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.
Stocks have enjoyed a summer rally, but my view is that most if not all the good news for the market is priced in for now. The majority of S&P 500 companies have reported second-quarter earnings, the Fed has laid out their forward policy statement and the long-awaited infrastructure bill has been agreed upon by both political parties. Aside from these major inputs, I don’t see any new bullish catalysts the drive stocks higher.
What I am concerned about is the delta, L and now D variants of COVID-19 that are proving to be seriously more contagious than forecast. For those vaccinated, the risk of fatality is low, but for those unvaccinated or those vaccinated by the Chinese vaccine, the risk of hospitalization and death is very high. And this is a big threat to most Latin American countries, most of Asia, pockets of Europe, and parts of the U.S. that haven’t had shots from the Pfizer, Moderna, and Johnson & Johnson vaccines.
The other moving target that has negative implications is how China is behaving regarding lack of access to the Wuhan lab, stalemate trade negotiations, global criticism of human rights, crackdowns of Internet corporations, a tightening grip on Hong Kong, and the open threat of a takeover of Taiwan. Separately, these are all issues bearing risk. Collectively, it’s a cauldron of toxic factors that risks triggering the beginning of a new type of cold war with the U.S.
Regardless of the upbeat economic news, the market is vulnerable to a correction in August and that is why I’m recommending investors take a more defensive position.
CURRENT TRADING LANDSCAPE
Traders have been conditioned to buy each and every dip the market presents, and it works until it doesn’t. My take is that during the course of the next couple of weeks, the complacent tone of the market landscape will give way to rising volatility where the 50-day MA for the SPY could be tested down at $430.
The $SPY continues to make all-time highs this past week. The semiconductor, home builders, and materials stocks led the market this week. SMH, XHB, and XME gained after FOMC meeting notes were released yesterday.
AMZN has disappointed Wall Street with earnings numbers that weighed heavily on Friday’s session.
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 has more room for the upside (lower yield).
Based on the steep correction in the reflationary stocks, strong dollar, and overbought technology stocks, the market will continue the correction in July/August. The $SPY short-term support level is at $435, followed by $430. The SPY overhead resistance is at $445. I expect the next stage of correction to resume this week or next.
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 October and November expiration dates.
"BUY" signal based on the Aggressive Power Trader Portfolio for tomorrow is at $434 level using SPY and "SELL" signal is at $440 for short-term traders.
Based on our models, the market (SPY) will trade in the range between $400 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 position 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.
Every year, I mark down four different sets of dates on my calendar. (Today marks one of these dates.)
I’m not talking about somebody’s birthdays or an anniversary of some kind. I’m talking about earnings seasons. And, this one is a doozie.
Before you click away, please let me be clear: it sounds dry, but using earnings seasons to your advantage can lead to incredible successes.
It’s like the changing of the seasons 4 times per year: something you know you can expect to happen.
It’s the same cycle, over and over again: rumors start building around a company in the run-up to earnings season, shareholders rush in, stocks go up, shareholders cash out.
Because these traders knew the past, they knew what to look for in the present. They saw the signs, bought in, and made their money on the backbone of strong earnings reports.
Founder and CIO
My AI models are flashing a sell signal for the Nasdaq and one of the most efficient ways to take advantage of this opportunity is to go long shares of the ProShares Short QQQ ETF (PSQ), a non-leveraged inverse ETF that trades very liquid. Per the sponsor’s website, ProShares Short QQQ seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the Nasdaq-100 Index.
The composition of the fund is made up of Nasdaq 100 swaps with the balance in short-term Treasuries.