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May 8th, 2022 | Issue 129 |
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It doesn't take much more than daily one-thousand-point swings in the Dow to send a clear message to traders that they best have a phenomenal trading system to depend on in which to make the most of a highly uncertain trading landscape. Bond yields traded above 3.05%, the highest level seen since November 2018. It is a real disappointment for the bulls to see such a strong effort to regain investor sentiment only to have cold water poured on their short-term spike. Grant it much of the rally was likely short-covering and program trading related buying, but clearly, Thursday's sell-off validated the notion that selling into strength remains the pattern of choice until data on inflation shows a definite flattening out to where the Fed can curtail what looks to be two more half-point rate hikes. 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 As for the stock market, the month of May is hardly delivering the bullish flowers following the April showers. This week's post-FOMC massive rally followed by an even bigger Thursday sell-off sent a very stark message to traders that the Fed remains squarely behind the curve. The bond vigilantes made this known after showing little conviction one way or another after the Fed raise the Fed Funds rate by 50 basis points, a measure most widely expected by the Street. But this measure came shy of what Wall Street really wanted, a 75-basis point hike to help narrow the gap between hyperinflation and where the credit markets are trading. Poor economic data was to blame for the sharp reversal lower. It was reported that quarter-over-quarter productivity fell by -7.5% indicating rising wages and falling output that are a direct threat to corporate profit margins. It was one of the worst productivity reports on record going back to 1947 that incited the broad selling pressure that left almost nowhere to hide other than being short the market. |
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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, April 28th. 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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This week's pick is the same as our Sector Spotlight security highlighted - ProShares Short S&P 500 ETF (SH). The problem I see with this market is that this is the third time in as many months that the SPY is testing the 4,150-4,200 level. My data is signaling that this time the lows might well be taken out. If you hit on something long enough, many times it breaks, and it starts to feel that way. When we apply SH to our AI-driven Forecast Toolbox for the near term, we get a Model Grade "B" rating with a Predicted Resistance price target of $16.68 which is 10% higher than where SH currently trades. A move to $16.86 would be a new 52-week high and imply the market buckling once again. Hence, with each oversold bounce, investors can leg into SH and protect their portfolios from material downside risk. |
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Inflation isn't slowing down — and it could crush traders even more. But there are always tons of winning trades… and I will find them for you. |
Traders who had it all "figured out" are clamoring to make sense of all the volatility. I'm not. Do you know why? Because I don't have to make sense of it. The algorithms that power my trading - the tools that I personally built, developed, and tested - don't rely on market sentiment or stability to succeed.
You see, there's always a winning trade… and my algorithm helps me find it.
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CURRENT TRADING LANDSCAPE |
Traders should not be fooled by violent bear market rallies, such as what we saw on Thursday. Investor sentiment hasn't been this bearish since March 2009 during what was a complete set of different circumstances. Back then the Fed opened the spigot of fiscal stimulus and the market rebounded. This time around, the market is correcting while the Fed is set to raise short-term rates for the next three months. As of Thursday's close, the $SPY closed lower 3.5%, at $413, below the 50 DMA and the 200 DMA. The value/reflationary ($VTV) closed lower 2.1%, at $142, right at the 50 DMA. The technology sector ($QQQ) closed lower 5.0%%, at $313, below the 50 DMA and the 200 DMA. The $DXY closed higher, near the $103.6 level, approaching the March 2020 high. The $TLT closed lower by 2.7%, at $115, and below the July 2019 lows. The ten-year yield closed higher at 3.06%. The $VIX closed higher, at the lower 30 levels, above the historical average. The $SPY short-term support level is at $420 followed by $410. The SPY overhead resistance is at $435 and then $441. The market correction started earlier than I anticipated. At this point, it is just a matter of time for the $SPY to break below the February lows. I would be a seller of any rallies in the market and have a BEARISH portfolio at this time... |
As per my opening comments, the technical damage is pretty severe, not just for the major indexes, but also for the majority of the market's 11 sectors where even the most stalwart stocks are subject to being pressured materially lower. To this point, the rolling correction looks to keep hitting all the great stocks that are considered the market generals. When stocks like Johnson & Johnson (JNJ) become sources of funds for institutional managers, then it sends a warning sign that investors should take seriously. Grant there are stocks that will buck the trend as is always the case in any market correction, but that number is narrowing with each day. It's a good time to hedge portfolios in the event key technical support for the S&P at 4,150 is taken out. Investors should consider utilizing ProShares Short S&P 500 ETF (SH), a 1x inverse ETF. As I noted the long-term primary bull uptrend is in place for S&P, but that level is down at 3,500 with 4,100 being the next level of key support – and as of Thursday's price action, the market is very concerned about another leg down. This is a very high conviction setup and for traders looking for a market hedge to work with. SH is one ETF that might be the right trade. It fits perfectly well in this market landscape, and we intend to put this ETF to work for our trading services in the week ahead. Readers of this column shouldn't miss out and get in on our bullish strategy when we take action. |
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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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