CLF 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. Cliff’s Natural Resources, CLF stock, is in focus today…

This journal entry looks at the recent market movements of Cliffs Natural Resources. NYSE: CLF

VantagePoint Trading Journal CLF Stock UPDATE

If you recall, VantagePoint’s predictive AI technology identified a bullish opportunity in Cleveland-Cliffs (CLF) due to a bullish crossover on 2/8/18. The software nailed it. CLF was trading $7.17 when the opportunity was identified. Even today, after a bearish week, CLF rallied and was trading $7.96. The option play was to purchase the March 8/9 call spread for $0.13.  We exited today at $0.30.  Given the overall climate of the markets and realizing a profit of 130.77%, we deemed it prudent to exit.

VantagePoint Trading Journal CLF Stock

After last week’s roller coaster ride, U.S. stock index futures are flirting with the red in early trades on Tuesday. Be careful! U.S. 10-year Treasury paper yield is also touching a four-year high of 2.885%. For me, it’s way too early to think that this ride is over. Inflation is on everyone’s mind and we get some key data tomorrow with the release of CPI, Retail Sales, and the Atlanta Fed Business Inflation Expectations.

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. Let’s focus our attention on Cliffs Natural Resources (NYSE:  CLF).  Here’s the VantagePoint Chart:

image of CLF stock trading diary with VantagePoint
VantagePoint recently indicated a potential upside breakout in CLF could be forming due to a bullish crossover on 2/9/18.

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 2/9/18. We can combine that with the VantagePoint propriety neural index indicator moving from the RED to the GREEN position also on 2/9/18. 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, simply buying CLF stock in the $6.85 area could be beneficial. You are anticipating a move to the upside. It’s also a conservative way to enter CLF without the limitation of time associated with other strategies.  It may also be wise to place a sell-stop order in the $6.45 area to mitigate potential losses.

For more 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.

The purchase of a debit call spread may be one way to approach this situation. You first need to determine your target price. You do this with three pieces of information: current price, time to expiration, and at-the-money implied volatility. In CLF stock, this yields a price of $8.40. One can consider the March $8.00/$9.00 call spread paying a debit $0.13 as one way to approach this bullish momentum. The maximum reward for this spread is the width of the spread less any premium you paid ($1 – $0.13 = $0.85). The maximum risk is your paid premium. These two figures give us reward to risk ratio of 6.69:1. This figure is inflated because it assumes that your target price is $9.00. In our instance, if we target $8.40, our risk to reward ratio would be 3.08:1.  Still a healthy r/r ratio.

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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