Happy Earnings Season! This week, we received key inflation and retail data as well as major banks releasing their earnings, officially kicking off the latest earnings season. On the personal side, I had the pleasure of spending time with my family in Florida this past week. This past week I returned from a visit to Miami, where I spent quality time with my in-laws and my son David.
Unfortunately, the weather was less than ideal; constant rain and strong winds set in. It seemed like Hurricane Season hit Florida in April instead of September! This type of weather was so unexpected that it had me thinking about global warming and wondering if this is how it affects our planet. Whenever I see weather shifting on this scale, I am reminded of the movie "The Day After Tomorrow" and how Mother Nature can sometimes surprise us.
Despite the weather, we made the most of our time indoors and played plenty of board games such as chess, cards, Uno, and Rummikub. Seeing the week play out had me thinking about the power of compounding investment, not just in the stock market but also in our relationships with our loved ones.
Spending quality time with my family is always a great investment, making the most of each day even if it's just a game of chess indoors while it rains outdoors. Making dinner and enjoying conversation with one another is similar to how small gains of 0.5-1% can compound over time and provide significant long-term results—exactly what we do when trading with our Earnings Power Trader or Aggressive Power Trader services.
While I was playing board games with David, my wife didn't let the rain stop her and made her way to the local stores in search of a new purse. Seeing some of these prices, I couldn't help but think about the impact of inflation! My wife joked that if we sold all of her purses, we'd be millionaires. While I don't think we'll become millionaires from selling purses, it's a great reminder that we should always be mindful of our spending habits and focus on making wise investments.
At YellowTunnel, we believe that our Earnings Power Trader and Aggressive Power Trader services can help you achieve your financial goals and grow your wealth over time. Just like playing board games with your kids can compound into a valuable relationship, our trading strategies can compound your gains and provide great long-term results. We invite you to give our services a try and see for yourself the power of YellowTunnel.
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 for 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
Welcome to our "Recent Trade Review" section, where we discuss some of our recent successful trades and highlight the strategies that led to our success. This week, we'd like to showcase our successful trade in DAL using our Earnings Power Trader (EPT) services.
Our EPT model identified DAL as an opportunity to collect extra premium due to elevated implied volatility. I bought into the position on Wednesday and held it overnight. By selling out the money premium and collecting a return of 0.5-1% by holding the position overnight, I and those subscribed to EPT were able to capitalize on this opportunity.
One of our primary strategies is to look for liquid names with weekly options available. Half of the volume of options are weekly and 0 DTE options, which allow us to take advantage of opportunities for quick gains. In a bear market, one of the most popular strategies is to collect premium by selling out of the money puts and call spreads.
I am proud to share that this strategy, alongside our A.I. models have been performing exceptionally well. Our paid services offer exclusive benefits, including SMS messages to alert you when to enter and exit positions in a timely manner. That is also the difference between our free services and paid services: we not only alert great buying opportunities but also when to sell. We believe this sets us apart from our competitors and allows us to provide top-notch service to our clients.
If you'd like to learn more about our trades and see recordings of our live trading room, please visit our website at the link below. While EPT and APT are paid services, it is completely free to follow along and watch our live trading room recordings. Just create a free account and head to:
CURRENT TRADING LANDSCAPE
Major stock indexes declined on Friday despite better-than-expected earnings reports from major banks, with mixed signals for the economy leaving investors uncertain about the future. Still, U.S. indices are still set to close the week in the green, though investors are keeping a close eye on how well companies' sales and earnings are holding up in an economy that is beginning to show some strain. Major banks officially kicked off earnings season on Friday with Citi, Wells Fargo, and Chase reporting quarterly data.
JPMorgan Chase & Co. reported positive sales and earnings per share, surpassing expectations, despite incurring losses of $868 million on securities. CEO Jamie Dimon noted that the economy currently looks healthy, yet growth is slowing and there are some uncertain signs for the future.
Wells Fargo (WFC) also beat its sales and earnings estimates, but it set aside billions of dollars in anticipation of potential losses on credit extended to people and businesses, similar to JPMorgan. Citigroup (C) reported better-than-expected performance for sales and EPS, with its stock up 4.1%. Friday's other key economic release, March retail sales, showed that sales rose only 2.9% year-over-year, falling below both expectations and February's results, both of which recorded gains of over 5%.
Although the indexes weren't soaring on Friday, the Dow is up 1.2% this week, marking its fourth consecutive week of gains and the largest four-week point gain since 2022. While some sectors were either holding steady or spending time in the green before seeing mild declines, the 10-year Treasury yield—a barometer for confidence in longer-term economic demand and inflation—is up to about 3.5% from just over 3.4% Thursday.
On Thursday, stocks rallied as new data showed that inflation was cooling down, leading investors to hope that the Federal Reserve would stop raising interest rates. The Producer Price Index (PPI) released on Thursday showed that companies' costs had risen by 2.7% year-over-year, below expectations of 3%, and the largest drop in three years.
The PPI data follows Wednesday's cooler-than-expected reading on consumer prices, with the latest CPI report showing prices rising by 5% for the 12 months ending in March; this is a slowdown from February's 6%. The core CPI, which excludes volatile food and energy prices, rose annually by 5.6%. Monthly CPI showed some cooling, ticking up 0.1% from February compared to the previous 0.4% increase.
The cooling of inflation has led to increased confidence that the Federal Reserve may soon pause its rate-hiking campaign. However, the flip side of falling inflation and interest rates is a weakening of economic demand, which the Fed highlighted in its meeting minutes released later in the day.
The VIX is trading near the $19 level, and the upcoming earnings season will influence the market's next move. I expect the market to trade sideways for the next two to eight weeks, and I have adopted a market-neutral stance looking for ways to hedge positions when appropriate.
The stock market is currently in a process of building a top, with a pullback expected to start within the next two to four weeks depending on earnings guidance. The drop in the two- and ten-year yields below multi-month support is a worrying sign, and if the ten-year yield drops below 3.2%, it could mean that the market has reached its peak for the next few months. Money market funds are at a historical high of two trillion dollars, and cash deposit outflows are at multi-year highs. The start of earnings season will set the tone in the market for the next few quarters, and the current market is only being supported by a narrow leadership. Risk management is crucial, and credit liquidity remains a key theme.
I still advocate for a "hard landing" approach, not opposing the Federal Reserve's high-interest rates and elevated US dollar. We may see bulls safeguarding the December lows in the upcoming weeks but as we get closer to earnings season there is an increased chance of testing or surpassing 52-week lows within months from now.
I remain firm that this SPY rally will be contained at $418-$424 levels and short support should fall between 375-350 throughout these few months. Current futures data leans towards predicting a 25 basis point rate hike when the Fed meets come May which further strengthens my forecasted outlook. I would be market BEARISH going into summer.
The current market landscape is definitely a stock-picker's market, and risk management should be at the forefront of investors' minds. Volatility is increasing, and the odds of a recession are on the rise. Risk management is extremely important, and that's where YellowTunnel comes in. YellowTunnel provides expert opinions, tools for risk management, and models for validating trade ideas with macro and micro conditions. With YellowTunnel, clients can stay in the market with a sense of hope, knowing that they have the best tools and experts to manage their risks and make informed investment decisions.
With this in mind, I have identified my next Power Trading and Markets sector and symbol and have cross-referenced it with our A.I. models.
The last time we traded AMERICAN AIRLINES (AAL) on April 2O, 2022, we had an 11.36% return on risk. Let me repeat that, and we had an 11.36%** return!
That's a pretty good return after holding the position for only 1 day!
This is my favorite time of year!
Every trading day, otherwise-unremarkable companies find themselves delivering outsized gains to shareholders.
25%... 45%... 64%...** and more.
During times of economic uncertainty, when consumers are more cautious with their spending, companies in the consumer staples sector can be expected to see relatively stable demand for their products. Additionally, with earnings season approaching, consumer staples companies are often seen as a defensive play by investors looking to hedge against market volatility. As a result, consumer staples could be an attractive sector to watch for those looking for stability in uncertain times. With this in mind, my AI model has identified a great opportunity.
Consumer Staples Select Sector SPDR Fund (XLP) is an exchange-traded fund that tracks the performance of companies in the consumer staples sector of the S&P 500 index. This sector includes companies that produce essential consumer goods such as food, beverages, household products, and personal care items. The fund holds stocks from some of the largest consumer staples companies in the United States, such as Procter & Gamble, Coca-Cola, and Walmart. As a defensive sector, the fund is often viewed as a safe haven for investors during times of market volatility or economic uncertainty.
With earnings picking up in the next few weeks, I believe this sector is in a great position to prosper. I have traded XLP in times of volatility when my A.I. models showed similar signals and found success. First up, reviewing the 10-Day Stock Forecast Toolbox predicted data for XLP, I see a strong vector trend that is one-directional and consistent towards the upside following Monday, April 17th. Thereafter, we see all green signals pointing towards the upside with nice top-building momentum. See $XLP 10-Day forecast:
If consumer staples are to grow during the coming earnings season, my A.I. model has identified another symbol within this sector that should prosper.
TRADE OF THE WEEK - Tap Into This Frothy Trade, Cheers!
Molson Coors Beverage Company (TAP) is a multinational brewing company formed in 2005 through the merger of Molson of Canada and Coors of the United States. Molson Coors is the fifth-largest brewer in the world, with a diverse portfolio of brands including Coors Light, Miller Lite, Molson Canadian, Blue Moon, and Carling. The company operates in over 40 countries, with production facilities in North America, Europe, and Asia.
In recent years, Molson Coors has expanded its focus beyond beer to include non-alcoholic beverages and cannabis-infused beverages. The company's stock, $TAP, is traded on the New York Stock Exchange (NYSE) and has a market capitalization of over $11 billion as of April 2023.
When reviewing my AI data for TAP, I see several encouraging signals. Looking at the Stock Forecast Toolbox, I see that TAP has an impressive model grade of B, indicating it is in the top 25% for accuracy. With this level of accuracy, I feel confident in the symbol's projection within my toolbox. Looking at the 10-day forecasted data, we see a strong vector trend towards the upside with all positive vector scores—signaling a great bull run for TAP in the coming days. See TAP 10-day predicted data:
Adding to my confidence in TAP is the symbol's forecast within my Seasonal Chart tool, which is my go-to tool for long-term forecasts. TAP is showing three-time ranges for the symbol to trade higher right out of the gate; these are the 20, 30, and 40-day time frames. These forecasts have a growing accuracy score, which only further supports the bullish perspective we see for consumer staples and TAP in the coming weeks. See TAP Seasonal Chart:
This week, I’ll be adding $TAP 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:
Thank you for subscribing to my blog. Let's have a great trading week!