The Fed has spoken! On Wednesday, following the Federal Reserve's announcement on interest rates, U.S. stock indices reached their highest levels in several months. The Fed's decision to raise rates by 0.25% was met with investor enthusiasm, as they saw the potential for additional rate cuts in response to current economic conditions. This news sparked a strong increase in stocks across all sectors. During the ongoing earnings season, several major companies have already reported their data, while a few others are still yet to release their results.
At home, our book club has taken on a new work and one that sparked a great discussion and had me thinking about it long after we finished the book and our weekly meeting. This past week's book was Lean In: Women, Work, and the Will to Lead by Sheryl Sandberg. The book explores the ongoing challenges faced by women in the workplace, including prejudice, the lack of equal opportunities, and the ongoing struggle for feminism.
One of the key themes of the book is the idea that women must "lean in" to their careers and take an active role in advocating for themselves and other women. Sandberg encourages women to be more assertive in their careers and to push for the equal opportunities they deserve. She also argues that men have an important role to play in promoting equality, by advocating for women and pushing for changes to the systems that hold women back.
Overall, "Lean In" is a thought-provoking and inspiring read for anyone interested in equal opportunities and the ongoing struggle for women's rights in the workplace. The Book Club discussion on this book was lively and provided much food for thought. One key takeaway from our discussion of "Lean In" is that even highly successful women often feel the need to hide their achievements and "dumb down" in order to avoid being perceived as threatening to men in corporate America.
This phenomenon hit close to home as I began to wonder if this was true in my own life. I asked my wife, who holds a law degree, this and she revealed that in some cases she has played down her achievements in the past, due to concerns about potentially offending a male ego. This realization was shocking to me and sparked an important conversation among the group and in our home.
It is evident that this issue is far from unique and highlights the ongoing struggles that women face in the workplace. Despite making significant progress in education and careers, many women still feel the need to downplay their abilities in order to avoid being seen as a threat. This reinforces the importance of continued advocacy for equality in the workplace and the need to challenge outdated systems that perpetuate these harmful cultural biases.
Doubts of impostor syndrome began to ring from this discussion which led me to our previous week's book: 12 Rules for Life. In that book, one of the rules outlined is the importance of concision and mutual understanding in discussions. Could I truly be as open toward equality if I had not noticed this type of slight discrepancy in my own life?
With Sheryl Sandberg's insights on feminism as a prime example of the power of definitions, I began to think of my own viewpoints and definitions. Depending on how feminism is defined, it can evoke both positive and negative reactions. For instance, a definition that suggests "women should act like men" is often viewed as offensive, whereas a definition that promotes equal treatment and opportunities for women is generally seen as positive.
Our book club's conversation surrounding Sheryl Sandberg's perspective, which deviates from the traditional perception of male-dominated gender bias against women, was both stimulating and enlightening. By raising various perspectives on this issue, our discussion enabled us to share personal stories that enriched all of our understanding of the matter. At the end of the book club meeting, there was no consensus; rather, there were a few different and divergent understandings. Who is right? Each side shared much of the same information, but they came up with different opinions.
That is the power of information and discussion. Through the text, we were led to places we have not discussed before. And with it, I believe all left better than before. Expanding on one 's beliefs and sharpening definitions through discourse is exactly what we do on a weekly basis in our live webinars.
Why is this important in trading? A key point of discussion these past few weeks has been deciphering when and how the recession could hit.
Soft and hard landing are terms used in finance and economics to describe the trajectory of interest rates. Understanding the definition of these terms is crucial as it affects whether one is bearish or bullish on the market. In this article, we will explore what soft and hard landing mean and the key differences between them.
Q: What is a soft landing?
A: Soft landing refers to the idea that interest rates will eventually go down as a result of subsiding inflation, high employment, and growing company revenues. This scenario is characterized by stable and sustainable growth of the economy.
Q: What is a hard landing?
A: Hard landing refers to the idea that interest rates will eventually go down as a result of a recession and rising unemployment rates. This scenario is characterized by a significant drop in company revenues due to prolonged elevated interest rates and is seen as the only remedy for controlling inflation.
The main point of disagreement between the two sides is when the Federal Reserve will start lowering interest rates. Until this date is agreed upon, either scenario could be correct for different quarters of the year. While the outcome of these scenarios is anyone's guess, it is important to continue the discussion as new information and data present themselves. Being informed about the market is just the first step to successful trading.
Regardless of your stance as a bull or a bear in the market, hard or soft landing, it is essential to take the time to listen to opposing viewpoints. While this may not always lead to a change in your opinion, it is important to at least consider the possibility that the other side might have valid arguments. This approach can aid in making informed decisions when it comes to managing your finances, such as how much cash you hold, how many positions you hold, and the size of those 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 are 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:
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
On Friday, the stock market saw a downturn as investors processed mixed news from the latest jobs report and the earnings of major tech companies. All three major U.S. indices turned red after trading higher for most of the week.
The latest jobs report showed a surprising increase in employment, with 517,000 jobs added in January, far exceeding the expected 187,000 jobs and surpassing the revised 260,000 jobs added in December. This resulted in the unemployment rate dropping to 3.4%; however, wage growth for January was 4.4%, lower than the 4.6% growth seen in December.
After the release of new data, the yield on 10-year Treasury bonds has risen to 3.5% from its previous level of 3.4%, in turn decreasing bond prices. Primarily, this can be attributed to Wednesday's Federal Reserve decision.
The Federal Reserve announced on Wednesday that it had raised the target range for the federal funds rate to 4.5%-4.75%. In their policy update, the Committee stated its aim to achieve maximum employment and 2% inflation over the long run. Future increases in the target rate will be based on economic and financial developments, inflation risks, and the impact of previous policy tightening. The Committee will continue reducing its holdings of Treasury securities and strategically adjust policy in order to meet its objectives. Furthermore, the Fed will vigilantly observe labor market trends, inflation numbers, as well as global developments to back up any future decision-making.
Additionally, the ISM Manufacturing Index for January revealed a surprising drop to 47.4, contrasting economists' predictions of a minor rise to 48.1. The drop in demand in the manufacturing sector bolsters the case for pausing interest rate hikes.
Earnings season is still ongoing and several major companies have reported exciting results, with more key reports to come. This week, the earnings of tech companies Amazon, Alphabet, and Apple made headlines. Despite boosting the market earlier, tech stocks saw a decline in after-hours trading. Apple's iPhone sales fell short of expectations, Amazon had a weak forecast and misses in its AWS segment, while Alphabet was affected by a slowdown in ad spending. Meanwhile, Bitcoin continued to rise after the Federal Reserve's announcement, with investors eyeing a potential $24,000 price. These events are worth watching as they may impact the market in the near future.
Increased volatility is expected in the equity markets in the coming months. While there may be a market bottom in the first half of the year, downward revisions to the S&P 500 revenue numbers are a major contributor to market instability and are not currently reflected in market levels. Additionally, the dollar is oversold and could see a rally in February and March. However, the bear market is expected to persist this year, making it important for investors to exercise caution and stay informed of market developments.
With these developments in mind, there is one sector and one symbol I will be looking to move on in the coming days - but before I settle on that let's review our A.I. data.
As of Friday, the 5-day chart shows the $SPY was trading 2.41% higher, near $412 - but gave up a good amount of gains during Friday's selloff. Major U.S. indices were trading higher throughout the week but sold off on Friday. The volatility index ticked higher throughout the week, finishing near $18, about 1% higher for the week.
Keep an eye on the overhead resistance levels of $410 and $416 for SPY, alongside its support at $402 and then further down to $394. Predictions point towards sideways trading in the market over a period of 2-8 weeks. I would remain MARKET NEUTRAL ON THE MARKET at this time and encourage subscribers to hedge their positions. See the $SPY Seasonal Chart above.
Looking at the road ahead, the markets are reaching new highs and are predicted to be more volatile in the first half of this year. Major drivers include PMI data, leading indicators, the latest Fed decision, and earnings season.
However, weak ISM data, poor leading indicator data, disappointing manufacturing results, and reduced job openings suggest a decline in inflation and raise concerns about a potential recession. The ECB and Fed both released updates this week, but Fed committee members indicated a stance to keep interest rates high.
With conflicting data, it is understandable to see how two opinions could be forming. However, it appears one side is taking the lead at the moment.
Better-than-anticipated inflation data from Spain and Italy, strong GDP from Germany, and positive PMI data from China, combined with a swift reopening, have many looking with a "glass half full" perspective. The outlook for the markets is shifting, as it seems that everyone agrees that inflation is declining and interest rates are going down.
The main question now is whether the economy will have a soft or hard landing. It is recommended to maintain a market-neutral stance going into the summer until the next earnings season begins in late April and May. The equity markets are predicted to be volatile, and the best-case scenario is that the market will reach its bottom in the first half of the year. The primary cause for this is the expected downward revision of S&P 500 revenue numbers, which are currently not yet reflected in market levels.
The dollar is oversold and may rally in February or March. Meanwhile, the bear market is expected to persist this year. China and precious metals started the year strong, but it is advised not to chase the rally as the dollar is expected to start rallying.
Investors are becoming less concerned with inflation data and are starting to focus more on the possibility of a recession, as yields continue to drop. If the data is better than expected, the rally may continue, but it is believed to be capped at the $410-$430 level on the SPY.
If this is the current state of the market, then there is one sector I have identified as a marque point of interest.
Earnings Season is here and so is Mr. Peltz.
Disney (DIS) will announce its earnings this Wednesday.
Activist investor Trian (who holds 4 million DIS shares) sent another letter to Disney, pushing for the removal of a board member in favor of instituting Nelson Peltz.
The last time we traded Disney (DIS) during the Earnings Season, we had a 50%** return on risk.
Let me repeat that, last time we had a 50% return!
That's a pretty good return after holding the position for only 1 day!
Be prepared: Disney (DIS) is scheduled to announce its earnings on February 8th.
This is my favorite time of year!
Using our predictive software, I have identified a specific sector that should see positive growth as Q1 of 2023 continues. Despite the many obstacles that continue to arise, this particular industry may be sheltered from a number of these difficulties and should experience growth due to existing market conditions along with our forecasting equations. According to my model, this symbol is especially promising—after conducting extensive research, I believe it is wise for us to proceed.
The iShares U.S. Telecommunications ETF (IYZ) provides exposure to stocks in the US telecom sector such as wireless carriers, telecom equipment manufacturers, and internet service providers. It tracks the performance of the Dow Jones U.S. Select Telecommunications Index, offering investors a comprehensive view of the industry.
Investing in IYZ allows for diversification within the telecom sector, reducing the risk associated with investing in a single company. The telecom industry plays a crucial role in technology and has a low correlation with other markets, making it a reliable source for portfolio stability.
The symbol is showing a promising vector trend in the first few days of the upcoming week and could forecast even better data if IYZ opens strong on Monday.
Our A.I. platform paired with the Seasonal Charts tool gives you a powerful ‘buy’ sign, and our chart analysis showcases the superb potential for success. After evaluating the three-time frames- 20 days, 30 days, and 50 days - we noted that in each of them, Seasonal Chart readings demonstrate remarkable gains ahead! See the $IYZ seasonal chart below:
If telecom is in a good spot to make gains despite the bear start to 2023, I believe there is one symbol that should outperform its peers and lead the telecom rally.