CL Stock 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 and ETFs. Colgate-Palmolive, CL stock, is in focus today…

This journal entry looks at the recent market movements of Colgate-Palmolive. NYSE: CL

VantagePoint Trading Journal CL Stock

Jobs and wage inflation are set to be a major focus of investors today, with the release of the February Employment Situation report. The consensus from economists is for nonfarm payrolls to be up 205K from January, although there is a wide range of estimates (152K to 230K) this month. The participation rate is expected to stay at 62.7%, while the unemployment rate is anticipated to move to 4.0% from 4.1%. Keep an eye on the average hourly earnings update amid concerns of wage pressures on corporate profit. Inflation fears could be unleashed if wage growth outpaces the anticipated year-over-year rise of 2.9%.

With all of these figures to keep track of, it’s helpful to have a tool that like VantagePoint to generate forecasts of market movement with up to 86% accuracy. 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. The market feels like it’s getting the sigh of relief it has been waiting for. Take Colgate-Palmolive (CL) for example:

image of CL stock trading diary with VantagePoint
VantagePoint recently indicated a potential upside breakout in CL due to a bullish crossover on 3/7/18.

Using the predictive indicators embedded within the VantagePoint platform and its predictive AI technology, we will point out two significant things. We have a bullish crossover indicated by the blue predictive indicator line crossing above the black, simple 10-day moving average on 3/7/18. We can combine that with the VantagePoint propriety neural index indicator moving from the RED to the Green position a trading day before on 3/8/18. This indicator measures strength and weakness for a 48-hour period. The move to the GREEN position indicates strength and further makes the case for a potential bullish scenario. That’s why one could consider entertaining a setup to the upside.

Strategy Discussion

If one were a straight stock trader, buying CL stock in the $71.50 area could prove wise. You are anticipating a move to the upside. It’s also a conservative way to enter CF without the limitation of time associated with other strategies. It would also be good practice to place a sell-stop order in the $69.50 area to mitigate potential losses.

For more active traders with a shorter investment time horizon, 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 purchase of a debit call spread may be one way to approach this situation. The first thing that you want to determine is your target price. You need three pieces of information to complete this calculation. That would include the current price, expiration date and at-the-money volatility for that timeframe. This calculation yields a target price of approximately $75.00. One could consider the potential opportunity of the April regular expiration 72.50/75.00 call vertical paying $0.60. This has a maximum risk of what you paid for the spread, or $0.60. The maximum reward is the width of the spread less any premium paid or $2.50 – $0.60 = $1.90. This gives us a reward to risk ratio of 3.17:1.

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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