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. Digital Realty Trust, DLR Stock, is in focus today…
This journal entry looks at the recent market movements of Digital Realty Trust NYSE: DLR
VantagePoint Trading Journal DLR Stock
With the first trading session of the year on deck, investors are sketching their market predictions for 2018. Will U.S. stocks keep rising? Which sectors will be hot? Will there be tax bill benefits or debt ceiling worries? What about the U.S. mid-term elections? Will the oil rally continue? What are the next steps for monetary policy? Will there be a dollar downturn? Needless to say, there is a lot of topics that can affect market outlooks for 2018.
While we have little control over these topics, we can control the tools we use to analyze the markets. The VantagePoint platform provides potential and direction for us using the powerful tools at our disposal. Using the artificial intelligence forecasting software, we can analyze individual stocks, futures or ETFs and broad indexes like the S&P, Dow, and the Russell. This week, we’ll stay in the REIT space but slide over to the data center sector.
Today we focus on DLR. Here’s 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 bullish crossover indicated by the blue predictive indicator line crossing above the black, simple 10-day moving average on 12/29/17. We can combine that with the VantagePoint propriety neural index indicator moving from the zero (0) to the one (1) position. This indicator measures strength and weakness for a 48-hour period. The move to the one (1) position further makes the case for a potential bullish scenario. That’s why one could consider entertaining a setup to the upside, or more specifically, a move NOT to the downside.
Strategy Discussion for DLR Stock
If one were a straight stock trader, buying DLR stock in the $113.50 area could prove to be prudent. You are anticipating a continuing move to the upside. It’s also a conservative way to enter DLR without the limitation of time associated with other strategies. In this scenario, it would also be good practice to place a sell-stop order in the $112.00 area to mitigate potential losses.
For more active traders, consider a setup utilizing options. Given the market conditions outlined above, taking a passive approach may be the best path to success. In this example, you allow yourself a number of potential outcomes that can eventually lead to a profitable trade instead of relying on just one.
The sale of a credit put spread may be one way to approach this situation. To collect the most premium, one may want to sell a call spread as close to the money as possible. We can consider selling the January 110/115 put spread that is trading $2.20. This will yield a risk to reward ratio of 1.27:1. This ratio is calculated by taking the width of the spread less any premium collected (5.00 – 2.20) and then dividing that number by the amount of premium collected (2.20). $5.00 divided by $2.20 =1.27. Please note, that this spread is in the money presently.
Given the trading and market environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.