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October 30rd, 2022 | Issue 154 |
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It was another week dominated by earnings and the latest inflation-related economic reports as worries of a potential recession continued to fluctuate while optimism regarding Fed action bubbled up. The tech sector saw shares under pressure following underwhelming Q3 earning data from some marquee names. Also this week, GDP data offered some support while PCE reports were released on Friday, further illuminating inflation's impact on the market. At home, things remained steady. The kids are a quarter through the school year, winter weather incrementally increases, and our book club is on to its next title. This month, we are reading F. Scott Fitzgerald's second novel The Beautiful and Damned. Originally released in 1922, the book followed a glitzy couple within the social elite living in New York during the Jazz Age. While the novel serves as a unique account of the roaring 20s, the story primarily follows a young married couple who would rather wait for an inheritance than create a working life for themselves. With no real purpose other than waiting for an inheritance, the protagonist couple over-indulge in a life of partying and mindless alcoholism. The inheritance is jeopardized by their ways but eventually, after a long legal battle, the couple receives theirs, at which point they care little about anything outside of themselves and deteriorate their marriage as well as each other. They care for nothing and spend the majority of their life aimless with no meaning. Before diving into the contents and meaning of the book, our book club had a rigorous discourse regarding the monotonous storytelling nature. Meandering from party to party, the repetitions of their aimless nights, the lack of change in any particular character were deeply scrutinized and appeared to grow in shallow and vapidness, as if serving no noticeable utility to anyone or anything. Fitzgerald shows us that complaisance does not serve an individual. Furthermore, an overt reliance on our parents or financial help outside of one's self stunts personal growth, undercutting the ability to develop a meaningful life. Most in our book club are fairly wealthy, have their own children and could relate to "spoiling" them. It is important to give our children meaningful lives and not withhold them from developing skills needed to further their own development. While we cannot relate to the main characters of the novel, we do find ourselves in a unique situation. I certainly did not grow up like these characters and had a much different upbringing. However, most of us within the book club do find ourselves in the potential position of bestowing much more wealth on our children than what we had grown up with. This is something that my wife and I have discussed and ramped up following the astute observations in the novel. We do not want our children to feel complacent. While we do want to give them every benefit we can, we also want to instill a drive to succeed within them. A self-generated drive for a meaningful life which in turn is a rewarding experience. Having had this discussion in our book club, we now see the deeper meaning offered by this novel and hope to take those lessons back to our lives. Similarly, stock market observers can also obtain a lesson from this book. Often stock market participants become complacent in their ways. Relying on the hope of a bull market return and being unwilling to shift strategy reminds me of the protagonist from Fitzgerald's work, simply waiting for their inheritance to come in. Are these traders becoming better investors simply off the speculation of a bull market return? Are they honing their skill to navigate volatile market conditions? Have they gained anything by their unchanged ways? The answer, I believe, in most cases, is no. The market landscape is ever-changing. If you began trading at the height of the pandemic when stocks hit record lows and eventually returned to their pre-pandemic levels, you would think you are a great trader and will just continue waiting out the current slump to regain gains once the bull market returns. (Does this mean if they received their inheritance earlier, they wouldn't be as despicable? It doesn't seem like it would.) As a trader, you cannot sit and wait for the bull market to return. Financial support is not promised and you must maintain the skills to work through the ups and downs. Developing different skills and tools and finding unique trends/signals to generate income in a bear market separate "trust fund" traders waiting for a lucky strike and the self-made, self-generated successful traders that find a way to thrive in all market conditions. This book helped push me to continue studying the market, search for innovation, and book gains where I can. I want to learn as many strategies as I can and learn to apply them in the right market conditions. Complaisance is no trait for a successful trader. And being a successful trader often requires a strong trading community to surround yourself with many viewpoints and strategies. That is why I started our YellowTunnel trading community, where you can discuss and dissect together. 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: |
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How To Trade a Bear Market Strategy Roundtable 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: |
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 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. |
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| Vlad Karpel
YellowTunnel and Tradespoon Founder |
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P.S. Click here for access to the Power Trading Live Strategy Roundtable Recorded every Thursday. P.P.S. Join our Discord Community to participate in our Free Live Market Volatility Trading Room Session every Monday and Wednesday at 8:15 am CST. Click Here To Join |
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Looking at how the market responded to this week's marquee events, there is one symbol I am interested in breaking down and, if the levels appear to be solid, investing in. With the majority of earnings returning positively while a handful of tech-based symbols weighed the market down in the opposite direction following underwhelming reports, there was one particular symbol that showed extraordinary resilience. With additional earnings, FOMC decision, and midterms coming up, I believe this symbol should prosper. General Motors (GM) was one of this week's highlights as the symbol traded positively through the midweek slump we saw. Triggered by some underwhelming earnings, most shares were pressured before rebounding to end the week. GM, however, saw a steady ride higher. Just in the last 5 days, GM has booked over 10% gains. Looking at its 52-week range, GM is trading well below its high of $67 and just above its low of $30. At $38 currently, GM offers us a unique opportunity. Let's review the A.I. data before jumping to conclusions. |
Looking at the Seasonal Chart of GM, seen above, the symbol is flashing a very impressive probability to go higher in the next 20, 30, and 40-day time ranges. With the current gap between the seasonal level and the current level, GM has the space to offer profits at its current price... |
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Have You Had Your Coffee Yet? |
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On November 3rd, STARBUCKS CORPORATION (SBUX) will announce its earnings. |
The last time we traded STARBUCKS CORPORATION (SBUX) on April 23rd, 2021, we had a 97.47% return on risk. Let me repeat that, we had a 97.47%** return! That's a pretty good return after holding the position for only 1 day! This is my favorite time of year! Every trading day, otherwise-unremarkable companies find themselves delivering outsized gains to shareholders. 25%... 45%... 64%...** and more. |
(A portion of Yellow Tunnel sales will go to directly help the Ukrainian people) |
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CURRENT TRADING LANDSCAPE |
As optimism that the Federal Reserve would contemplate smaller interest-rate hikes at its November meeting, all three major indices traded higher this week, despite some big tech companies posting weak earnings. Underwhelming reports from the likes of Microsoft and Meta stressed Nasdaq levels throughout the week before finding a path higher on Friday. The positive GDP report, which broke the 2-quarter streak of down reports, also offered support for shares this week, ahead of the upcoming November Federal Reserve Open Market Committee policy update decision. As of Friday, the 5-day chart shows the $SPY was trading over 3% higher, near $388. The S&P 500 is up 2.25% on Friday, with the Nasdaq and Dow also seeing gains greater than 1%. The $VIX hit a high of $29 to open the week but gradually sold off, now trading near the $26 level. |
Currently, I am watching the overhead resistance levels in the SPY, which are at $390 and then $400. The $SPY support is at $380 and then $370. The market is currently rising and I predict this trend will continue for the next two months. In the short term, however, the market may fall back slightly as it is presently overbought. I would be a buyer into any further sell-offs and have encouraged subscribers not to chase the market to the downside. |
The market landscape is constantly changing. Fed outlook can flip on a dime, and while rate hikes are expected, optimism regarding a shifting Fed perspective has gained momentum as of late. Only following the Fed, will it be clear where the market will head. However, due to the latest levels in the market, there is one sector set to benefit and display a clear path higher. With the FOMC decision on deck and midterms thereafter, market clarity should push this particular sector higher. The Consumer Discretionary Select Sector SPDR Fund (XLY) is a renowned ETF that highlights S&P performance with a focus on retail, hotels, restaurants, leisure, luxury goods, automobiles, and consumer services. With over $14 million in assets, XLY is currently trading at $144 and slightly above its 52-week low of $133. Going back to December of 2021, this symbol was hitting its 52-week high of $215. While such a high might not be the exact outcome of the ETF as we head into the final months of 2022, it does show a promising pathway toward its upside. Holidays are right around the corner and an annual holiday rally is expected. Similarly, clarity from two more Fed decisions this year and the upcoming midterm elections could offer shares support through 2022. With plenty of room to trade higher, and plenty of market drivers to push it in that direction, I am going to be focusing on the retail sector for the next few trading sessions, hopefully finding a good entry into XLY. Before I commit to the sector, let's review my A.I. model's forecast... |
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Market Volatility LIVE Trading Room Sessions Join Our Discord Community 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. |
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