Pepsi Stock Ready To Pop!
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This week's readings on price inflation were released, exceeding forecasts and pushing assets. According to a Bureau of Labor Statistics survey published this week, American consumers paid considerably greater prices for a variety of items in June as inflation levels rose in a slowing US economy. The consumer price index, which measures the cost of common items and services against a year prior, rose 9.1 percent in June from a year ago. This was more than the 8.8% anticipated by the Dow Jones Industrial Average. On a monthly basis, headline CPI rose 1.3 percent and core CPI increased 0.7%, exceeding both forecasts.
This jump in consumer costs reflects a broad and serious rise in overall inflation, with real wages declining to their lowest point since records began in 2007. The unexpectedly high inflation data will keep the Federal Reserve on track to managing demand, adding to the political pressure on congressional Democrats as they approach November's midterm elections. One positive aspect revealed in the latest economic readings is the employment sector, which has remained robust with almost 400,000 new positions created last month.
The CPI data preceded Friday's key retail reports, in which experts expected a 0.9% growth in June, along with the CPI increase at 1.1%. When data was released, it was revealed retail sales in the United States increased by 1% in June, which suggests that consumers are still purchasing a lot of goods. However, if inflation is considered, it's also likely that sales dropped. Retail sales have been declining for the past few months, following a period of strong growth throughout much of the epidemic. Rising prices are driving customers are becoming pickier about what they buy as a result of heightened inflation, with retailers now seeing the consequences.
There has been a lot of speculation about what the Federal Open Market Committee (FOMC) will do next. The FOMC is expected to be more aggressive in the coming months, given current economic conditions and the recent rise in inflation, with a second 75 basis-point interest rate rise already expected by Fed policymakers later this month. Traders had already factored in a 75-point boost before the data were announced, but now they're also contemplating the likelihood that it could be a full percentage point.
Several economists believe that a speedier move by the US Federal Reserve would result in a greater chance of a recession next year and the next meeting is scheduled for July 26-27. Following the most recent CPI and Retail statistics, the continuing earnings season will take center stage, with future market movement expected to be determined by it. Next week, look out for key earnings reports from IBM, Netflix, Tesla, AT&T, and Bank of America, as well as additional Q2 reports.
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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 specified stop-loss strategies with every trade. This market can create great profits or cause sudden losses, so it is imperative to maintain a proper money management technique by controlling your risk with each trade.
CURRENT TRADING LANDSCAPE
As of Friday, the 5-day chart shows the $SPY was trading 1.2% lower, near $381, and just slightly above the key long-term support – $380. While certain sectors lowered following the latest economic releases, several other sectors were able to see nice boosts including consumer staples and tech. The technology sector ($QQQ), for example, was, up 0.75% following the release of June's labor data, at $288, above its 50 DMA.
I expect a short-term rally for the market in the next couple of weeks and I am watching SPY overhead resistance levels at $396 and $409, as well as support levels at $380 and $372.
The $DXY traded lower on Friday, near the $108 level, but has still managed a positive week, as well as an impressive month - up 3.26%.
Taking a closer look at the statistics, I'd be a seller into the rally and have a NEUTRAL portfolio right now. The market is presently oversold and in the process of bottoming.
The "BUY" signal based on the Aggressive Power Trader Portfolio is at the $380 and then $372 level using SPY and the "SELL" signal is at $396 and then $409.
If you are trading options consider selling premium with November and December expiration dates.
Although there was a recent boom in U.S. markets, all three major U.S. indices trading higher for four straight sessions last week, markets turned lower this week with pressure from the latest CPI report. In spite of this data, the dollar remained strong while the market continued to be oversold.
With many believing the worst of inflation could be behind us, I anticipate the market to continue a short-term advance for the next few weeks.
NEW EARNINGS POWER TRADER SERVICE
We recently launched our new Earnings Power Trader service that we at Yellow Tunnel are 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 we 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 Aggressive 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 enter 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.
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.
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SECTOR SPOTLIGHT
Following this week's CPI and retail data, which sent U.S. markets lower, my estimation is that the market will continue to be oversold. The dollar's ability to remain strong during this somewhat turbulent period has strengthened my belief in a short-term rally, which puts the focus on a select segment of symbols and sectors that are currently underperforming.
Specifically, I am interested in the consumer section which had struggled to start the year but has since found good footing and momentum heading into the second half of the year. SPDR's Consumer Staples Select Sector ETF (XLP) has boomed almost 5% in the last month and saw a nice half-a percent boost following the latest labor report. The ETF’s seasonal chart, seen below, is signaling the symbol will most likely trade higher in the next 30-50 days.
XLP aims to match the price and yield performance of the Consumer Staples Select Sector Index and provide an accurate depiction of the consumer staples sector in the S&P 500 Index. The ETF looks to provide accurate exposure to firms from the food and staples retailing, beverage, food product, tobacco, household product, and personal goods industries in the United States.
TRADE OF THE WEEK
When looking for a symbol in this field, I can think of no better example of a prime consumer staple that could see continued growth in the next few months than PepsiCo, Inc. (PEP). Pepsi's six-month chart shows a slight drop in line with the 6-month performance of consumer staples. However, in the last 30-days, the symbol has picked up steam, up over 8%, with room to go higher based on historical data.
The gap between the annual seasonal line and the current year price is significant when looking at PEP's Seasonal Chart. This, along with the symbol’s 10-day forecast, provides a great consumer sector opportunity. In my current reading of the market, a short-term rally is due and one that would likely benefit PEP and the consumer staples sector.
PEP boasts an impressive 6-month prediction, seen above, in our Stock Forecast Toolbox and is trading above the range our 10-day forecast yielded. These two signals, along with the potential shown in the Seasonal Chart, present a bullish trend I'd like to back.
This is exactly where our AI tools are so crucial in determining precise entry and exit points. I’ll be looking to trade $PEP this week as a strong buy. A great consumer staple to trade during the market landscape.
We link our Tradespoon Live Trading Room to assist you to manage the existing inflationary trend. And we keep our positions updated on a regular basis. Our AI technology seamlessly integrates with our platform to provide our customers with the most comprehensive trading experience available today.
The beauty of our AI-driven system is that we are always equipped to bring new trade ideas to our members. Trades in best-of-breed stocks and ETFs that are not yet recognized by the larger universe of traders.
We really pride ourselves on this kind of discovery process to bring trades with very high probability risk/reward parameters to members throughout each week. Our track record speaks for itself from the standpoint of a Winning Trades Percentage, Average Return Per Trade, and Net Gain.
Given the volatile climate lately, we're taking advantage of market dislocation and valuation distortion to our advantage. We're aiming to assist our members all the time, which is why serious traders should not trade without first consulting market-proven AI solutions.
The consistent performance of our services is just incredible. My historical stellar performance is made possible by being right on 85.01% of all trades that I made, with an average profit of 37.21% per trade on our collective trade recommendations. To my knowledge, this trading performance is one-of-a-kind that stands alone in the marketplace for superior trading advice where our numbers and results speak for themselves.
Once you’ve become a member of any of our services, I highly encourage you to view the instructional videos on how to best use your membership and participate in live weekly strategy roundtable workshops that are also archived in the event that they need to be viewed at a later time.
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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 2022 the best year on record for your trading portfolio.
Have a wonderful week ahead, keep in mind the people of Ukraine in your thoughts and prayers, and let's make some great money together in 2022.