrow leadership.
I remain in the hard landing camp, not fighting the Fed's high-interest rates and the historically high US Dollar. The expectation is that the bulls will hold on to December lows in the next few weeks, but as we approach earnings season, there is a high probability to test and break 52-week lows in the next few months. The SPY rally is still believed to be capped at $418-424 levels, and short support is 375-350 for the next few months.
Futures data already points to a high probability of a 25 bp rate hike in the US during the May meeting. I would be market bearish going into summer.
With all eyes on the Federal Open Market Committee coming together next week, and another hike likely upon us, I have identified not only a sector I am deeply interested in but a specific symbol within as well! And that's not all. My A.I. arsenal is flashing the green light!
Introducing the Weekly Power Trader trading system for the concerned investor - Only $9
The gurus like to pack their advisories with tons of features to distract you from the fact that they aren’t making you much money.
However, when I founded Weekly Power Trader, I had a different idea: put the focus on the trades.
You’re not looking for a bunch of extra reports and information that you could easily Google. You want access:
Access to a sophisticated trading algorithm that takes the fear out of your trades, even during this current market uncertainty
Access to a trading system that helped me have a consistent 84.85% win rate no matter what the market does.
Access to tools that helped generate returns of up to 283.33% on a single trade*
Watch me trade - live.
Unlimited access to weekly training sessions, including videos and webinars designed to help you bank more gains and put this knowledge to work in your own trades. You can trade smarter with training that includes:
Technical stock analysis: Learn how to predict the future direction of stocks to maximize your gains
Fundamental stock analysis: Make financial forecasts using the historical and current performance of a company - so you know which are the winning trades and why
And most importantly: Access to a system that does all of this while handing you back your time - so you can spend it doing what you want to do instead of managing your portfolio constantly.
That’s why I developed the Weekly Power Trader.
With a new Charter Membership to Weekly Power Trader, you get access to my proven, powerful, algorithmic trading system.
Every week, you get up to 10 trade recommendations in a mix of both stocks and options. Each step you need to take is laid out in detail, with the entry and exit guidelines laid out before you.
All you do is log into your dashboard, take those recommendations, and make your picks, and then you are free to step away.
(A portion of Yellow Tunnel sales will go to directly help the Ukrainian people)
As investors navigate the uncertain market conditions with ongoing inflation and continued volatility, there is a good sector that could offer a safe haven for their investments. This sector is known to have a low correlation with the stock market and is often seen as a hedge against inflation. In recent weeks, this sector has seen symbol spike to new highs and nearing all-time highs. For those looking to diversify their portfolio and mitigate potential market risks, YellowTunnel’s A.I. models have identified the perfect sector.
Gold is an important sector within the stock market and is often used as a hedge against inflation and economic uncertainty. It is a commodity that has been valued for centuries and is seen as a safe haven investment during times of market turmoil. The price of gold is driven by supply and demand, as well as global economic and political events.
In the stock market, there are several ways to invest in gold, including buying shares in gold mining companies, exchange-traded funds (ETFs) that track the price of gold, or purchasing physical gold bullion. My preferred method is investing in gold ETFs to reach a broader selection and impression of the sector. ETFs offer a convenient way to invest in gold without the hassle of storing physical gold, but they may not track the price of gold perfectly.
Overall, gold is considered a valuable asset in a diversified investment portfolio and is often used as a hedge against inflation and market volatility. It is important for investors to carefully consider their investment objectives and risk tolerance before investing in gold or any other sector of the stock market.
With this in mind, there is one symbol that stands out and my A.I. tools are showing promising signals for this gold staple.
TRADE OF THE WEEK - Today's #1 Gold Play
The SPDR Gold Trust (GLD) is the world's largest gold-backed exchange-traded fund (ETF). Founded in 2004 by State Street Global Advisors, GLD is a way to provide investors with an easy and cost-effective way to invest in gold. The ETF holds physical gold bullion as its only asset and tracks the price of gold, allowing investors to gain exposure to the precious metal without the need to own physical gold. With nearly $60 billion in market cap, GLD is considered one of the most popular and liquid ETFs in the world. It is often used by investors as a hedge against inflation and market volatility, as well as a diversification tool within a broader investment portfolio.
When I plug in GLD into my A.I. models I am seeing several encouraging signals.
GLD is showing a model grade of “B” which indicates the gold ETF is in the top 25% of accuracy within our data universe. The 52-week range for the symbol sits at $150-$190, and at $184, GLD’s current price neared the high and has since slightly backed off. As previously stated, the market landscape is prime for gold to create new all-time highs.
Although GLD’s vector is currently pointing towards the downside, this forecast could flip as soon as Monday. After nearing its all time high, GLD slid back as the stock market rallied. This prompted a downward trend within the vector, however, the symbol has shown it is able to create new highs at times like this. Looking at its current levels GLD is primed for a rally if the market volatility picks up next week with the FOMC meeting in play.
Adding to my confidence in the symbol is the Seasonal Chart forecast for GLD. Seasonal Chart, my go-to long-term forecast tool, is flashing several promising signals. GLD is showing a higher trade forecast for the next 20, 30, 40, and 50 days! With all four time ranges pointing towards the upside, I love GLD’s potential in the coming weeks. See $GLD Seasonal Chart:
This week, I’ll be adding $GLD to my portfolio!
Our track record speaks for itself from the standpoint of a Winning Trades Percentage, Average Return Per Trade, and Net Gain. Just take a look:
The consistent performance of our services is just incredible. My historical stellar performance is made possible by being right on 84.85% 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 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:
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