Greetings, YellowTunnel Community!

This week, all eyes were on the latest FOMC decision and inflation data, which provided crucial insights into the current state of the market. Amidst these significant economic updates, earnings season continued to make waves, with Oracle's (ORCL) recent report highlighting the volatility we've seen with Dell (DELL) and NVIDIA (NVDA).

Oracle’s latest earnings, while slightly below Wall Street forecasts, painted a positive picture of the company’s future. The company demonstrated strong growth in its cloud infrastructure deals, pointing to a rising demand for its services, particularly in the field of artificial intelligence (AI). This upbeat sentiment rippled through the market, significantly benefiting Nvidia. After Oracle’s earnings call underscored a strong demand for Nvidia chips, Nvidia’s stock experienced a notable increase, further fueled by a recent stock split.

In the backdrop of these earnings reports, there was significant activity in the options market surrounding Oracle. Open interest, a key metric representing the total number of outstanding options contracts that have not been settled, indicated a substantial move was expected. Specifically, there was large open interest at the 140 call strike, along with a noticeable call skew. Typically, this scenario suggests high demand for call options with minimal hedging—signifying strong bullish sentiment.

To strategically position myself amidst this anticipated volatility, I employed a call butterfly spread, a sophisticated and cost-effective options strategy. But what exactly is a call butterfly spread?

A call butterfly spread is an advanced options trading strategy that involves three key steps:

1. Buying one call option at a lower strike price – In this case, the 135 strike.
2. Selling two call options at a middle strike price – Here, the 140 strike.
3. Buying one call option at a higher strike price – The 145 strike in this scenario.

This strategy creates a spread that allows for participation in the stock’s movement at a lower cost, balancing potential risk and reward. The goal is to profit from limited price movement, with the maximum profit achieved if the stock closes at the middle strike price at expiration.

With Oracle, this approach proved highly successful. The price movements stayed within our desired range, enabling me to close the trade with triple-digit returns. The precise entry and exit points of the trade were carefully timed to maximize profitability. For a detailed analysis of this trade and other successful strategies, I encourage you to visit our trading performance page.

As we continue to navigate the ever-changing market landscape, staying informed and strategically positioned is key to capitalizing on the opportunities that volatility presents.

Recent Trade Review

Based on the comprehensive macro analysis gathered this week, I executed a successful long stock trade with CrowdStrike Holdings, Inc. ($CRWD). Our analysis indicated a bullish market trend following the latest inflation data, which suggested a more favorable economic environment for growth stocks.

Using insights from YellowTunnel's Aggressive Power Trader (APT) services, I identified $CRWD as a prime candidate due to the extreme demand for call buying. This demand was a clear indicator of bullish sentiment, and by leveraging this information, I was able to capitalize on the upward momentum of CrowdStrike's stock.

The major advantage of YellowTunnel's paid services over free offerings lies in the precision and timeliness of trade alerts. Paid subscribers benefit from SMS notifications that provide exact entry and exit points, ensuring timely and well-informed trading decisions. This feature is particularly valuable in a fast-moving market, where timing can significantly impact profitability.

For a more detailed look into this trade and to observe our strategies in action, I encourage you to watch Tuesday’s recording of the live trading room session. This recording provides an in-depth analysis and showcases the rationale and execution behind the $CRWD trade. You can access the recording here: Live Trading Room Recordings.

As we continue to navigate the market's dynamics, staying informed and strategically positioned is crucial to taking advantage of the opportunities that arise.

CURRENT TRADING LANDSCAPE 

Last week was pivotal for market data, marked by the release of the latest FOMC and CPI/PPI reports. Despite indications from the previous week's jobs report suggesting no rate cut, there was still a significant amount of news and market reaction. Investors remained focused on key developments like the Consumer Price Index (CPI) report and notable corporate earnings releases. With a bullish outlook, I am encouraged by current market conditions where inflation remains within expected bounds and corporate earnings consistently surpass forecasts, which supports equity markets. Looking ahead, while the SPY's potential rally may be capped around $540-$550, there is noted short-term support at $500-$510, indicating potential for further market gains amid sustained upward momentum in the months ahead. For reference, the SPY Seasonal Chart is shown below:

To start the week, the Nasdaq Composite exhibited notable strength driven by robust activity in semiconductor stocks on Monday. The S&P 500 made modest gains across its components, while the Dow Jones experienced slight declines. Leading sectors included energy and utilities within the S&P 500, each showing notable increases. The iShares Semiconductor ETF also recorded solid gains, supported by positive performance from Nvidia.

Investor sentiment on Tuesday remained cautiously optimistic as they awaited crucial economic data and the FOMC meeting outcome. Market attention centered on forthcoming CPI and PPI reports expected to provide deeper insights into inflationary trends. Contrary to expectations, the Producer Price Index (PPI) for May declined by 0.2% from April, signaling effective Federal Reserve measures in curbing inflation. Yearly, the PPI rose by 2.2% in May. This unexpected data, coupled with softer CPI readings, suggested inflation pressures were easing faster than anticipated.

Wednesday marked a pivotal day with the release of CPI data and the conclusion of the FOMC meeting. May’s CPI report indicated a slowdown in inflation pressures, remaining unchanged from April on a headline basis, while core CPI increased by a modest 0.2%. These figures eased market concerns, aligning with Federal Reserve expectations.

The Federal Reserve opted to maintain the benchmark interest rate steady within the 5.25% to 5.50% range, aligning with market forecasts. Emphasizing a commitment to sustaining higher interest rates for a prolonged period, Fed officials aimed to steer inflation toward a sustainable path back to the 2% target. Chairman Jerome Powell underscored the delicate balance required to manage inflation, support labor market strength, and foster economic growth. Revised forecasts now anticipate a single quarter-point rate cut by the end of 2024, a notable shift from earlier projections.

Inflation, as measured by the consumer price index, increased at an annual rate of 3.3% in May, a slight deceleration from April’s 3.4% rise. Chairman Powell highlighted expectations for a gradual moderation in inflation throughout the remainder of the year, maintaining a cautiously optimistic outlook on economic conditions.

Thursday witnessed continued market positivity following the Federal Reserve’s decision and favorable inflation data. Stocks benefited from indications of a weakening economy and slowing inflationary pressures, enhancing prospects for potential interest rate cuts later in the year.

Oracle’s recent earnings report, though slightly below expectations, showcased promising growth in cloud infrastructure deals, particularly in artificial intelligence (AI). Nvidia’s stock rose following Oracle’s earnings call, buoyed by strong demand for its chips and a recent 10-for-1 stock split.

Broadcom also made headlines with its announcement of a 10-for-1 stock split and saw shares surge by 12% after reporting robust second-quarter earnings. Both the S&P 500 and Nasdaq Composite continued their upward trajectory, reaching new record highs amidst positive market sentiment.

Meanwhile, treasury yields declined notably, with the 10-year and 2-year yields hitting their lowest levels in over two months. This trend underscored growing confidence in U.S. inflation moderating faster than previously anticipated.

The 10-year yield remains volatile, trading between 4.3% and 4.7% throughout the week, retesting lower levels amidst ongoing market pressure despite the drop in interest rates. The debate over potential interest rate cuts persists, driven by evolving economic data. Market volatility in the treasury sector reflects ongoing repricing of rate cut expectations in terms of timing, magnitude, and frequency.

With the VIX hovering around 12, indicating low market fear, major indices such as QQQ and SPY approach all-time highs. Value and interest-sensitive stocks are showing signs of recovery. Assets like SLV and GLD have retraced from recent peaks but maintain a strong long-term uptrend.

Friday saw a slight dip in stocks following four consecutive record closes for the S&P 500 and Nasdaq Composite. The Dow Jones Industrial Average struggled alongside the S&P 500, while the Nasdaq Composite posted marginal gains.

To wrap up the week, the preliminary data from the University of Michigan’s consumer sentiment index showed a decline to 65.6 in the first half of June from May’s 69.1, below the anticipated 73 reading. Inflation expectations for the upcoming year remained steady at 3.3%, with long-term projections inching up marginally to 3.1% from May’s 3%.

-

🚀Unlock the Power of A.I. in Trading!🚀

Are you overwhelmed by the data deluge in trading markets? Struggling to find those elusive winning trades? You're not alone. But there's a solution that even the titans of trading are turning to: A.I. Technology.

Former Google CEO Eric Schmidt predicted it, and legendary trader Paul Tudor Jones confirmed it: "No man is better than a machine, and no machine is better than a man with a machine."

Now, it's your turn to be unstoppable in trading with our proprietary A.I. software. Achieve an astounding 85. win rate and get up to 5 trades per day!

Click HERE for details

-

SECTOR SPOTLIGHT

Amidst the dynamic shifts in the market driven by the latest economic data this week, investors are carefully evaluating promising sectors poised for growth. Recent economic indicators and the Federal Reserve's cautious stance on interest rates highlight opportunities in sectors traditionally resilient in inflationary environments and bolstered by industrial demand. As inflation remains within expectations and corporate earnings consistently outperform forecasts, interest in commodities like silver has intensified.

Silver, particularly accessible through vehicles like the Silver ETF (SLV), presents compelling opportunities in the current landscape. Silver is esteemed not only for its historical role as an inflation hedge but also for its widespread industrial applications spanning technology to renewable energy sectors, which have attracted considerable attention. The metal's dual-purpose nature positions it favorably against the backdrop of recovering global economies and sustained demand for essential raw materials.

Furthermore, the strategic incorporation of silver into portfolios serves as a prudent diversification tactic, aligning with the outlook for economic expansion and heightened industrial activity. As global markets continue to navigate economic recovery phases, silver's versatility and historical resilience make it an increasingly attractive option for investors seeking stability and growth potential in uncertain times.

TRADE OF THE WEEK: iShares Silver Trust (SLV)

With inflation levels stable and corporate earnings consistently surpassing expectations, the environment favors silver, valued both as an inflation hedge and an essential industrial metal. Silver's appeal extends beyond its traditional role as a store of value, increasingly valued for its industrial applications in sectors like green energy and technology, amidst recovering global economies and sustained commodity demand.

iShares Silver Trust (SLV) tracks the price movements of silver bullion, providing direct exposure to silver prices with expenses deducted from returns. Held in secure vaults, each SLV share represents fractional ownership of physical silver bullion. Silver historically serves as a reliable hedge against inflation, gaining value amid economic uncertainty, and its industrial uses in electronics, solar panels, and medical devices support price stability.

Traded on major exchanges, SLV offers liquidity and transparency, appealing to investors seeking precious metal exposure without the logistics of physical ownership. It diversifies portfolios, potentially reducing overall volatility compared to traditional asset classes.

Advanced Artificial Intelligence models integrated with YellowTunnel's analytics highlight technical and fundamental factors supporting SLV's positive trajectory. Amid fluctuations in treasury yields and equity markets, SLV's liquidity and exposure provide stability and potential for capital appreciation. As economic data and earnings updates unfold, SLV remains a strategic addition to watchlists for investors aiming to capitalize on current market dynamics and enhance portfolio resilience.

This week, I’ll be adding iShares Silver Trust (SLV) to my portfolio!

And one more thing! 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 84.18% of all trades that I made, with an average profit of 37.08% per trade on our collective trade recommendations. To my knowledge, this trading performance is one-of-a-kind and stands alone in the marketplace for superior trading advice where our numbers and results speak for themselves.

Visit our website at www.yellowtunnel.com and select one of our services as your default trading system. With our AI-powered platform, let's make 2024 the most profitable year yet for your portfolio! Remember to conduct thorough research and assess your risk tolerance before making any investment decisions.

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:

 www.gate.org

Wishing you a week filled with resilience, growth, and prosperous opportunities!