Hi everyone and welcome to the Yellow Tunnel community, a family of trading services dedicated to all classes of traders seeking to elevate their trading skills, market awareness, and trading profits.
This week, markets began to dip in reaction to an alarmingly high services report from the U.S., causing concerns that inflation and Federal action could be imminent. After the unveiling of Thursday's jobless figures, markets began to rebound. But that momentum quickly dissipated when producer price inflation information was revealed on Friday, with all three major U.S. indices turning red. In the wake of several major financial releases this week, attention now shifts to the impending Federal Open Market Committee meeting taking place next week.
As November came to an end last week, my book club wrapped up and reviewed another book - The Master and Margarita. A critical work in modern Russian literature, though some complained far too long, Mikhail Bulgakov fearlessly reinterprets the tales of Faust and Pontius Pilate with his widely-considered masterpiece. While I do not align with those bad reviews and complaints about the novel, I do admit it is incredibly dense. The novel vividly and truthfully depicts Soviet life in the 1930s, although with an added supernatural element in it, still making it so accurate that its uncensored version was not released until the 1960s - several decades after its completion. And its insights are still relevant today.
Disguised as a human, the devil strides into Moscow surrounded by an ominous team of followers - consisting of a powerful witch and an enormous talking, vodka-drinking black cat. The mysterious visitors swiftly wreak chaos in a city that is adamant about denying both the existence of God and Satan. But, these strangers also bring comfort to two forlorn Muscovites: one is an author who faces ridicule for daringly writing a book concerning Christ and Pontius Pilate; while another is Margarita, who loves the Master so dearly she would gladly take her life and go to hell for him. The novel essentially recounts the story of Pontius and Jesus while also providing a layered interpretation of Stalin-era soviet life.
Many believe that Bulgakov was a visionary who knew his book would never be published, and even more think he had an unexplainable influence over Stalin. This power over the dictator kept him safe from prosecution which other writers were not so lucky to avoid. It was known that the ruler of Russia at that time praised human courage in certain forms, preferably metaphoric, which fueled one theory: the novel was a message to Stalin. Although Stalin is portrayed as Satan, he holds a certain redeeming quality in that he typically deals with characters who example negative traits and blindly praise Satan's offers and deceptions. The book punishes and persecutes liars and cheaters while strong-willed characters like the Master and Margarita are saved and allowed to find peace due to the strength of their character and internal drive.
Why am I telling you this? Beyond the benefits of reading and recommending a great novel, I am recounting Bulgakov's tale to highlight the benefits of maintaining strong character and the drawbacks of rigid, tyrannical-like beliefs. Just this year, we started with an overwhelming sense of constant growth that flipped by year's end to an inevitable recession. Now as we head into 2023, neither recession nor growth appears imminent but the moves made within your portfolio are.
Being succumbed to the latest winds of market discourse can cost even the most profitable traders. Do not assume certain market conditions will exist just because they have and do not align yourself with just one market outlook, being bearish or bullish. It is key to hold certain tenets while at the same time being mercurial enough to adjust toward any market landscape shifts.
With interest rates and long-term yields in focus, market perception this year was all over the map. Even I interacted with these market trends as they came and found myself seeing both potential growth and potential recession at times. So while reading and then discussing this novel with my book club, in the back of my mind, I started to draw market connections.
In my view, the book's message -- when examined through a market lens -- was that if I believe a recession is near and inflation reaches its peak before subsequently dropping, then it stands to reason that the Federal Reserve will act quickly. This could result in minimal damage to companies' earnings and abruptly jumpstart the market rally earlier than anticipated.
Unlike the characters in the book, I'm determined not to lose my head and continually keep an open mind that allows for both sides of any argument. Trading is a calculated game based on your opinion and risk tolerance--which means there's no such thing as absolute certainty. Despite this, it can be incredibly rewarding for those who are willing to take risks or stay rooted in their core beliefs.
The ability to wield both is something I pride myself in. And when I am asked to review YellowTunnel or I get asked something like "does YellowTunnel work?" I always think back to that duality: strong character and malleability. At YellowTunnel, we inform our trading with proven A.I. models and a deeper understanding of self and market psychology. Building on traditional technical indicators, my neural network is a self-learning A.I. meant to go past previously archaic and rigid models used by old finance thinkers. At YellowTunnel, our stock and ETF trend analysis comes from both my proprietary tech and years of stock market experience.
Sometimes the question becomes is YellowTunnel a TradeSpoon rebranding? And the answer is an unquestionable no. When I reviewed the retail-trader marketplace I saw a gap in how we interacted and interpreted the market in our day-to-day trading. No one was talking about the psychological aspect of the trader. While offering unique and self-learning market forecasting A.I., at YellowTunnel we also offer insight aimed at helping traders - at any level- with how they approach each trade, each day, and their portfolio.
And that is the duality that is also praised in Bulgakov's The Master and Margarita. Maintaining the strong character to keep with a trading regimen, stop loss and target gains prices, and careful trade management is one part of the YellowTunnel equation. Being able to adjust to the various interpretations of the market, whether imminent recession or another bull run, is the other tenet I instill in YellowTunnel subscribers and Power Trading and Market readers.
At YellowTunnel, we focus on not only trading-centered ideas but also non-trading opportunities that will offer our subscribers a chance to become more well-rounded and complete traders. In addition to the trading tools and ideas available on our website and during our weekly webinars, we provide other resources that can help supplement your Live Trading experience.
That is precisely why I recommend being part of our YellowTunnel trading community, where you can discuss and dissect multiple trading strategies with others. This is exactly what we did in my latest Strategy Roundtable, which we hold weekly on YellowTunnel. I 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 to 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 U.S. stock market faced its deepest dive in almost a month as Monday's service sector report revealed higher-than-usual readings in America. Consequently, this spike may induce the Federal Reserve to take bolder steps than anticipated when combating inflationary pressures within our economy which sent markets lower to start the week. Shares then turned positive following an encouraging unemployment report which was then negated, sending markets once again into the red, after the latest Producer-Price Inflation report was released on Friday.
On Monday, the Institute for Supply Management (ISM) released survey findings that showed a spectacular increase in November - to an astounding 56.5%. This remarkable surge is proof positive that our nation's economic success is continuing which, when viewed through the lens of the Fed trying to slow economic activity, was not well received.
Then, on Thursday, the weekly U.S. jobs data ignited investor confidence as the number of continuing jobless-benefit claims rose to their highest level since February – an indication that could soothe the Federal Reserve’s need to raise interest rates any further. As the first week of December drew to a close, unemployment benefits applications reached 230,000 - meeting expectations. Additionally, ongoing claims increased by 62 thousand to 1.67 million individuals--the highest number recorded since February 2020--suggesting that layoffs are slowly but surely rising as the economy weakens.
Recently, investors have been keenly observing the U.S. labor market for signs of growth and progress. Last week, stocks took a downturn when data revealed a higher-than-expected increase in wages and an increasingly vibrant job sector. This indicated that the Federal Reserve's efforts to maintain inflation were unsuccessful, sparking fear of potential economic destabilization.
Although the November jobs data revealed that average hourly wages had increased more than five percent over the past year, this success created apprehension in some market experts about potentially surpassing inflation's rate. Unfortunately, these worries indicated that beating inflation may be harder to achieve than initially forecasted.
Finally, on Friday, the Labor Department released a report showing that U.S. wholesale prices had increased by 0.3% in November - mostly meeting expectations.
The PPI Index continues its positive trajectory with an impressive 0.3% increase in the past three months, surpassing initial estimates of a 0.2% gain for October and September which were subsequently revised upwards. November saw a steady 0.3% rise in the core producer price index, which does not include volatile food, energy and trade prices, also up from last month's gain.
Producer prices experienced a slowdown in their 12-month increase, dropping to 7.4%, the least it has been since May 2021. This is also the fifth consecutive month that inflation numbers have declined from this year's high of 11.7% - an impressive feat! Despite forecasts of a higher inflation rate in November, the wholesale level has seen an encouraging downtrend since reaching its peak in March.
Aside from employment and inflation levels, another key focal point for investors is the latest levels of long-term U.S. treasury yields.
Reflecting on this week, long-term yields rose with the 10-year Treasury note yield approaching 3.5%. Although there has been a notable jump in yield since Thursday, it still remains beneath its starting point for the month. As treasury yields remain at the center of attention for many investors, staying abreast with developments here is essential as we make our way into 2023.
Given the U.S. dollar's feeble condition and fluctuating interest rates, the 10-year yield has fallen below its long-term support level of 3.5%. I anticipate that this downward trend will persist until 2023, with a possible low point of 2.5%. This provides an ideal opportunity to invest in bonds or other fixed-income products while yields are higher than they have been for quite some time!
Contrary to prior forecasts, this year has seen a rise in yields thanks to inflation concerns alongside various levels of market volatility. Nonetheless, the last few weeks have brought forth recession fear and anxiety resulting in lower yields and equity markets. Looking back, history shows that capital has moved from stocks exclusively into bonds traditionally.
The U.S. dollar is oversold and January and February should bring a much-needed resurgence in the dollar due to its current undervaluation. It’s highly likely that our current Christmas rally will remain in effect for a while longer, but expect the bear market to keep dragging on into next year as well. The Q4 earnings season will soon start and should influence stock prices, either higher or lower, so stay mindful of any changes in your investments before it is too late!
With this in mind, let’s review the latest levels in the market.
As of Friday, the 5-day chart shows the $SPY was trading 1.82% lower, near $396. However, the S&P 500 was trading higher on Friday, along with the Dow and the Nasdaq, though the symbols continue to trade gains and losses throughout the day. The volatility index has trended higher during the week, beginning the week near $20 before inching up to $22.
As it stands, I am watching the overhead resistance levels in the SPY, which are presently at $400 and then $410. The $SPY support is at $390 and then $385.
In my view, the current market rally should persist in the next two to four weeks. We are observing a well-defined trading range which could potentially suggest that now it is best not to pursue any aggressive buying or selling strategies at this point; I recommend being cautiously neutral in position and avoiding chasing either of these directions with your investments. For reference, the SPY Seasonal Chart is shown below:
As the holidays approach, the market is expected to rise further; yet, this could be short-lived when earnings season begins and its effects start to come into play. Employment figures as well as inflation data have already had an impact on markets which have now shifted their attention toward the next Federal Open Market Committee meeting. This offers one particular sector a tremendous opportunity for success in the coming weeks!
The markets have been all over the place.
And with worldwide uncertainty, wars, and ‘trimflation’, volatility just keeps increasing.
Traders are being more cautious — not knowing what will happen in the next few days (let alone next year).
Me? I’ve made 1698 trades since the beginning of 2020 to today… and 85.10% of them have made money.
While I’m not taking on unnecessary risks or being careless with my money, I’m still making the same trades I always have and will continue to do so throughout December and 2023.
(A portion of Yellow Tunnel sales will go to directly help the Ukrainian people)
With the last Federal Open Market Committee meeting of 2022 coming up and a holiday rally brewing, it appears the market is set for a nice run to end the year. Still, there are plenty of market detractors out there as inflation concerns and contradictory economic data continue to mount. Although it appears the bear market remains regardless of the holiday rally, there is one sector, after close review, I believe is primed for a pop.
In times of increased and unpredictable market volatility, I take solace in investing in inverse ETFs.These symbols are formulated to short the day-to-day performance of their chosen ETFs and tend to be in higher demand during times of high market volatility.
As we come to the end of 2022, I anticipate that bear market trends will reignite. Historically, tech stocks are often one of the first victims when markets descend - these major technology companies have such a great influence on setting direction for markets as a whole, making them fantastic barometers for predicting where things may be headed in the future.
If the earnings return below expectations a selloff could ensue which makes one particular symbol a favorable buy from me in the coming days.
ProShares Short QQQ (PSQ) offers a great opportunity to benefit from the current oversold bounce of the Nasdaq 100. This inverse ETF makes it simple for traders to jump in and short our Sector Spotlight security at an opportune time. Don't miss out on this chance to capitalize off of recent market strength - get started with PSQ now!
When we apply PSQ to our AI-driven Forecast Toolbox for the near term, we get a Model Grade “A” rating with a Predicted Resistance price target of $14.29 which is decently higher than where PSQ currently trades. At $13.86, PSQ is trading in the middle of its 52-week range of $10.65-$15.63.