🎓 Market Lesson: How to Trade the Industrials Breakout

From Good to Great: Applying Atomic Habits to Stock Trading Success

Our book club is diving into James Clear's Atomic Habits, and let me tell you, it's packed with insights that go way beyond just personal growth. As we prepped for our next discussion, one chapter really leaped out at me, especially when I started thinking about the world of stock trading: “How to Get Good to Being Truly Great.”

This isn't just about showing up; it's about a systematic approach to continuous improvement. And if there's one area where continuous, measurable improvement is non-negotiable, it's trading.

The Trader's Dilemma: Performance Without Proof?

In trading, it's easy to get caught up in the “feel” of things. You might feel like you're getting better, that your decisions are sharper, or that you're learning from your mistakes. But feelings don't pay the bills — results do. Clear's point about true greatness emerging from deliberate practice and measurable feedback is profoundly relevant here. How do you know you're actually getting good if you can't quantify it?

The Atomic Habits Solution: Journal, Grade, and Measure

This is where the magic of atomic habits comes in for traders. To move from simply making trades to becoming truly great, we need to implement systems that provide undeniable feedback.

1. Journaling Every Single Trade
This isn't just for reviewing winning trades (though that's important). It's about meticulously documenting every entry, exit, reasoning, emotional state, and external factor. What was your hypothesis? What was your risk? How did you feel at different points? This log becomes your raw data.

2. Self-Grading Your Decisions (Not Just Outcomes)
This is perhaps the most crucial step. After each trade, grade your process and decision-making, not solely whether it was a win or loss. Did you follow your plan? Was your risk management disciplined? Did you react emotionally? A winning trade executed poorly can be a “C,” while a losing trade where you followed your system perfectly might still be an “A.” This helps detach outcome from process quality.

3. Tracking Average Performance Week Over Week
This is where measurable results truly shine.

  • Win Rate: How many of your trades are profitable?

  • Average Win vs. Average Loss: Are your winning trades significantly larger than your losing trades?

  • Expected Value (EV): When you combine win rate with risk/reward, does your system show a positive edge over time?

  • Consistency: Are your self-grades improving? Are your metrics trending positively?

By consistently tracking these metrics week over week, you gain an objective, undeniable picture of your progress. You can see whether adjustments are working. You can identify specific weaknesses — exiting too early, poor entry timing, holding losers too long — that may be dragging down performance. This isn't about one-off wins; it's about incremental improvements that compound into meaningful results.

The Path to Trading Mastery

Just like an athlete refining technique or a musician perfecting a piece, traders achieve greatness through deliberate practice, consistent feedback, and tiny, atomic improvements. The market doesn’t care about your intentions; it cares about your execution. And the only way to genuinely improve execution is to measure it, grade it, and systematically refine the habits that drive it.

Great trading is not built on motivation — it’s built on systems. Small improvements in discipline, risk control, and process integrity compound quietly until they become undeniable. One percent better entries. One percent tighter risk management. One percent more emotional control. Over time, those marginal gains separate amateurs from professionals.

So as you read Atomic Habits, ask yourself: Are you chasing outcomes, or are you refining the machine that produces them?

Because in trading, “good” can be accidental.

Great is engineered.

Review of Last Trades

Last Thursday in our Live Trading Room, we executed a long position in $WMT — Walmart Inc. — after our EPT (Enhanced Predictive Timing) services model identified it as a high-probability opportunity.

The setup wasn’t about hype. It was about structure. Defined entry. Clear risk. Measurable upside. That’s the difference between guessing and executing a plan.

If you missed it, you can watch the full session here!

This trade also highlights a key distinction between our free and paid services. In the Live Trading Room, you see the analysis in real time. With our paid EPT services, you receive precise SMS alerts telling you exactly when to enter and exit. In a market where timing and liquidity shift quickly, speed and clarity matter.

Walmart was a textbook example of disciplined execution — not chasing, not reacting, but following the model.

Now, let’s step back and look at the broader trading landscape shaping these opportunities.

Current Trading Landscape

This was a volatile week that ultimately closed mostly positive, but the path there mattered.

Between February 14th and 17th, the S&P 500 and Dow Jones Industrial Average pushed to fresh all-time highs before modest pullbacks set in. Large-cap performance ended mixed to slightly positive, but underneath the surface there was clear rotation. Value and industrial names quietly absorbed capital, helping offset softness in technology. The Nasdaq Composite, while resilient on certain sessions, was the clear relative underperformer during rate-driven selloffs.

The most important catalyst shaping this backdrop remains the labor market.

The January nonfarm payrolls report, released earlier this month but still driving price action, showed 256,000 jobs added versus expectations of roughly 180,000. Unemployment held steady at 4.1%, and average hourly earnings rose 0.4% month-over-month, keeping year-over-year wage growth near 4.1%. That combination forced a rapid reassessment of the Federal Reserve’s rate path. Traders significantly reduced expectations for aggressive cuts in 2026, and the probability of a near-term rate reduction dropped sharply.

The bond market responded accordingly. The 10-year Treasury yield rose roughly 15–20 basis points during the repricing and continues to trade in a volatile but defined range between 3.6% and 4.35%. Each move toward the upper end of that range tightens financial conditions and weighs on growth valuations. That dynamic explains why technology and high-multiple names struggled on heavier days, with the Nasdaq down 1.5–3% during peak rate pressure sessions, while the S&P and Dow showed more resilience thanks to sector rotation.

Trade policy added another layer of complexity.

The Trump administration reaffirmed its intention to proceed with tariffs on Canada, Mexico, and China — including 25% on steel and aluminum and 10% on other Chinese goods — unless significant concessions are made. Additional rhetoric targeted the European Union and India over digital taxes and agricultural access. Even after the Supreme Court ruling against the use of the International Emergency Economic Powers Act, the administration signaled it would pursue alternative legal authorities to maintain its tariff agenda. Markets did not panic, but cyclical and trade-sensitive areas such as materials, industrials, and small caps experienced bouts of weakness. The Russell 2000 lagged during risk-off windows, the dollar strengthened, and the VIX spiked intraday several times, though it remained contained in the 18–22 range.

At the same time, earnings season reinforced how selective this environment has become. Big tech and AI-linked names faced renewed scrutiny. Microsoft and other cloud-exposed companies signaled moderation in capital expenditure growth, echoing late-2025 concerns. Nvidia and parts of the semiconductor supply chain saw profit-taking after extended runs. The result was intensified growth-to-value rotation, with financials and industrials outperforming on a relative basis.

Consumer data added to the “higher for longer” narrative. The University of Michigan’s preliminary February reading showed a drop in sentiment alongside a rise in one-year inflation expectations back above 3%. That combination pressured rate-sensitive areas such as real estate and utilities and reinforced the view that the Fed has little urgency to ease policy.

Overlaying all of this was geopolitical and fiscal noise, including renewed Russia–Ukraine and Middle East headlines and brinkmanship around government funding deadlines. These factors did not change the structural outlook, but they did contribute to periodic intraday volatility spikes and safe-haven flows into Treasuries and gold.

The dominant theme is clear: higher real yields, tariff uncertainty, and big-tech digestion are compressing growth multiples, while value and quality balance sheets provide stability. This is a classic macro rotation environment.

Technically, the longer-term trend remains intact. There is a plausible path for SPY toward the 700–720 range over the coming months if earnings resilience persists and yields stabilize. However, near-term support between 650 and 660 is critical. A sustained break below that zone would likely accelerate de-risking and volatility.

Momentum has deteriorated, which is why I remain in the market-neutral camp. The risk is not an immediate structural breakdown. The risk is compression — interest rates remaining higher for longer while unemployment indicators begin to tick upward. That combination can pressure valuations and produce choppier trading conditions.

For now, this is not a market to chase. It is a market to manage. The long-term trajectory remains constructive, but selectivity, discipline, and respect for macro forces are essential in this phase.

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Sector Spotlight

Something subtle shifted this week. While headlines focused on record highs, tariff rulings, and the bond market’s grip on valuations, the real story wasn’t happening in mega-cap tech. It was happening in companies tied to factories, supply chains, infrastructure, and physical output. Capital began moving toward businesses that don’t rely on multiple expansion or AI enthusiasm to justify their price.

When yields push toward the upper end of the 3.6%–4.35% range and the market digests a “higher for longer” rate backdrop, investors instinctively reassess where durability lives. Growth stocks thrive on liquidity and optimism. But when liquidity tightens and policy uncertainty rises, psychology shifts toward tangible earnings, order backlogs, and pricing power.

This week reflected that pivot.

Strong labor data reinforced economic resilience. Tariff rhetoric reintroduced trade complexity but also underscored the importance of domestic production and strategic supply chains. Meanwhile, tech names struggled under the weight of elevated yields and capex scrutiny. The market didn’t collapse; it rotated. That’s a confidence signal.

Investors are not fleeing risk entirely; they’re reallocating toward companies directly leveraged to real economic activity. There’s a psychological comfort in businesses tied to infrastructure spending, manufacturing demand, and capital investment cycles. It feels closer to fundamentals and further from narrative.

That brings us to the Industrials sector, specifically the Industrial Select Sector SPDR Fund ($XLI).

Industrials are gaining traction because they sit at the intersection of resilience and cyclicality. If growth slows but remains positive, these companies still participate. If domestic production accelerates under evolving trade policy, they benefit. And if rates stabilize without collapsing, their valuations remain supported by earnings visibility rather than speculative expansion.

In a consolidating market, that profile is attractive. This isn’t about chasing momentum. It’s about aligning with a rotation already underway, one grounded in confidence, real-economy exposure, and a return to fundamentals. 

And within that sector, one name stands out as particularly well-positioned.

Trade of the Week

If this market is rotating toward tangible demand and disciplined capital allocation, then GEV fits the narrative cleanly.

GEV operates squarely within the industrial ecosystem — tied to infrastructure, grid modernization, and long-duration capital projects. In an environment where policy headlines revolve around tariffs, domestic production, and supply-chain resilience, companies positioned to support physical economic expansion gain structural relevance.

This week’s trading action reinforced that setup.

As yields climbed and tech multiples compressed, industrial flows strengthened. Relative performance charts show capital steadily moving away from stretched growth names into sectors with earnings durability. GEV held technical support during broader volatility and began building higher lows — a classic accumulation pattern. Volume expanded on up days, suggesting institutional participation rather than retail speculation.

From a macro standpoint, the strong labor report signals that economic activity remains firm enough to sustain infrastructure and capital investment. At the same time, tariff developments increase the likelihood of domestic buildout in certain industries, which indirectly supports demand visibility for companies like GEV.

Technically, GEV is consolidating just below a key resistance zone, with risk clearly defined beneath recent swing lows. That creates asymmetric payoff potential — limited downside if the consolidation fails, but meaningful upside if the breakout confirms.

More importantly, it aligns with the broader psychological shift in the market.

Investors are gravitating toward names that represent execution over narrative, backlog over buzz, and tangible growth over speculative expansion. GEV checks those boxes.

This trade is not about predicting a macro pivot. It’s about positioning within the rotation that is already occurring.

Industrials are gaining traction because confidence is returning: not in liquidity-driven rallies, but in real economic momentum. And when psychology turns toward fundamentals, the companies building the backbone of that economy tend to lead.

This week, I’ll add GE Vernova Inc ($GEV)  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 82.43% of all trades that I made, with an average profit of 39.46% 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.

As we step deeper into 2026, shifting market conditions make this an ideal moment to reevaluate your trading approach and position your portfolio for the opportunities ahead. Explore the full suite of tools and services at www.yellowtunnel.com and choose the trading system that aligns with your goals for the new year. Powered by advanced AI and built for today’s fast‑moving markets, YellowTunnel helps you cut through noise, sharpen your strategy, and pursue stronger, more consistent performance in 2026.

Whether you’re focused on real-time trade opportunities, advanced analysis, or developing a disciplined trading mindset, we’ve got the tools and insights to guide you. As the year unfolds, let's work together to make 2025 the most profitable year for your portfolio. But remember—successful investing starts with informed decisions. Always conduct thorough research and assess your risk tolerance before executing any trades.

Let’s make this year a transformative one for your financial growth!

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!