Hi everyone and welcome to the Yellow Tunnel community, a family of trading services dedicated to all classes of traders seeking to elevate their trading skills, market awareness, and trading profits.
As the latest earnings season kicked off, markets began Q4 with mixed messages throughout. Hope over an easing Fed approach offered some relief earlier in the month which was later squashed by the CPI and employment data. Furthermore, last month's Federal Open Market Committee meeting minutes, which were just released, buoyed the hope that we could see another rally of the kind we just saw in July/August. Investors had hoped the Fed could pivot but the latest data countered that notion and only added to the understanding the Fed will continue to hike rates. Mixed messages can often be confusing, but are not a total deterrent to success.
Just this week, I was reminded of that with my own daughter. Playing volleyball from a young age, her teams would often focus on fundamentals and good teamwork - more concerned with how you participated than what the result was. The older she got the more this mentality seemed to take a backseat, both with the coaches and players. Still, at a relatively young age, her middle school gym reads "It's not about winning, it's about participation."
A good-natured idea - if we were not losing every single game. Yes, every game. What I found even odder this year: for the first time, their coach began stressing winning. Working players hard in practice and only letting those who serve well, serve at all. Not allowing players to show up late to practice and the like. All of this reminded me of trainers and teachers I met growing up in the Soviet Union before it became Ukraine. Hearing her coach repeatedly blow the whistle and demand perfection transported me right back to the USSR. Having since raised kids in the U.S., I do not know which side of the "ocean" I stand on in regard to how coaches should motivate players. I wanted to shield my child from the harshness the coach provided and at the same time, I wanted the losing, which also caused her pain, to stop.
Ultimately, I realized it is not a one size fits all approach. Some kids prosper being handled with "padded gloves," and some kids require that fire to be pushed to the next level. As I sat there in her latest game, I looked at the coach on the sideline screaming his head off. I looked right above the kids playing and saw the participation sign hanging in the gym. Mixed messages all around.
And well, the team won. Kids were elated: jumping up and down, hugging their coach, almost coming to tears of joy. The struggle they endured, repeated failures, all the ups, all the downs - was finally worth it. And yes, it was just one regular season game but the team finally felt the reward for all of their efforts. So in the end, I do not know which approach was correct, and in a way, both messages could apply. Winning the volleyball game did not define these kids but putting hard effort toward a shared goal brought them joy. Sometimes, two things can be true, and sometimes that's just the way it's got to be.
That's exactly what we're seeing in the market. Unemployment remains low, inflation remains high. Hope over a Fed changing course that is met with data to counter it. The Fed is exhausting all of its options, and yet recession seems imminent. Confusing, to say the least, but something we must navigate through in order to make profits and, as previously stated, should not be a deterrent to success.
Yes, that may be confusing but one thing I always recommend to elevate the confusion is never trading alone. Finding a trading community to bounce ideas off of and find new ways to better your portfolio.
That is why I recommend being part of our YellowTunnel trading community where you can discuss and dissect with others. This is exactly what we did in my latest Strategy Roundtable, which we hold weekly on YellowTunnel. I 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 to 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.
CURRENT TRADING LANDSCAPE
Apart from the bounce back we saw on Thursday, U.S. markets predominantly traded lower this week. Headline news and market sentiment surrounded the Consumer Price Index reports released on Thursday and the FOMC minutes released on Wednesday. Additionally, September retail data was released on Friday with earnings season officially kicking off on the same day as major banks released their latest earnings.
After the U.S. consumer-price index for September was released on Thursday and showed higher numbers than what economists had predicted, stocks took a sharp plunge. Despite a brief dip, stocks rebounded sharply in the last hour of trading. This latest movement has not changed market sentiment that the Federal Reserve will continue to raise interest rates at future meetings.
Reading into the CPI report, we see that the cost of living in the United States rose by 0.4% in September, signaling unrelenting high inflation levels continuing into the end of the year. Yearly inflation increased from 8.2% to 8.4%, and when reviewing data that excludes gas and food, inflation showed a 0.6% increase - which is double what was initially forecasted. Therefore, the Federal Reserve is most likely going to keep raising rates. With necessities like rent and medical expenses increasing as well, experts are speculating that there will be two more hikes of .75 basis points in November and December's FOMC meeting.
Reviewing the latest levels in the market, we are watching overhead resistance levels in the SPY which are presently at $376 and then $390. The $SPY support is at $355 and then $340. We expect the market to continue the bottoming process for the next 2-8 weeks. The short-term market is oversold and can stage a multiple sessions rally. I would be a buyer into any further sell-offs and encourage readers not to chase the market to the downside.
As of Friday, the 5-day chart shows the $SPY was trading 1.61% lower, near $357 - erasing Thursday's gains. The S&P 500 was down over 2% on Friday, with the Nasdaq and Dow trading significantly lower as well. The $VIX saw an up-and-down week, trading as high as $34 before edging settling around $32 on Friday.
Looking at the above levels, I believe the bottoming process will continue in the current period. Inflation remains at high levels with rent, food, airline tickets, and gas all rising above estimates. The market remains oversold and could stage a couple of rallies after we just saw it break below the June/July lows.
As long as SPY remains above its recent lows, the market will continue the bottoming process.
The dollar is looking at a relatively flat week, selling off on Thursday only to recoup losses on Friday. Globally, both Asian and European markets look to close the week in the green after having mixed results throughout. Speaking of Europe, one headline-making additional waves this week includes Credit Suisse's recent insolvency concerns.
After the Swiss bank announced its 3 billion buyback program, in another effort to subvert its latest struggles, the cost of insuring exposure to Swiss-issued debt dropped severely. The five-year credit default swaps sold off sharply and neared the 2008 level - fanning the flames of recession fears. The bubbling liquidity issue offers insight into the current standing of the global economy. Liquidity is the engine that keeps financial services running.
While some of this action could be seen as a solution to inflation pressures, it is often an indicator of recession. Transportation of goods via sea and railroads are way down. Japan's Yan is at historically high levels, and Europe, on the other hand, is seeing historically low levels. The current disconnect in the global market is signaling a wider issue than inflation, one which can be steamrolled into an all-out recession.
This is something incredibly important to keep an eye on as we head into 2023. Currency rates will offer additional insight into the global economy and with the upcoming U.S. earnings season, we can see how they will impact various sectors. A strong dollar, historically, weighs on earnings.
This week, we saw earnings season kick off with major banks JPMorgan Chase, Citigroup, Morgan Stanley, and Wells Fargo releasing earnings on Friday. Next week, the latest earning season is set to be in full stride with marquee earnings data from Bank of America, Charles Schwab, Netflix, Johnson & Johnson, Tesla, AT&T, and Verizon next week. Additionally, the latest Beige Book will also be released.
NEW EARNINGS POWER TRADER SERVICE
I recently launched our new Earnings Power Trader service, which I am very excited about. Each week, our expert traders use our AI Tools to provide the Top Bullish and Bearish Stocks, each with an Entry Price, Target Profit, and Stop Loss.
This new service is special because it offers real-time alerts via SMS and access to Vlad's live positions and orders. When I put together this system, I wanted to be in the fight with other investors. That’s why I don’t play on your emotions to sell newsletters - I put my money where my mouth is.
Every trade recommendation that I make using this system – comes straight from the list of trade recommendations I use myself.
Not only that, but every trade I make is logged in detail for you to review at any time. You can see my entire trading history, updated LIVE so that you can see, learn from, and even copy my trading strategy. Click here to learn more.
Signals have historically averaged over 85% accuracy in my live trading since inception. Sometimes I hold positions for 2-5 days by using options (selling OTM Calls and Puts spread) and targeting 1% target gain and 1% stop loss using stock price. The green color should be interpreted as a bullish signal and the red as a bearish signal.
How To Use Our Signals
Once you become a member, I encourage you to review our Live Trading Room recordings to see how I trade Earnings Power Trader signals in my account. A snapshot of how we produce our Live Trading Room Sessions shows how we pack in a lot of information that can be accessed from whatever device you’re driving.
As a reminder, consider buying near the "BUY" level with a "10 days prediction" higher than the close price. In our live trading room, I usually hold a position for 1-2 days.
I allocate less than 5% of my portfolio if the position is being held overnight. On average, less than 1% of the portfolio should be at risk if you own a position for less than one day.
I entered a position at the predicted LOW (BUY) price or yesterday's close price. My stop loss is 1% and my target gain is 1% of the stock price. I target 75% accuracy using these signals.
A few subscribers asked about Options trading using the signals provided. Please review live trading room recordings. I often sell OTM credit put spread using weekly options and collect 0.5% using stock price. For example, if the stock is trading at $100, I would sell an OTM Put (strike less than 100) with an option BID price close to $0.5.
Earnings Season is here and Freeport-McMoran (FCX) will
announce its earnings this Thursday.
The last time we traded FCX during Earnings Season, we had a 150% return on risk.
Let me repeat that, we had a 150% return!
That's a pretty good return after holding the position for only 9 days.
Be prepared: Freeport-McMoran (FCX)is scheduled to announce its earnings on October 20th.
This is my favorite time of year!
Founder and Chief Investment Officer
(A portion of Yellow Tunnel sales will go to directly help the Ukrainian people)
As earnings season begins, the current bottoming process looks to highlight strong sectors and illuminate sectors feeling the biggest impact of inflation. The market appears to be oversold and while that does decrease the areas in which shares can prosper, there is still room for profit. This week, I'll be highlighting one sector and specific ETF I believe is showing the signals to withstand the current shaky economic standings.