Sticky 3M(MMM): Money, Money Money
Hello and welcome to the YellowTunnel community, a family of trading services dedicated to all classes of traders seeking to elevate their trading skills, market awareness, and trading profits.
Markets kicked off the week on a positive note but experienced some retreat during midweek. Market watchers are now eagerly awaiting ongoing earnings season reports, including those from $GE, $MSFT, and $TSLA as well as purchasing managers' index (PMI) data that may drive the next market move. Ultimately, investors will be watching for Friday's PCE data which will further inform inflation levels leading into next week's FOMC meeting.
At home, our book club recently read Jordan Peterson's "12 Rules for Life," and one of the main points that stood out was the importance of listening to both sides. With the current split narrative regarding the recession and inflation levels, I found this part of the book particularly apt to our current market conditions. The book emphasizes that someone with whom you disagree always has some knowledge that you do not possess, and it is our job to find that information and maintain healthy, balanced dialogues.
The main message of the book is that we should always seek the truth. With so many different opinions on what is right and wrong, the book argues that the only way to make a decision is to speak the truth, live the truth, and maintain healthy dialogue.
This message applies not only to our personal lives but also to the world of finance. The stock market is often filled with conflicting narratives, with some people predicting a soft landing and others predicting a hard landing. In the spirit of the current situation, those who believe in a soft landing may not want to listen to messages of a hard landing, and may even ridicule those who hold a different view. The opposite is also true for those who believe in a hard landing.
Are you a bull or a bear when it comes to the stock market? Regardless of your perspective, it is important to have a cash management strategy in place. So let's break it down:
Q: How much cash should I have if I am a bull?
A: As a bull, you may be more optimistic about the market and therefore have a lower cash allocation. It's a good idea to have around 30% cash on hand, and consider deploying some of that cash on pullbacks. This way, you'll be able to take advantage of any buying opportunities that may arise.
Q: How much cash should I have if I am a bear?
A: As a bear, you may be more cautious and have a higher cash allocation. It's a good idea to have around 50% cash on hand, and consider raising cash on market rallies. This way, you'll be able to protect yourself in case of a market downturn.
Q: How much should I risk per trade?
A: Risk management is crucial when it comes to trading. In our live trading rooms, we suggest using a dollar-cost averaging (DCA) strategy and risking 1% of your portfolio per trade. This way, you'll be able to manage your risk effectively and not expose yourself to too much downside.
Whether you are a bull or a bear, it is important to always listen to arguments from the other side. Even if you do not change your opinion every time the wind blows, at least you can consider the possibility that the other camp might be right. This can help you make better decisions when it comes to managing your cash, the number of positions you hold, and the size of your positions.
That is why I highly suggest joining the YellowTunnel trading community, where you can review our non-opinionated AI trading program and openly discuss and explore different trading strategies with other participants. We offer a 30-day risk-free trial that gives you access to the YellowTunnel platform and lets you decide for yourself. If after 30 days you believe YellowTunnel's predictive software and trade intelligence platform is not for you, we will refund your membership! That is how confident we are in our signal accuracy and trading tools.
For more information on the YellowTunnel tools and our trading community, I suggest reviewing our latest Strategy Roundtable, which we hold weekly on YellowTunnel. I also recommend checking out our latest Roundtable webinar in its entirety below:
How To Trade a Bear Market Strategy Roundtable
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 for 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.
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.
CURRENT TRADING LANDSCAPE
This week, the markets rose in expectation of fresh PCE data and the existing earnings season. The $VIX index stayed tranquil near its $20 mark while investors waited to see how CSX, BA, and TSLA's quarterly earnings reports – along with GDP Data – would affect the market's trajectory.
Currently, the $SPY overhead resistance levels are at $402 and then $416 while the support is situated at $396 and then later on, down to $391. In my estimation, I believe that it will remain in a sideways trade for 2-8 weeks - thus making me MARKET NEUTRAL AT THIS TIME. As such, I highly recommend taking precautionary steps by hedging your positions accordingly.
After a strong opening to the week, markets stumbled as tech giants reversed course. Microsoft – America's second-largest firm by market cap – particularly weighed down enthusiasm after their earnings report included a sobering outlook and sent investors into selloff mode. Consequently, all three major U.S. indices declined on Wednesday amid this negative news cycle from an industry leader. By Wednesday's close, however, shares began picking up with the Dow Jones booking a marginal gain.
On Tuesday, purchasing managers' surveys uncovered that U.S. manufacturing and services industries have contracted for seven straight months since January, further affirming the prospect of a "hard landing" as investors become increasingly worried that the Fed's relentless rate hikes could drive an already moderating economy into recession.
Although Wednesday's reports have been less than stellar, tech earnings are not the only cause for concern. Boeing (BA) managed to achieve positive cash flow for two quarters in a row but posted a quarterly loss when analysts expected a profit, leading its stock prices down by 0.3%. Abbott Laboratories (ABT) adjusted profits exceeded Wall Street estimates; however, sales dropped 12% compared to last year and their stocks plummeted 2.1%. After the market close on Wednesday, all eyes will be turning toward Tesla (TSLA) earnings.
Next week, the Federal Reserve is gathering to make a decisive judgment on monetary policy and most likely hike interest rates by one-fourth of a percentage point as it transitions towards more relaxed policies.
Investors were closely monitoring the fourth-quarter Gross Domestic Product (GDP) report on Thursday to decide if economic expansion has decelerated. When results were posted, investors received a bit of surprise. Gross domestic product growth for the fourth quarter was 2.9%, a slight decrease from the previous quarter's 3.2%, but still indicating a strong economy. This was higher than economists' predictions of 2.3%.
On Friday, the Personal Consumption Expenditure (PCE) figures for December are due to be released. Although there is no indication of any unexpected results in this significant report, it will play a major role in dictating both how the Federal Reserve and markets behave moving forward.
Following the release of surprising positive inflation data from Europe and America, interest rates decreased while the value of the U.S. dollar remained steady. The yield on 10-year bonds is currently below 3.5%, a level that had previously been considered supportive, as sales figures did not meet expectations. Given this situation, as the period for reporting earnings continues and markets remain sluggish, I plan to capitalize on this opportunity by investing in a specific symbol and sector; more details to come.
Earnings Season is here and Apple (AAPL) will announce its earnings this Thursday.
The last time we traded AAPL during the Earnings Season, we had a 23.90% return on risk.
Let me repeat that, we had a 23.90% return!
That's a pretty good return after holding the position for only 1 day!
Be prepared: APPLE (AAPL) is scheduled to announce its earnings on February 2nd.
This is my favorite time of year!
You’re Invited: Click Here
Despite the market's uncertain nature, there is one type of trade that tends to perform well during such times. Although the beginning of 2023 had some positive rallies, it has since returned to a bearish trend. With various challenges emerging, this specific industry may be positioned for hardships in the upcoming weeks - and thus present a perfect selling opportunity.
ProShares Short S&P 500 ETF (SH) shorts the S&P 500 and is currently trading near the $15 level, below its 52-week high. The symbol has been on the decline this week - making it an opportune time to buy low.
As I've outlined above, the bear market is here. The Fed is set to hike rates in an attempt to combat inflation which will surely inflict some volatility on what is already an unpredictable market landscape. Based on this, I like what I'm seeing for $SH in the weeks to come and will be adding it to my portfolio. But before I do that, let me verify with my priority A.I. models.
If selloffs are to ensue then I will not only be looking to add $SH but also looking to short one specific symbol.
TRADE OF THE WEEK - Sticky 3M(MMM): Money, Money Money
3M Co. (MMM) is a diversified American company that operates in various industries such as industrial production, worker protection, healthcare, and consumer goods. 3M is known for its strong brand and innovative products, such as Post-it notes and Scotch tape. The company has a long history of paying dividends to shareholders and has generally been considered a stable and reliable investment. However, like all stocks, the value of 3M's stock can be affected by a variety of factors, including economic conditions, industry trends, and the performance of the company.
Just this week, 3M provided a bleak outlook for the economy in the upcoming year, highlighting an expected decrease in consumer spending. The company's fourth-quarter earnings failed to meet expectations and its guidance for 2023 also fell below analyst predictions, which caused its shares to decrease during early trading.
Looking at our 10-Day Forecast for MMM, we see that the symbol is trending lower for the first part of the forecast, and unless 3M produces a narrative turning surprised it is likely the updated forecast could see MMM selling off for several days.