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May 22th, 2022 | Issue 131 |
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China's banks lowered their key lending rate on loans of five years or more to 4.45% from 4.60%, the biggest cut since 2019. The reduction came as a surprise as the banks are wary of capital flight to the U.S. and the strong dollar is their rates are too low. The move comes to stem a deepening slump in the Chinese housing market and a slew of soft economic data for April. |
The news out of China is but a nominal measure, but a headline that traders can latch on to when $1.9 trillion in options and derivatives expire Friday, setting up for more volatility that has the market on pace for its seventh straight week of posting losses. The hits just keep coming as inflationary prices pressure takes a deeper toll on businesses. Last week revealed some risks to forward earnings growth when a couple of big retailers reported their quarterly results. Shares of Walmart Inc. (WMT) and Target Corp. (TGT) tanked after both companies cited excessive shipping costs and higher wholesale prices for goods that squeezed profit margins. This is what the market feared would be an eventuality if inflation persisted, and unfortunately, it has. There are also fresh signs of lower business investment in IT products and services, a key driver of the U.S. economy and market sentiment. Some recent surveys of IT spending are showing a more cautious approach to upgrades. This concern was evidenced by the slowdown in orders reported by Cisco Systems Inc. (CSCO), where the stock shed nearly 20% following the release of its quarterly results. Commodity prices remain elevated and will likely remain so until there is some positive data regarding oil inventories and crop forecasts that satisfy the market's fear of ongoing shortages brought on by the war in Ukraine that is entering its third month. As these concerns and the slow growth prospects in China overwhelm buyers, bond yields are retreating in the process, a positive development. To sum up, a lot of bad news has been priced into stocks where the market is due for a short-term oversold rally. To this point, I can't emphasize how vital it is for blog 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 AI platform is navigating us in and out of select trades. It's FREE and I want 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: https://discord.gg/YjBfkaqGGu 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 specified 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. |
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| Vlad Karpel
YellowTunnel and Tradespoon Founder |
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P.S. Please see below for access to the Power Trading Live Strategy Roundtable presentation I recorded on Thursday, May 19th. Click Here P.P.S. Join our Discord Community to participate in our Free Live Trading Room Sessions every Monday and Wednesday at 8:15 am CST. Click Here To Join |
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Freeport-McMoRan Inc. (FCX) is a leading U.S. based mining company and one of the world's top producers of copper with significant mining properties in North American, Indonesia and South America. The company has a $51 billion market cap and is forecast to earn $4.00 per share in 2022 on an 18% rise in revenues to $27 billion. The stock has endured a sharp correction, trading at $37 and down $52 seen back in late March. As of this past Monday, shares of FCX are displaying bullish price action, reversing off the recent low and on the verge of an upside breakout at $38 that would invite strong follow-on buying. This is a kind of bullish setup we seek to trade in a sector where capitation of selling pressure looks complete... |
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CURRENT TRADING LANDSCAPE |
The major averages are groping for a tradeable bottom and quite possibly it is in the making, albeit not without some serious technical damage to overcome. In another sign that bearish sentiment is taking hold, the transportation index broke to a new 52-week low Thursday that opens the way for some follow-on downside, but how much probably is a function of oil prices. Transportation stocks tend to be leading indicators of future GDP growth prospects as the flow of goods is easily measured along with freight rates. The break of the recent lows is a negative development, but could easily be reversed with a drop in crude prices and improving supply chain conditions. Not everything is bearish as sentiment would suggest. This past week saw strong quarterly results from notable companies Analog Devices Inc. (ADI), Palo Alto Networks Inc. (PANW) and Home Depot Inc. (HD). The price action has been to initially rally stocks on good news only to see those gains fade within a day or two. This kind of selling into any bouts of strength has to exhaust itself before traders will reverse course and resume buying the dips on strong volume. Downside volume and the A/D line have been clearly bearish and are a strong tell as to when the selling pressure will subside. The $SPY closed lower 0.6%, at $389, retesting the long-term support level. The value/reflationary ($VTV) closed lower 0.8%, at $136, below the 200 DMA. The technology sector ($QQQ) closed lower 0.5%, at $289, retesting the 50-percent retracement from the pandemic 2020 low to 2022 high... |
In light of the bullish news out of China regarding the lowering in interest rates, this is a positive development for the electric automakers and construction industry, both of which are large users of copper. The same holds true for the U.S. economy where auto production is stifled by a shortage of semiconductors and what is still a robust housing coupled with heavy government spending on infrastructure bodes well for copper prices. Copper prices have retreated well off the March high and currently trade at $4.17/lb. where a key technical reversal looks to be underway. A good trading vehicle for copper and other base metals is the SPDR Metals & Mining ETF (XME). This ETF gives traders broad exposure to the metals sector that including copper, aluminum, gold, silver, coal, steel and other minerals. The composition of XME is all the holding are U.S. based and are close to being evenly weighted and is rebalanced on a quarterly basis. XME has an AUM of about $2.7 billion and owns 32 stocks. The top ten holdings account for about 49% of total assets, making this a fairly concentrated ETF... |
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Join Our Discord Community Participate in our Free Live Trading Room Sessions every Monday and Wednesday at 8:15 am cst. Click Here To Join |
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NOTE: We encourage all subscribers to view the instructional videos on how to best use your membership and invite our members to participate in live weekly strategy roundtable workshops that are also archived for your convenience so that they can to be viewed at a later time. |
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To effectively trade in today's rapidly moving equity markets, active day traders and swing traders must stay ahead of market changes due to inflation, global uncertainty, politics, as well as innovations and technological changes used by hedge fund traders and proprietary trading firms. With traders like you in mind, we designed this intensive roundtable where you will deepen your understanding of all aspects of stock and options trading in today's changing market. |
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DISCLAIMER: Vlad and his team may have a financial interest in the picks as they trade many of the same equities and options they pick. Vlad Karpel and YellowTunnel (Company) is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. All investing strategies are made available to the general public on a regular basis. We do not provide personalized financial advice or investment recommendations. As an investor, you know that any kind of investment opportunity has its risks. There is no such thing as low-risk stocks and we recommend you invest wisely and that only risk capital should be used to trade. Investing in Stocks and Options is highly speculative. No representation is being made that the use of this strategy or any system or trading methodology will generate profits. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed here and on our website. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE SUCCESS: It should not be assumed that the methods, techniques, or indicators developed at YellowTunnel will be profitable or that they will not result in losses. Nor should it be assumed that future picks will be profitable or will equal past performance. All of the content on our website and in our email alerts is for informational purposes only, and should not be construed as an offer, or solicitation of an offer, to buy or sell securities. Remember, you should always consult with a licensed securities professional before purchasing or selling securities of companies profiled or discussed on YellowTunnel.com. Performance results that are discussed above are from the Live Trading Room, multiple YellowTunnel tools were used to achieve these results. Trade % Gain/Loss is calculated by dividing the $ Gain/Loss by the Max Risk which is the posted Stop Loss for the trade. Yellow Tunnel's performance data represents the average return on all trading recommendations from January 1, 2020, to today. *Win rate percentage reflects the average that Yellow Tunnel's software helped me identify a profitable investment strategy.** Triple-digit returns are not typical and are not intended to reflect the likelihood of similar returns in the future. |
This email was sent to edwardlorilla1986.paxforex@blogger.com by info@yellowtunnel.com. Questions or inquiries regarding the website and/or service may be submitted via email to info@yellowtunnel.com. You may also complete our inquiry form located here. YellowTunnel LLC, 318 Half Day Rd., Suite #215, Buffalo Grove, Illinois 60089. Website: https://www.yellowtunnel.com Copyright © 2022 Yellow Tunnel LLC. All rights reserved. |
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