The latest CPI data has hit the market and earnings season is officially upon us! After a short lull of little to no key data to start 2024, we are now flush with news that will dictate the market. While it was a pleasure to attain tangible data to inform trading to start the year, I was reminded of the big changes coming in 2024. An election year, global wars, and the unprecedented nature of the current market landscape. At home, I, too, was looking to a big year of changes. Having seen my oldest daughter go off to college, I thought I would be ready for an event like this, but perhaps one is never ready to feel further from one's children. As I sit here, contemplating the imminent departure of my daughter to study abroad in the enchanting city of London, a whirlwind of emotions engulfs me. She's brimming with excitement, counting down the days until her adventure begins. And while pride swells within me, there's an undeniable undercurrent of concern. It's the classic parental mix of joy and worry, a rollercoaster ride of emotions that many of you may relate to.
The idea of her venturing into a new chapter of her life, embracing different cultures, and navigating the bustling streets of London, triggers a reflection on the concept of getting out of one's comfort zone. It's a sentiment that extends beyond personal experiences and resonates profoundly in the world of finance and trading.
In a way, the anticipation of exploring London mirrors the exhilaration we feel when we step into uncharted territories in our financial endeavors. The allure of new opportunities, the chance to expand our horizons, and the thrill of the unknown parallel the excitement of exploring a vibrant city. It's about breaking free from the routine, embracing change, and, in the process, discovering hidden treasures.
Just as my daughter has booked AirBNBs and eagerly awaits visits from family and friends, our financial journeys involve creating connections and seeking valuable insights. In the world of trading, the path to success often leads through learning new technologies, meeting diverse minds, and adopting innovative tools—whether it's the remarkable capabilities of ChatGPT or other cutting-edge AI tools.
At YellowTunnel, we emphasize the importance of never assuming that you know or have seen everything. There's perpetual room for improvement and learning, just as there's always a new corner to explore in a bustling metropolis. And speaking of exploration, I'm delighted to invite you to our upcoming webinar: "BEST 2024 INFLATION/RECESSION EARNINGS SEASON TRADES."
- When: Thursday, January 18th
- Time: 1:00 PM Eastern Time (10:00 AM Pacific)
We're delving into Inflation/Recession Resistant Earnings Season Trades—identifying stocks that flew under the market's radar and are poised for unexpected and significant moves. It's the "sweet spot" of this volatile 2024 inflation/recession stock market, and we don't want you to miss out.
Join us as we navigate uncharted financial territories together, breaking free from our comfort zones and embracing the excitement of the unexpected.
Here's to stepping into new horizons, both in life and in trading.
Recent Trade Review
In our live trading room this week, YellowTunnel A.I.'s Aggressive Power Trader (APT) model pinpointed a lucrative opportunity on Tuesday. Crowdstrike Holdings Inc. ($CRWD) presented an optimal entry point for a long position, and we swiftly acted on it.
To witness the detailed analysis behind this successful trade, check out the Tuesday recording here. The APT model's identification of $CRWD as a prime opportunity is evident on our performance page.
Our trade involved a strategic long stock position on $CRWD, aligning with the APT model's insights. This cybersecurity giant showed promise, and our execution mirrored our confidence in its potential.
For a quick overview, explore the highlights of the trade in the recording here. At YellowTunnel, transparency, innovation, and market precision define our approach. Each successful trade underscores our commitment to empowering members with actionable insights.
Stay tuned for more updates as we navigate the markets with precision and purpose.
CURRENT TRADING LANDSCAPE
This week unfolded with a laser focus on pivotal inflation data unveiled in the Consumer Price Index (CPI) reports, coupled with the commencement of earnings season featuring major banks. The prevailing sentiment among most market participants is that the Federal Reserve is likely done raising rates for this year and the next, leaning towards a high probability of initiating interest rate cuts in the first half of 2024—a scenario that is seen as bullish for the market.
The SPY rally, though capped at $470-490 levels, is poised for short-term support at 430-450. While the market anticipates short-term pullbacks, the pattern of higher highs and higher lows remains contingent upon the prevailing belief in recession-free signs propelling the market higher. For reference, the SPY Seasonal Chart is shown below:
Despite a late 2023 uptick in consumer prices interrupting a temporary inflation slowdown, recent indicators suggest an impending deceleration in the coming months. December's CPI revealed a robust 0.3% surge, marking the most substantial gain in three months. The year-over-year inflation rate climbed to 3.4%, showcasing the resilience of inflationary pressures. Delving deeper, the core inflation rate increased by 0.3% in December, with the annual core inflation rate nudging down to 3.9%, a milestone not seen since mid-2021.
The Federal Reserve, unwavering in its projections, anticipates a gradual decline in inflation, targeting less than 2.5% in 2024 and aiming for its 2% bullseye by 2025. Despite the CPI adding a touch of heat to the market, the overarching narrative remains one of cautious optimism and confidence in the Fed's ability to manage inflationary forces.
Complementing the CPI narrative, the Producer Price Index (PPI) fell 0.1% at the year-end from a month earlier—a third-straight month-over-month decline. Notably, the decrease in December was led by a 12.4% drop in prices for diesel fuel. Excluding food and energy, the PPI climbed 0.2%. This deflationary signal from the producer side contributes to the market's confidence in a potential interest rate cut by the Federal Reserve come March, highlighting the delicate balance between inflationary and deflationary forces.
Against this backdrop, earnings season unfolded with a mixed bag of results. JPMorgan Chase exceeded expectations, reporting a fourth-quarter adjusted profit of $3.97 a share, while Bank of America missed, posting a profit of $3.1 billion, or 35 cents a share. Citigroup reported a fourth-quarter loss of $1.8 billion, attributed to one-time charges related to restructuring efforts. Wells Fargo, reporting in line with estimates, faced a decline.
Beyond the banking sector, BlackRock, the world’s largest asset manager, reported fourth-quarter earnings that beat analysts’ expectations and announced the acquisition of Global Infrastructure Partners for $12.5 billion, signaling a push into private markets. UnitedHealth posted fourth-quarter adjusted earnings of $6.16 a share, beating estimates but witnessing a decline after posting higher-than-expected utilization of medical services. Delta Air Lines, while topping Wall Street expectations, saw a decline after cutting its 2024 earnings guidance.
The recent surge in Treasury yields, with the 10-year note hitting 4.043%, has significantly impacted the dynamics of the oil market. This increase in yields prompts a cautious assessment of oil prices, introducing an additional layer of complexity to the current trading landscape. The market's attention is particularly drawn to the delicate interplay between Treasury yields and oil prices, with investors closely monitoring these interconnected factors for insights into the future trajectory of the oil market.
Simultaneously, geopolitical risks associated with the U.S.-led coalition's strikes on Houthi rebel targets in Yemen have further heightened the volatility in oil prices. While these strikes are intended to reduce the threat to international shipping, they carry the potential for an escalation of conflict in the Middle East. The resulting climb in oil prices reflects the market's sensitivity to geopolitical tensions and the potential impact on global trade. Against this backdrop, investors find themselves navigating a complex landscape where oil prices are not only influenced by economic indicators like Treasury yields but also by the ever-evolving geopolitical dynamics that shape the energy market's outlook.
As we absorb the implications of these earnings releases, U.S. stock futures turned lower, reflecting caution on the outlook for inflation and interest rates. The delicate interplay between economic indicators, corporate performance, and global events continues to shape the growing 2024 trading landscape.
In this week's sector spotlight, we turn our attention to a strategic trading opportunity within a sector that aligns seamlessly with the current market dynamics. With 2024 market activity picking up momentum and earnings season in full swing, this sector could see impressive growth in the coming days. Specifically, when considering the sector’s end-of-2023 performance.
As we gear up for potential gains, our focus centers on the Semiconductor Sector, represented by the ETF $SMH. Let's delve into the bio of $SMH and explore why the semiconductor sector, at this juncture, presents a compelling investment opportunity.
The Semiconductor ETF ($SMH) encapsulates a diverse array of companies at the forefront of technological innovation, ranging from established industry leaders to emerging players shaping the future of electronics. Semiconductors play a pivotal role in powering a spectrum of devices, from smartphones to sophisticated computing systems. The semiconductor sector, a cornerstone of the tech landscape, has exhibited resilience and adaptability in navigating market fluctuations.
In the current market landscape, the semiconductor sector stands out for several reasons. The increasing integration of technology across industries underscores the indispensable nature of semiconductors, positioning companies within the sector for sustained growth. Furthermore, as global economies recover and industries leverage advanced technologies, the semiconductor industry is poised to benefit from heightened demand. The sector's inherent strength lies in its ability to overcome supply chain disruptions and seize emerging opportunities, making it an attractive prospect for investors seeking stability and growth potential.
TRADE OF THE WEEK - $NVDA Extends Run with Robust AI Chip Demand
In our trade of the week spotlight, we focus on NVIDIA Corporation ($NVDA), a standout player within the semiconductor sector. NVIDIA has been extending its impressive run, driven by the robust demand for AI chips. The company's AI-focused chip has become a key driver behind NVIDIA's stellar performance.
NVIDIA's cutting-edge AI chip has gained prominence as the demand for artificial intelligence continues to surge across various industries. From powering AI-driven applications to enhancing data center capabilities, NVIDIA's innovative chip technology positions the company as a leader in the AI landscape. Against the backdrop of the latest AI advancements and the growing reliance on AI technologies, $NVDA emerges as a compelling investment opportunity.
Looking ahead to the upcoming trading week, the confluence of factors, including the semiconductor sector's strength and NVIDIA's pivotal role in AI chip demand, sets the stage for a strategic move. Considering insights from the above article and the latest AI data, buying $NVDA in the upcoming week appears to be a prudent decision, aligning with the overarching narrative of resilience and growth within the semiconductor sector.
And my A.I. agrees! The stage is set for NVDA to ride a nice wave higher, just take a look at my 10-day predicted data for NVDA:
This week, I’ll be adding NVIDIA Corporation ($NVDA) 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 85.27% of all trades that I made, with an average profit of 38.06% 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.
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 2024 the best trading year of your portfolio yet!
As always, remember to conduct thorough research and consider 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:
Wishing you a week filled with resilience, growth, and prosperous opportunities!