V – Visa Trading Journal with VantagePoint

VantagePoint Trading Software is a forecasting tool that uses both end of day data and Artificial Intelligence to provide traders a forecast of market movement. These forecasts are 1-3 days in advance and help traders improve their timing on making trades and maximizing profit potential. The Artificial Intelligence software forecasts market movement for stocks, futures, Forex, ETFs and Cryptocurrencies. Visa, V Stock, is in focus today…

This journal entry looks at the recent market movements of Visa, NYSE: V Stock

VantagePoint Trading Journal Visa Stock

Quashing speculation that it was mulling bigger changes to its framework, the Bank of Japan vowed to maintain “extremely low” interest rates, but revealed a series of small policy adjustments. Those include allowing long-term rates to fluctuate depending on economic and price developments, and conducting asset purchases with more flexibility. The BOJ also trimmed its price forecasts and conceded inflation could fall short of its target for three more years.

*Source:  Seeking Alpha

Let’s consider Visa Inc. (ticker: V):

V Stock

The VantagePoint platform recently indicated downside momentum.

Using the predictive indicators embedded within VantagePoint and its predictive AI technology, we will point out three significant things. We have a bearish crossover indicated by the blue predictive indicator line crossing below the black simple moving average on July 27th.  We can combine that with the VantagePoint propriety neural index indicator moving from the GREEN to the RED position back the day prior.  This indicator measures strength and weakness for a 48-hour period, in this case weakness.  The move to the RED position further makes the case for a potential bearish scenario. We also have the predicted high and low below yesterday’s actual high and low indicating further downside momentum.  I want to play the VP bearish indication.

Strategy Discussion

If one was strictly a stock trader, selling V in the $136.500 area could be prudent.  You are anticipating a move to the downside.  As a protective measure, it is always good practice to place a buy-stop order.  In this case, placing that order in the $140.50 area will mitigate potential losses.

For active traders with a shorter investment time horizon, you can consider a setup utilizing options. Given the market conditions outlined above, taking an active, premium debit approach may be the best path to success.

Because of the reasons given above, the purchase of a debit put spread may be one way to approach this situation.  The first thing that you want to do is calculate your target price.  In order to perform this calculation, you need three pieces of information:  current price, expiration date and the implied volatility for that expiration date.  For V this calculation yields a target strike of ~$132.  You may want to consider the V August 10th weekly expiration 132/134 put spread, buying it for $0.40.  The most you lose is the premium paid and the most you can gain is the width of the spread less any premium paid.  Max risk = $0.40 and max reward = $1.60.  This means that you are getting odds of 4.00:1.

Given the trading and market environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.


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