🚀 The Moment Is Here: Earnings + Seasonality Opportunity
This Week in Israel: Two Cities, Two Completely Different Worlds
I spent this week in Israel, splitting my time between Jerusalem and Tel Aviv. I've always been fascinated by how two cities separated by less than an hour can feel like two completely different worlds. This trip was a powerful reminder of just how much history, culture, and perspective can exist in such a small place.
Tel Aviv is a city that lives in the moment.
Mornings along the Mediterranean were filled with runners, surfers, families, and children heading to school with surfboards. The beaches were beautiful, the weather was perfect, and the energy was contagious.
Afternoons were spent enjoying incredible food, fresh fish, hummus, and coffee. Evenings were for walking through neighborhoods like Neve Tzedek and Jaffa, where restaurants stay busy late into the night and the city never seems to slow down.
It's a modern, creative, ambitious city, full of people building businesses, pursuing opportunities, and enjoying life.
Then you arrive in Jerusalem, and everything changes.
Jerusalem is not simply a place you visit. It's a place you feel.
Walking through the Old City, you're surrounded by thousands of years of history. The Jewish, Christian, Muslim, and Armenian Quarters sit alongside one another, each carrying extraordinary religious and cultural significance.
We visited the Western Wall early in the morning. My son placed a note between the stones and stood there quietly for a long time.
Later, he told me something that stayed with me: "You feel like you're part of something way bigger than yourself."
We also visited Yad Vashem, an experience that leaves you with very little to say afterward.
What struck me most was the contrast. Tel Aviv represents the energy of the present, while Jerusalem reminds you of the enormous weight of the past.
Two very different cities, yet both essential parts of the same story.
Travel has a way of changing your perspective. It reminds you that while the immediate moment matters, understanding the bigger picture is just as important.
And in some ways, that's exactly how I've been approaching the financial markets.
Recent Trade Review: JPMorgan Chase & Co. (JPM)
In our recent Live Trading Room session, I traded JPMorgan Chase & Co. (JPM) through our Earnings Power Trader (EPT) service.
Our EPT model identified JPM as a potential market-neutral opportunity, an important distinction in the current environment.
When inflation, interest rates, and earnings headlines are pulling the market in different directions, investors don't always need to predict whether a particular stock will rise or fall. A carefully selected, market-neutral options strategy can create opportunities while reducing dependence on a single directional forecast, although these strategies still carry risk.
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With earnings season underway and volatility increasing, that kind of timing and discipline becomes even more important.
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Current Trading Landscape
Wall Street is facing another important test as stubborn inflation, rising geopolitical tensions, and uncertainty surrounding artificial intelligence spending challenge the market's recent momentum.
The biggest development this week was Wednesday's September Consumer Price Index report. Headline inflation climbed to 3.7% year over year, exceeding expectations, while core inflation rose to 2.6%. The hotter-than-expected reading sparked a broad selloff, with technology and semiconductor stocks suffering some of the sharpest losses.
The report also complicated the Federal Reserve's next policy decision on October 27–28.
Following September's interest rate increase, the Fed continues to balance persistent inflation against signs of slowing economic growth. Although expectations for another immediate hike have eased following comments from Fed Chair Kevin Warsh, investors remain concerned that rates could stay elevated longer than previously anticipated.
The ongoing war involving Iran continues to add pressure. Disruptions around the Strait of Hormuz have kept Brent crude above $100 per barrel, increasing transportation and energy costs while complicating the inflation outlook.
Tariffs are creating additional uncertainty for businesses already struggling with higher input costs. Friday's import-price data reinforced those concerns, showing that rising energy and imported-goods prices remain a challenge.
Meanwhile, the 10-year Treasury yield continues to fluctuate within a broad 4.5%–5.5% range. Elevated borrowing costs remain one of the biggest risks to the economy, particularly for companies dependent on financing future growth.
Artificial intelligence has become another major source of market volatility.
Investors are increasingly questioning whether the enormous amounts of capital being invested in AI infrastructure will translate into sustainable profits. Companies including Oracle and CoreWeave have experienced significant selling pressure as concerns surrounding financing, valuations, and long-term returns intensify.
Higher interest rates only amplify these concerns, making investors increasingly sensitive to cash flow, profitability, and balance-sheet strength.
However, the underlying AI investment story remains compelling. Taiwan Semiconductor reported another record quarter, with profits rising nearly 69% from a year earlier, demonstrating that demand for advanced semiconductor technology remains substantial.
That distinction is important. The market is not necessarily abandoning artificial intelligence. Investors are becoming more selective about which companies can turn strong demand into sustainable earnings.
Earnings Season Meets an Increasingly Skeptical Wall Street
The opening week of third-quarter earnings season has reinforced this shift toward greater selectivity.
Major financial institutions, including JPMorgan Chase, Goldman Sachs, Citigroup, Wells Fargo, Bank of America, and Morgan Stanley, reported mixed results.
Trading activity and certain banking operations remained strong, but investors also focused on financing costs, credit quality, and profitability. Goldman Sachs benefited from robust trading revenue, while JPMorgan delivered higher revenue but missed profit expectations. Bank of America also faced pressure following disappointing results and regulatory charges.
The broader message is that corporate America remains resilient, but investors are becoming less forgiving of disappointing results and cautious guidance.
Strong earnings alone may no longer be enough. Investors want evidence that growth can continue despite higher interest rates, inflation, and geopolitical uncertainty.
This is precisely why disciplined stock selection matters as earnings season accelerates.
SPY and VIX: Why I Remain Bullish
Despite the recent selling pressure, I remain in the bullish camp.
The major indexes have been testing their 50-day moving averages, making this an important technical area to watch. Holding these levels could help stabilize sentiment, while a sustained breakdown would increase the risk of a deeper correction.
The CBOE Volatility Index (VIX), which had been trading around 16 earlier in the week, jumped above 20 during Friday's session as selling intensified. That increase reflects growing investor anxiety and reinforces the importance of managing downside risk.
The 10-year Treasury yield remains volatile, and the possibility of interest rates staying higher for longer continues to be one of the market's most significant challenges.
Nevertheless, I believe the longer-term bullish trend remains intact.
For the SPDR S&P 500 ETF Trust (SPY), my intermediate-term upside target remains 780–810 over the next several months, assuming economic growth remains resilient and corporate earnings continue to support valuations.
On the downside, I am watching 740–750 as an important support zone.
A recovery above the 50-day moving average, accompanied by improving market breadth and declining volatility, would reinforce my bullish outlook. Conversely, a sustained break below support could indicate that the market needs additional time to consolidate.
I do not believe investors should abandon their long-term strategies simply because volatility has increased. However, this is also not an environment for blindly buying every dip.
The emphasis should be on selecting fundamentally strong companies, identifying favorable entry points, and maintaining disciplined risk management.
Looking Ahead: Earnings, Seasonality, and the Fed
Next week could be another important turning point as third-quarter earnings season accelerates and investors prepare for the Federal Reserve's October 27–28 meeting.
Corporate results will dominate the headlines, with reports expected from Tesla, Netflix, GE Aerospace, IBM, Lam Research, Texas Instruments, and several other major companies.
Investors will be looking beyond headline earnings to assess management guidance, operating margins, capital spending, and expectations for the remainder of the year.
Economic reports will also provide important insight into the health of the broader economy. Housing starts and building permits will help gauge the impact of elevated borrowing costs, while weekly jobless claims and manufacturing and services activity will offer additional clues about employment and growth.
Beyond next week, the Fed's policy decision and upcoming GDP and inflation reports could help determine the direction of Treasury yields and equity markets heading into November.
Seasonality is another important consideration.
Historically, the final months of the year have often provided a favorable environment for equities. While seasonal trends are never guaranteed, the combination of strong corporate earnings, attractive individual stock opportunities, and potential year-end buying could provide support if inflation and interest rates stabilize.
I remain bullish on the market's intermediate- and longer-term outlook, but the risks are undeniable.
Persistent inflation, elevated energy prices, tariff uncertainty, and geopolitical instability could increase recession risks and create additional volatility.
This is definitely a stock picker's market, and risk management should be at the forefront of every investor's mind.
The most important lesson is that volatility does not eliminate opportunity. It changes how we should approach it.
At YellowTunnel, our focus remains on helping investors navigate these conditions through experienced market analysis, risk-management tools, and quantitative models that evaluate opportunities against both macroeconomic conditions and company-specific fundamentals.
The goal is not simply to stay invested regardless of market conditions. It is to remain positioned for long-term opportunities while adapting exposure and managing downside risk as conditions change.
The long-term bull market remains intact in my view. But the investors who succeed in this environment will be those who combine conviction with selectivity, discipline, and a clear plan for managing risk.
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Sector Spotlight: Biotechnology (XBI)
While technology stocks struggle with questions surrounding AI spending, valuations, and higher borrowing costs, I am turning my attention to another area of the market with substantial long-term growth potential: biotechnology.
The SPDR S&P Biotech ETF (XBI) offers diversified exposure to companies developing new treatments across oncology, immunology, rare diseases, and other areas of medicine.
What makes biotechnology particularly interesting right now is that many of its most important growth catalysts are driven by clinical trials, regulatory approvals, and medical innovation rather than the same economic forces influencing traditional technology companies.
The sector has already demonstrated considerable strength in 2026, although recent selling pressure has created another important test. XBI has retreated from its September highs, reflecting the broader market's increasingly cautious attitude toward growth-oriented investments.
Higher interest rates remain a challenge. Smaller biotechnology companies frequently depend on external financing to fund research and clinical development. When borrowing costs increase, investors become more selective about which businesses deserve capital.
However, there are several reasons I believe the sector deserves attention.
First, the recent weakness in AI-related stocks could encourage investors to look for opportunities in other areas of innovation. Biotechnology offers exposure to potentially transformative technologies without relying on the same enormous data-center infrastructure investments.
Second, the pace of medical innovation continues to accelerate. Advances in cancer immunotherapy, personalized medicine, and genetic technologies are creating opportunities for companies capable of translating successful clinical research into commercial products.
Finally, major pharmaceutical companies continue to seek promising treatments and technologies to strengthen their pipelines, creating potential acquisition and partnership opportunities across the industry.
One of the most encouraging developments has been the success of Moderna and Merck's experimental personalized cancer therapy in a late-stage melanoma trial. It provides an important example of how meaningful clinical breakthroughs can change investor expectations for an entire technology platform.
That said, XBI is not a defensive investment simply because it belongs to health care. Clinical setbacks, funding conditions, regulatory uncertainty, and sudden market selloffs can produce significant volatility.
I believe biotechnology represents an attractive sector to monitor as investors search for the next areas of sustainable growth beyond the AI trade.
For XBI, I will be watching for price stabilization, improving momentum, and confirmation from our models before increasing exposure. In this environment, finding the right entry point is just as important as identifying the right sector.
Trade of the Week: Moderna, Inc. (MRNA)
This week's trade spotlight is Moderna, Inc. (MRNA), one of the most compelling—and volatile—stories in biotechnology.
Moderna became a household name through its COVID-19 vaccine, but the company's longer-term investment opportunity is increasingly tied to applications of its messenger RNA technology beyond infectious diseases.
In August, Moderna and Merck announced positive Phase 3 results for intismeran autogene, an experimental personalized cancer treatment being developed alongside Merck's immunotherapy drug Keytruda.
The study demonstrated statistically significant improvements in preventing melanoma recurrence and the spread of disease compared with Keytruda alone.
This represents a potentially important milestone for personalized cancer medicine.
Rather than developing a single treatment for every patient, the technology is designed to identify mutations within an individual's tumor and help train the immune system to recognize and attack cancer cells.
The implications could extend beyond melanoma. Moderna and Merck are already studying the technology across several additional cancer types, including lung, bladder, and kidney cancer.
For investors, the next major catalyst arrives October 24, when detailed Phase 3 melanoma results are scheduled to be presented at the European Society for Medical Oncology Congress.
Moderna will also report third-quarter financial results on November 6, providing another opportunity to evaluate commercial performance, spending, and management's expectations for its expanding pipeline.
These developments have helped fuel an extraordinary rally in Moderna shares this year.
However, that enthusiasm has also created substantial valuation risk.
MRNA has experienced sharp selling pressure this Friday as investors take profits and reassess how much future success is already reflected in the stock price. The company also continues to report operating losses while investing heavily in research and development.
This is precisely the type of environment where I believe disciplined trade selection becomes critical.
The investment thesis is compelling: Moderna has the potential to become a much broader platform for developing cancer treatments and other medicines. But promising science does not automatically translate into immediate profitability, and expectations are already high.
My approach to MRNA is bullish on its long-term potential but selective on timing.
Rather than chase a stock ahead of a major clinical announcement, I want to see selling pressure stabilize and our models confirm a favorable entry point. Depending on volatility and available options pricing, a defined-risk strategy may also be worth evaluating.
A strong presentation later this month could reinforce investor confidence in Moderna's oncology pipeline. Disappointing details, however, could produce another substantial move lower.
With inflation, interest rates, and geopolitical uncertainty continuing to influence the broader market, I believe opportunities like Moderna demonstrate why this remains a stock picker's market.
MRNA is my trade of the week because of its transformative potential and important upcoming catalysts—but managing the risk will be every bit as important as identifying the opportunity.
This week, I am adding Moderna, Inc. (MRNA) to my portfolio.
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For the rest of 2026, the market is entering a more selective and demanding phase. On the surface, major indexes remain resilient, but underneath, investors are navigating a more complicated environment shaped by geopolitical tensions, tariff uncertainty, uneven megacap earnings, sticky inflation expectations, and renewed pressure from interest rates. At the same time, labor market data is beginning to soften at the edges, creating a setup where discipline, timing, and data-driven decision-making are becoming more important than broad market optimism.
This is exactly where YellowTunnel becomes essential.
In a market where leadership is narrowing and volatility can return quickly, investors need more than headlines and guesswork. YellowTunnel’s AI-powered tools are designed to help you cut through the noise, identify high-probability setups, track changing market conditions, and stay aligned with the strongest pockets of opportunity. Whether you are looking for real-time trade ideas, advanced stock and options analysis, predictive market data, or a more disciplined trading process, YellowTunnel gives you the structure and clarity needed to act with confidence.
As conditions tighten heading into Q4, the difference between reacting emotionally and following a proven, data-backed approach can be significant. Our goal is to help you stay prepared, stay selective, and stay focused on the opportunities with the strongest risk-reward potential.
Whether you are focused on short-term trades, portfolio positioning, options strategies, or improving your overall trading mindset, YellowTunnel provides the tools, insights, and guidance to help you navigate this market with greater precision.
Let’s work together to make the rest of 2026 a stronger, smarter, and more disciplined period for your portfolio. As always, successful investing begins with informed decisions, proper risk management, and a clear understanding of your personal goals and risk tolerance before entering any trade.
Wishing you a productive and profitable trading week!
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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: