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 and ETFs. Aon, AON stock, is in focus today…
This journal entry looks at the recent market movements of AON. NYSE: AON
VantagePoint Trading Journal AON Stock
Wow! What a week! Market volatility continues as the bulls and the bears fight it out. Congress did its best not to do its job by shutting down the government once again on Thursday. But, early Friday morning, Congress passed a spending bill that would extend the current level of federal funding until March 23. The bill would also bump limits on defense and non-defense spending by about $300B over the next two years. It will now be sent to President Trump for his signature. The market rallied on this news, but in my opinion, our exploration of the downside in the markets is not over.
Thanks to the tools the VantagePoint platform provides us, we are not lost amidst this chaos. We can use the artificial intelligence forecasting software to analyze markets at all levels. Whether you are looking for individual stocks, futures or ETFs, stock sector rotations, or broad indexes like the S&P, Dow, and the Russell, VantagePoint can easily compile that data. Today, we will focus our efforts on Aon (NYSE: AON). Let us look at the chart:
Using the predictive indicators embedded within the VantagePoint platform and its predictive AI technology, we will point out two significant things. We have a bearish crossover indicated by the blue predictive indicator line crossing below the black, simple 10-day moving average on 2/6/18. We can combine that with the VantagePoint propriety neural index indicator moving from the GREEN to the RED position back on 2/8/18. This indicator measures strength and weakness for a 48-hour period. The move to the RED position indicates weakness and further makes the case for a potential bearish scenario. That’s why one could consider entertaining a setup to the downside.
If one were a straight stock trader, simply selling AON stock in the $138.00 area could prove to be prudent. You are anticipating a move to the downside. It’s also a conservative way to enter AON without the limitation of time associated with other strategies. It would also be good practice to place a buy-stop order in the $144.00 area to mitigate potential losses.
For more active traders, consider a setup utilizing options. Given the market conditions outlined above, taking an active, premium debit approach may be the best path to success.
The sale of a credit call spread may be one way to approach this situation. You want to collect as much premium as you can while still maintaining a reasonable reward to risk profile. Selling the March 140/145 call spread at a credit of $1.15 could prove to be a prudent move. The maximum reward you can get from this spread is the credit you receive, $1.15. The maximum risk is the width of the spread less any premium that you collect. In this case, $3.85. The gives us a reward to risk ratio of 3.35:1.
Given the trading and market environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.