TLT Alert: Tender Loving Trade To Soar
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.
It’s been a top-heavy week for the stock market in that the major indexes have managed to sustain most of their gains by virtue of the mega-tech stocks trading at or near their highs. Apple Inc. (AAPL), Amazon.com Inc. (AMZN), Alphabet Inc. (GOOGL), Facebook Inc. (FB), Microsoft Corp. (MSFT), and Tesla (TSLA) make up 25% of the total weighting of the S&P 500. It might be said that as this group of stocks go, so goes the market.
Retail sales for June were up by 0.6% versus a -0.6% consensus estimate. The news was encouraging, but not enough to sway the market higher. The rolling correction in the reflation trade that started with the travel sector has made its way to the financials, energy, industrials, materials, transportation and is now hitting the semiconductor sector and other high-PE tech stocks.
There are dueling arguments about inflation and whether the Fed is on the right track with maintaining QE and the transitory narrative. To their credit, the bond market has voted with both feet as yields are testing last week’s lows even as the present inflation data continues to come in hot.
In the meantime, earnings season is heating up, with stocks not really responding well to reported quarterly results that beat forecasts. In sum, the market rallied in June and early this month on the rumor of great quarterly numbers and is now selling on the news in classic fashion.
CURRENT TRADING LANDSCAPE
This week, the $SPY took a pause from the recent rally and settled below the key short-term support level at $435. The Mega Cap technology stocks led the pullback today. High Beta stocks also changed momentum to the downside (ARKK, WFH, IWM).
The $DXY has broken above $90.60 resistance and has confirmed its breakout. The next level of resistance is at $93. The $TLT continued to trade higher and the next level of overhead resistance is at $150.
Based on the steep correction in the reflationary stocks, strong dollar, and overbought technology stocks, the market is due for a correction in July. The $SPYshort-termm support level is at $430, followed by $425. The SPY overhead resistance is at $440.
I would consider rebalancing the portfolio at this point to be more market-neutral. The second wave of the sell will continue for the next 2-4 weeks. Market corrections are never a one-way trade.
Based on our models, the $SPY can pull back 5-10% from the all-time highs in the next 2-4 weeks. If you are trading options consider selling premium with September and October expiration dates.
"BUY" signal based on the Aggressive Power Trader Portfolio for tomorrow is at $428 level using SPY and "SELL" signal is at $435 for short-term traders.
Based on our models, the market (SPY) will trade in the range between $405 and $440 for the next 2-4 weeks.
NEW WEEKLY DYNAMIC POWER TRADER SERVICE
We recently launched our new Dynamic 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.
What makes this new service so special is that 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 86% accuracy in my live trading since inception. Sometimes we hold positions for 2-5 days by using options (selling OTM BULLISH PUT 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 color 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 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 OTM put (strike less than 100) with option BID price close to $0.5.
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Bond investors are decidedly in the camp that the sharp inflation readings are a bubble and not something structural on a longer-term basis. As such, bond prices are trending higher and yields lower. The iShares 20+ Year Treasury Bond ETF (TLT) is the most popular trading instrument for playing the price action on the yield curve from the long side. As the dollar trades higher, that helps push bond prices up as well.
From the chart below, TLT is right up against its 200-day m.a. and looks to push up through it in the days ahead, especially with the dollar index (DXY) also trending higher and taking out overhead resistance. Considering the amount of debt being created by the Fed and Congress coupled with the hot CPI, PPI, and retail sales data, the rally in bonds and the dollar is somewhat counterintuitive. But that’s what makes markets!
At Weekly Power Trader, we apply our custom proprietary AI algorithms to all market trends and scenarios where even when it appears the conventional thinking is in the right position, it can turn adversely against the herd mentality in a hurry, just as has happened recently.
TRADE OF THE WEEK
With fund flows turning negative in the reflation sectors, there are bullish inflows of capital into some of the consumer staples stocks, with some hitting new all-time highs. A case in point is PepsiCo Inc. (PEP), which reported outstanding second-quarter results while also raising guidance.
The conglomerate beverage and food company is seeing all seven business segments hitting on all cylinders and Wall Street is cheering the strong quarterly report with buyers stepping in aggressively. Consumer spending on Pepsi’s products is robust with the company able to maintain good profit margins.
Applying our AI tools to the stock, the Seasonal Chart is very positive on shares of PEP over the very near term and well beyond. The stock registers “Higher” probability readings for the next 20, 30, 40, and 50-day periods.
With that said, the spike in the shares over the past week should be noted in that the stock is due for a brief period of back and filling that would present an optimal entry point for traders. To that point, we’ll be looking to greenlight this trading opportunity in the days ahead and want to encourage all readers of this blog to sign up to get in on this big breakout that should produce multiple trading opportunities for us.
This is what our precision AI platform does for our members. It identifies, clarifies, and verifies high-quality trades like PEP. By being a member of any one of our services, it’s these kinds of opportunities that our proprietary algorithms provide our members to look forward to every day, where they can put their risk capital to work on both long and short positions.