Hi everyone and welcome to the Yellow Tunnel community, an aggressive short-term trading service dedicated to all classes of traders seeking to elevate their trading skills, market awareness and trading profits.
The market woke up on the wrong side of the bed Friday after the latest inflation and consumer sentiment data greatly disappointed Wall Street. The CPI for May came in at 1.0%, above forecasts of 0.7% and Core CPI ex-food and energy registered a gain of 0.6% was above the 0.5% estimate. Prices were broadly higher across several parts of the economy, new and used cars, housing and especially food prices saw its largest 12-month increase going back to 1981. Add in gasoline now at $5/gallon on a national average and the message is clear – the Fed has a lot of work to do.
The late selloff Thursday leading into the release of the data Friday smacks of the numbers getting leaked, which tends to be more commonplace these days. Regardless, the key takeaway is that the market had priced in two more half-point rate hikes for June and July, but now it is presumed there will be another rate hike at the September meeting, with November and December meetings also a possibility.
Inflation and a strong dollar will likely result in a swath of lower earnings revisions that will further contract stock multiples on growth stocks with earnings. For stocks with high price-to-sales multiples with no earnings, there remains a significant downside risk. At this juncture, traders should be combing the market for deep value stocks with low P/E multiples, such as what I highlight further in today’s column below.
To this point, I can’t emphasize how vital it is for blog 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 AI platform is navigating us in and out of select trades. It’s FREE and I want highly encourage everyone to sign up to the Live Trading Room and keep checking in throughout the trading day.
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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 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
The narrative has taken a sudden turn from a soft landing later this year to that of “fire and ice” where red-hot inflation leads to a recession. Fear is greater than greed and stocks fall faster than they rise - they take the stairway up and the elevator down. A retest of the March lows for the major averages looks imminent.
As of mid-Friday, the $SPY is trading down 2.6% to $390, right below the short-term support resistance - $399. The value/reflationary ($VTV) trades down 2.1%, at $137, below the 50 DMA. The technology sector ($QQQ) trades lower by 3%, at $290, below the $50 MA.
The $DXY trades higher, near the $104.2 level, trading below the December 2016 high. The TLT trades lower by 1.09%, at $113, and facing the key long-term support. The ten-year yield is higher at 3.18%. The $VIX trades higher, near the 29 level.
The $SPY short-term support level is at $396 has been violated and is followed by $380 as the next key level. The SPY overhead resistance is at $420 and then $430.
I would be a seller into the rally and have a NEUTRAL portfolio at this time. Short-term the market is oversold, undergoing the bottoming process, and can continue the rebound lasting multiple weeks.
"BUY" signal based on the Aggressive Power Trader Portfolio for tomorrow is at the $384 level using SPY and the "SELL" signal is at $410 for short-term traders.
If you are trading options consider selling premium with September and October expiration dates.
Based on our models, the market (SPY) will trade in the range between $350 and $440 for the next 2-8 weeks.
NEW PROFIT ACCELERATOR TRADER SERVICE
We recently launched our new Profit Accelerator 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.
Signals have historically averaged over 85% accuracy in my live trading since inception. Sometimes we hold position 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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Trying to pin the blame of inflation on any one factor does no one any good, but there is plenty of finger-pointing going around. What gets lost sometimes in the discussion is that consumer demand remains robust for goods and services in areas where discretionary spending isn’t being compromised.
Take travel for instance. The major airlines and hotel chains have broadly guided the Street higher on revenue and earnings for the summer travel season. Airports, hotels, amusement parks, beaches and rental cars are sold out through Labor Day. Although this reality runs counter to the market’s negative reaction to the CPI data, most folks with summer travel plans aren’t canceling their trips because of higher gas prices.
Within the buoyant travel sector, the U.S. Global Jets ETF (JETS) offers traders a vehicle to trade the pullback in an industry that is seeing strong demand and some M&A activity as Frontier Airlines and JetBlue Airways Corp. (JBLU) are in a bidding war for Spirit Airlines Inc. (SAVE).
More importantly, the biggest carriers are being quite vocal about the rapid recovery and healthy business conditions despite inflationary pressures. The biggest challenge being voiced is the shortage of workers and pilots needed to expand the number of flight offerings.
Within the JETS ETF, the top ten holdings make up about 61% of total assets, which amount to $3.1 billion in AUM.
When we apply our proprietary AI-driven Forecast Toolbox to JETS, we get a Predicted Resistance price target of $23.20 which implies a nice move higher from its current price of $18.25. For traders looking to work with this sector and alleviate single-stock risk, going long JETS should be a strong consideration.
TRADE OF THE WEEK
Of the top holdings within the JETS ETF, Delta Airlines Inc. (DAL) shows up best within the sector. Delta is the largest U.S. airline by sales and has the strongest balance sheet among the major carriers. After posting a loss of -$4.08 per share in 2021, the company is forecast to earn $3.15 per share in 2022 and $6.34 per share in 2023 according to average estimates by the 19 analysts that cover the stock (www.yahoofinance.com)
This soaring profit growth comes as a byproduct of an estimated rapid 59% rise in 2022 revenue to $47.5 billion. At the stock’s current price of $35.50, the shares trade with a forward P/E of just 5.6x, fitting the very profile I outlined in my opening comments to seek out deep-value stocks that are being sold down in sympathy with the market.
Here too, when we apply another of our AI tools, the Seasonal Chart, to DAL, we get a “Higher” probability reading for the next 20 trading days off this reaction low.
This is where our AI tools are so crucial in determining precise entry and exit points. I’ll be looking to trade DAL this week on this pullback that will be one trade not to miss out on!
Trading Thoughts: 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 1-2 days position and allocate no more than 5% of trading capital to any single trade.
I allocate less than 5% of my portfolio if I hold a position overnight. On average, less than 1% of the portfolio should be at risk if you have a position for less than one day. I look to enter a position at the predicted LOW (BUY) price or yesterday's close price. For Weekly Power Trader, my stop loss for stocks is 2% and my target gain is 2%. I target 75% accuracy using these signals.
We tie our Tradespoon Live Trading Room to help you manage the current inflationary wave. And we update our closed positions daily. Our AI platform works seamlessly to provide our subscribers with the most robust trading experience available anywhere in the market 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.
Considering the volatile landscape of late, we’re taking advantage of market dislocation and valuation distortion. We’re striving to help our members ring the register all the time and this is why serious traders should not trade without checking in with market-proven AI tools.
The consistent performance of our services is just incredible. Our historical stellar performance is made possible by being right on 85.01% of all trades that we made, with an average profit of 36.98% 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.
Traders seeking the most-timely directional trading strategies where historically over 85% of all my trades were profitable to come alongside the Yellow Tunnel community and make one of our services your go-to AI trading platform for no-excuses Trading.
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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, continue to embrace the people of Ukraine in your thoughts and prayers, and let’s create some meaningful wealth together in 2022.