📊 Energy Spike + Strong Earnings + Capex Surge = AI's Trade
How Your Ego Is Taxing Your P&L: The Expensive Need to Be Right
If you’re journaling and grading your trades, your Ego is the one pattern that shows up everywhere. It’s not in your entry. It’s not in your indicator. It’s in your excuses.
FOMO makes you chase. Loss Aversion makes you hold. Ego makes you defend both.
And it’s the most expensive emotion in trading because it disguises itself as confidence.
What Is Ego in Trading?
Ego says: "I’m a good trader, therefore this trade should work."
Great trading says: "I have a good process, therefore my outcome over 100 trades should work."
Ego needs to be right this trade. Greatness accepts being wrong this trade to be right over time.
Your reference point shifts when Ego is driving. It’s no longer entry price. It’s your identity. Selling a loser feels like admitting, "I was stupid." Taking profits early feels like, "I need to prove I can win." Moving stops feels like, "I’m not wrong yet."
You’re not trading the market anymore. You’re defending yourself from the market.
3 Ways Ego Shows Up In Your Trading Journal
If you’re grading yourself A-F, watch for these behaviors:
The "I’ll Prove It" Add-On
You buy SPX calls at $4.00. They drop to $2.50. Your system says cut. Ego says: "I did the work. I know I’m right. The market is wrong." So you double down at $2.50 to lower your breakeven and "prove it." It goes to $1.00. Grade: F on process. You traded your opinion, not price. Your review will show avg loser size spikes on Ego days.
The "I Can’t Be Wrong Today" Hold
You’re down on the day. You have a loser that hit your stop 20 minutes ago. But Ego says: "I can’t end red. I’m not a losing trader." So you hold it into close, hoping for a miracle candle to save your identity. It doesn’t. Grade: F. You let one trade define your day because you couldn’t accept being wrong.
The "Told You So" Trade That Ruins Tomorrow
You take a perfect A+ setup. It works huge. Ego takes over: "I’m hot. I’m great at this." So you take 3 more C setups after lunch that weren’t in your plan. You give back 70% of the morning win. Your P&L is still green, so you call it a win. Grade: C-. You turned discipline into gambling because your Ego needed more proof you were great.
How Great Traders Measure Ego
This is where Atomic Habits meets trading. James Clear says you must fall in love with boredom and let go of identity. Great traders don’t need to be right. They need to follow the system. Add these 3 metrics to your weekly review:
Average Down Count: How many times did you add to a losing trade that was not part of the original plan? If greater than 0 per week, Ego is defending. Great traders aim for zero.
Time Past Stop: How long did you hold after price hit your original stop? If avg is greater than 2 minutes, Ego is negotiating with the market. Great traders exit within seconds of their level.
Unplanned "Victory Lap" Trades: How many trades did you take AFTER you hit your daily profit goal? If more than 1, Ego wanted a trophy. Great traders stop when the plan says stop. Grade those extra trades separately – they’re usually C or worse.
The Atomic Fix: Make Being Wrong Your Job
Before every trade, write this in your journal:
"My job today is not to be right. My job is to follow my plan. A loss that follows the plan equals A. A win that breaks the plan equals F."
Great traders reframe a stop-out as proof they are disciplined, not proof they are dumb. They know the market doesn’t know who you are or care what you think.
Ego says: “I am my last trade.”
Process says: “I am my next 100 trades.”
Your homework this week is to give every trade two grades: an outcome grade and an ego grade.
An ego grade of A means you followed the plan exactly. You did not average down unexpectedly, move your stop or manufacture an additional trade because you were frustrated or overconfident.
An ego grade of F means you argued with price.
Reply with your weekly “Ego Grade Average!”
Financial psychology helps explain why this exercise matters. Confirmation bias encourages us to search for evidence supporting our original position. The sunk-cost effect makes us reluctant to abandon a trade after investing money, time and emotional energy into it. Self-attribution bias convinces us that winners prove our skill while losers were caused by bad luck, manipulation or an irrational market.
Together, these biases create a dangerous illusion: that protecting our opinion is the same thing as protecting our capital.
It isn’t.
Going from good to truly great means firing yourself as the predictor and hiring yourself as the risk manager. Your journal will show exactly when that transformation begins—not when you stop taking losses, but when losses stop controlling your decisions.
That distinction is especially important in markets like this one, where rapidly changing headlines, interest-rate expectations and sharp sector rotations can punish even a well-researched thesis. We cannot control whether the next trade works. We can control its size, its stop, and whether one outcome is allowed to become a judgment about who we are.
The market does not reward the trader who needs to be right.
It rewards the trader who can be wrong without losing control.
Recent Trade Review
One of our recent DPT trades focused on the Roundhill Memory ETF ($DRAM). The DPT model identified $DRAM as a long opportunity, giving subscribers a timely way to participate in strength across the memory-chip industry.
We reviewed the setup and trade management during last Thursday’s Live Trading Room. You can watch the complete recording here:
https://yellowtunnel.com/live-trading-room-recordings#live-trading-room-recordings
This trade also highlights one of the most important differences between our free and paid services. Free forecasts and market analysis can help traders identify potential opportunities, but paid-service subscribers receive timely SMS alerts communicating when it may be appropriate to enter, manage and exit a position.
Identifying a promising setup is only the beginning. Execution, timing and risk management ultimately determine whether an opportunity becomes a successful trade. The DPT service is designed to provide that additional guidance throughout the life of the position—not simply identify a symbol and leave traders to manage it alone.
Current Trading Landscape
This week offered another reminder that the market does not care how strongly investors believe in a particular outcome. Corporate earnings continued to show underlying economic strength, particularly across technology, cloud computing and artificial intelligence, but escalating conflict between the United States and Iran pushed oil prices sharply higher and forced investors to reconsider the inflation and interest-rate outlook.
Markets began the week cautiously as geopolitical concerns competed with optimism surrounding the latest earnings season. Resilient jobless claims and firm U.S. service-sector activity reduced immediate recession fears, while continued housing weakness showed the pressure that elevated borrowing costs are placing on rate-sensitive areas of the economy. Global inflation data and the European Central Bank’s policy decision added volatility to bonds and currencies, but oil and Big Tech ultimately became the week’s dominant market drivers.
By Thursday, those risks had become increasingly difficult to ignore. Brent crude surged more than 7% and moved above $100 per barrel as attacks on energy shipping routes raised fears of a more serious supply disruption. At the same time, Alphabet and Tesla sold off following their quarterly reports, intensifying pressure on the technology sector and pulling the broader market toward an important technical test.
The VIX is now trading near 18, reflecting greater uncertainty without signaling outright panic. SPY is testing its 50-day moving average, while the technology-heavy Nasdaq has experienced more significant pressure as investors reconsider valuations, capital-spending requirements and the possibility that interest rates remain elevated for longer.
Oil Becomes the Market’s Biggest Macro Variable
The expanding conflict in the Middle East remains the market’s most immediate risk. Continued U.S. strikes on Iranian targets, Iranian retaliation and attacks affecting Saudi tankers in the Red Sea have placed both the Strait of Hormuz and the Bab el-Mandeb shipping route under greater scrutiny.
Brent crude briefly moved above $100 per barrel Thursday, while WTI climbed above $90. Oil has now risen sharply from its early-July levels, transforming what had previously been a source of inflation relief into a renewed threat to consumer prices, corporate margins and Federal Reserve policy.
Higher energy prices spread throughout the economy. Airlines and transportation companies face rising fuel expenses, manufacturers pay more to produce and distribute goods, and consumers have less discretionary income after paying more at the gas pump. Energy producers may benefit from stronger crude prices, but a sustained oil shock would place additional pressure on consumer discretionary, industrial, transportation and retail stocks.
The key question is whether the latest move represents a temporary geopolitical risk premium or the beginning of an actual supply disruption. A ceasefire, improved shipping conditions or an increase in available supply could quickly remove part of that premium. Additional attacks on tankers, ports or energy infrastructure could push crude higher and extend the market’s rotation toward energy and other inflation-sensitive assets.
For the broader market, stabilization may matter more than the absolute price of oil. Investors can adjust to expensive energy when prices are relatively orderly. A rapid and unpredictable rise is more dangerous because it creates uncertainty around inflation, corporate earnings and the path of monetary policy.
Inflation Improved, but the Improvement Is Now at Risk
The latest inflation reports offered meaningful signs of progress. The Consumer Price Index declined 0.4% in June, while the year-over-year inflation rate slowed to 3.5%. Core CPI was unchanged for the month and increased 2.6% from one year earlier. Producer prices also declined in June, with final-demand PPI falling 0.3%.
The problem is that those reports were measured before the latest surge in crude prices. Much of June’s improvement was connected to lower energy costs, and that tailwind could reverse if oil remains near $90 to $100 per barrel through the second half of the summer.
Tariffs create another potential source of inflation by increasing the cost of imported goods, raw materials and components. Businesses must either absorb those expenses through lower margins or pass them on to consumers through higher prices. Neither outcome is particularly favorable for equity valuations.
This is why interest rates remain the most important risk to the bullish market outlook. The 10-year Treasury yield continues to move within a broad range of approximately 4.0% to 4.8%, but it has recently moved closer to the upper end as investors price in higher energy costs and the possibility of tighter monetary policy. The yield reached approximately 4.70% Thursday as oil and inflation concerns intensified.
A sustained move above 4.8% would create another valuation challenge for technology stocks and increase borrowing costs across housing, autos and consumer credit. It would also make bonds more competitive with equities, potentially encouraging investors to reduce exposure to expensive growth stocks.
Corporate earnings remain strong in many areas, but the market is becoming less willing to reward growth without sufficient cash-flow generation. Investors increasingly want evidence that record spending on artificial intelligence, data centers, robotics and new manufacturing capacity will produce sustainable returns.
Alphabet reported a strong quarter, with revenue increasing 24% to approximately $119.8 billion. Google Cloud revenue jumped 82% to roughly $24.8 billion, demonstrating exceptional enterprise demand for AI infrastructure and cloud services.
Despite that growth, Alphabet shares declined after management increased its planned 2026 capital spending to between $195 billion and $205 billion. Investors focused on the cost of expanding AI capacity and questioned how quickly those investments would translate into higher earnings and free cash flow.
Tesla faced a similar reaction. The company’s revenue held up better than some investors had feared, but adjusted earnings missed expectations, operating profitability remained under pressure and aggressive investment produced negative free cash flow. The stock fell sharply as investors weighed Tesla’s current financial performance against its longer-term ambitions in autonomous driving, robotics, artificial intelligence and manufacturing expansion.
These results do not mean that the AI investment cycle is ending. Alphabet’s cloud growth shows that demand remains extremely strong. Instead, the reaction demonstrates that the market is applying a higher standard to companies making enormous infrastructure commitments.
During the first stage of the AI rally, investors rewarded companies simply for announcing new spending and positioning themselves as beneficiaries of the technology. The next stage will require measurable revenue, improving margins and sufficient cash generation to justify that spending.
That shift could create a more selective technology market. Companies with clear AI monetization, strong balance sheets and durable free cash flow may continue to outperform, while businesses dependent on distant or uncertain returns could face greater scrutiny.
The Market’s Technical Test
The broader market now faces an important technical and psychological test. SPY is trading near its 50-day moving average, the VIX is near 18 and several of the market’s largest technology stocks are under pressure at the same time.
A successful hold near the 50-day moving average would suggest that investors still view weakness as an opportunity to add exposure. A decisive break below that level, particularly if accompanied by rising yields and further oil strength, could trigger additional de-risking and a deeper market correction.
Market breadth will also be important. The market does not necessarily need Alphabet, Tesla and every semiconductor stock to rally simultaneously. It does need enough participation from financials, industrials, healthcare, energy and other economically sensitive sectors to offset weakness in the largest technology names.
The VIX remains elevated enough to confirm increased caution but below levels normally associated with broad panic. That creates an environment where sharp moves in both directions are possible, particularly around earnings reports, geopolitical headlines and economic data.
A Critical Week Ahead
Next week will bring one of the most important combinations of central-bank policy, economic data and corporate earnings this summer.
Durable-goods orders arrive Monday and will provide an updated look at manufacturing demand and business investment. Consumer Confidence follows Tuesday, offering insight into household expectations, employment conditions and the potential effect of rising gasoline prices on future spending.
The Federal Reserve begins its two-day meeting Tuesday, July 28, with its policy decision and press conference scheduled for Wednesday, July 29. Policymakers must balance improving June inflation data against higher oil prices, tariff uncertainty and a labor market that remains relatively resilient. Even if rates are left unchanged, the Fed’s comments regarding energy prices and the possibility of future tightening could produce significant movement in Treasury yields, the dollar and equities.
Thursday will bring the advance estimate of second-quarter GDP along with June personal income, consumer spending and the Fed’s preferred PCE inflation measure. Together, those reports will show how quickly the economy was growing and whether underlying inflation continued to improve before the latest oil spike.
The Employment Cost Index arrives Friday and will provide another important measure of wage inflation. Persistent labor costs, combined with higher energy prices, could make the Federal Reserve even more reluctant to loosen policy.
Big Tech earnings will remain equally important. Microsoft and Meta report Wednesday, followed by Amazon and Apple on Thursday. Investors will focus heavily on cloud growth, AI-related revenue, capital-spending guidance, margins and free cash flow after Alphabet’s report raised the bar for the entire sector.
Market Outlook
I remain in the MARKET BULLISH camp. The long-term trend remains intact, and I believe SPY can eventually reach the $760 to $780 range over the next few months.
At the same time, the market is entering a more volatile and selective period. Oil has become a major inflation variable, Treasury yields are moving near the upper end of their recent range and several market-leading technology companies are facing increased scrutiny.
I am watching the $700 to $720 area as important short-term support for SPY. Holding above that zone would preserve the broader bullish structure, even if the market experiences additional volatility or consolidation along the way.
The broader rally does not require every geopolitical headline to improve or every technology company to deliver a perfect quarter. It does require oil to stabilize, Treasury yields to remain below the top of their recent range and corporate earnings to continue justifying current valuations.
For now, this is not an environment for chasing every move or defending every position. Traders should remain selective, manage position sizes carefully and focus on companies with strong earnings, healthy cash flow and identifiable catalysts.
Next week’s Federal Reserve meeting, inflation data, GDP report and Big Tech earnings should help determine whether the current test of the 50-day moving average becomes another buying opportunity—or the beginning of a deeper correction.
EPT special is live — MSFT reports next week
Q2 earnings season officially kicked off last week — and the moves are already bigger than most traders expected.
Banks led it off. Morgan Stanley reported last week. Stock trading revenue up 69%. Record quarter. The kind of print that separates the traders who were positioned from the ones who read about it after the close.
Our new AI called MS for over 30% overnight.
👉Click here to see how it works 👈
Sector Spotlight
Energy moves to the top of our sector watchlist as geopolitical risk, rising crude prices and renewed inflation concerns reshape market leadership.
Brent crude briefly crossed $100 per barrel this week, while WTI moved above $90 as the conflict between the United States and Iran raised concerns about disruptions to major shipping routes. Higher oil prices have pressured technology, consumer and transportation stocks, but they can create a more favorable revenue and cash-flow environment for energy producers, refiners and service companies.
The Energy Select Sector SPDR Fund ($XLE) offers broad exposure to this theme. The fund holds 21 S&P 500 energy companies across oil and gas production, refining, pipelines and energy services. Approximately 91% of the portfolio is allocated to oil, gas and consumable-fuels companies, with the remainder concentrated in energy equipment and services. Its largest positions include Exxon Mobil, Chevron, ConocoPhillips, Marathon Petroleum and Phillips 66.
This diversified structure is important in the current environment. Producers can benefit from higher commodity prices, refiners may gain from stronger margins and pipeline operators can generate steadier fee-based revenue. XLE therefore provides broader exposure to the energy rotation without requiring traders to correctly identify which individual company will benefit most from the latest geopolitical development.
Valuation may also support the sector’s relative appeal. As of July 22, XLE traded at approximately 13 times estimated forward earnings and offered a 30-day SEC yield of 2.5%. That compares favorably with many expensive technology stocks now facing greater scrutiny over capital spending, margins and free cash flow.
The bullish case does not depend entirely on crude continuing to rise vertically. Oil stabilizing near elevated levels could be healthier for energy stocks than another uncontrolled spike. Sustained prices would support earnings and cash flow while reducing the risk that an extreme energy shock causes broader demand destruction or forces the Federal Reserve to become more aggressive.
The primary risk is that energy remains one of the market’s most headline-sensitive sectors. A ceasefire, restoration of normal shipping activity or an increase in available supply could quickly remove part of oil’s geopolitical premium. Conversely, additional attacks on tankers, ports or energy infrastructure could keep crude elevated but also increase volatility across the entire market.
Rather than chasing XLE immediately after a sharp oil move, traders should watch for an orderly pullback, improving relative strength and evidence that the fund can hold its gains when crude pauses. Oil inventory reports, developments in the Strait of Hormuz and Red Sea, Treasury yields and guidance from major producers will remain important catalysts.
With technology under pressure, inflation expectations rising and investors searching for sectors capable of benefiting from higher commodity prices, XLE offers one of the market’s clearest tactical opportunities. Entry discipline remains critical, but the current combination of earnings support, attractive relative valuation and geopolitical catalysts favors continued attention to the energy sector.
Trade of the Week: EQT Corporation ($EQT)
Our Trade of the Week is EQT Corporation ($EQT), one of the largest natural gas producers in the United States.
EQT gives traders a more focused way to participate in the energy theme. Unlike many of XLE’s largest holdings, which are heavily influenced by crude oil and refining margins, EQT is primarily tied to natural gas production, transportation and infrastructure. That distinction provides exposure to another important part of the energy complex rather than simply repeating the crude-oil trade.
The company entered this volatile environment with improving operating momentum. During the second quarter, EQT reported sales volume of 634 billion cubic feet equivalent, exceeding the high end of its guidance because of strong well performance, system-pressure optimization and fewer price-related production curtailments than expected. Capital expenditures totaled $666 million, approximately 9% below the low end of management’s guidance, reflecting operating efficiencies and lower infrastructure spending.
Those results are important because energy producers must do more than increase production. They must convert that production into cash without allowing drilling and infrastructure costs to consume the benefit of stronger commodity prices.
EQT generated approximately $1.05 billion in operating cash flow during the quarter and $330 million in free cash flow attributable to the company. For the first six months of 2026, free cash flow attributable to EQT reached roughly $2.16 billion, up from approximately $1.28 billion during the same period last year.
Management also raised its full-year production outlook to between 2,375 and 2,450 Bcfe following the stronger-than-expected operating performance. That combination of rising production expectations, disciplined spending and meaningful free-cash-flow generation strengthens the fundamental case for the stock.
EQT’s integrated business model provides another advantage. Its midstream assets can produce relatively steady, fee-based cash flow during periods of weaker commodity pricing, while its low-cost upstream operations provide greater exposure when natural gas prices rise. This structure may help soften downside risk without eliminating the company’s upside sensitivity to improving natural gas fundamentals.
Natural gas storage and weather will remain important variables. The Energy Information Administration reported 3,024 billion cubic feet of working gas in storage as of July 10, following a weekly increase of 41 Bcf. Summer electricity demand, future storage injections, LNG exports and expectations for the winter heating season could all influence natural gas prices and EQT’s near-term performance.
The main risk is that rising crude oil does not automatically guarantee rising natural gas prices. EQT remains exposed to natural gas volatility, regional pricing differentials, weather-driven demand and changes in production across the industry. The stock could also experience continued post-earnings volatility as investors evaluate realized pricing, capital spending and the sustainability of its cash-flow performance.
For that reason, traders should avoid chasing a sudden energy-sector spike. The stronger setup would be an orderly pullback that holds support, followed by renewed buying volume and confirmation that EQT is outperforming both the broader market and other natural gas producers.
EQT combines strong production, improving operating efficiency, an integrated infrastructure platform and substantial free-cash-flow generation. With energy attracting renewed market attention and investors becoming more selective about earnings quality, EQT offers an attractive opportunity for the coming week—but position sizing and a predetermined stop remain essential in this highly volatile environment.
This week, I am adding EQT Corporation ($EQT) 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 82.30% of all trades that I made, with an average profit of 39.66% 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.
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 Q3, 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.
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!