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. FaceBook, FB stock, is in focus today…
This journal entry looks at the recent market movements of Hewlett-Packard. NYSE: FB
VantagePoint Trading Journal FB Stock
Facebook’s Chief Executive Mark Zuckerberg saw his net worth decline by about $5 billion Monday, but it could have been worse. Ahead of Facebook’s worst one-day decline since 2012, prompted by news that data affecting 51.3 million members was improperly shared with a political consulting firm, Zuckerberg had been busy selling stock. So far this year, he has sold nearly 5 million shares.
Disposing of those FB stock shares before Monday ended up saving about $40 million, according to Securities and Exchange Commission filings and MarketWatch. At Monday’s close, the 4.9 million shares Zuckerberg has sold this year under a predetermined plan would be worth $855 million. Zuckerberg made about $900 million selling those shares, according to calculations using average weighted prices reported to the Securities and Exchange Commission.
You can have the ability to save money in your trading as well. A tool like VantagePoint generates forecasts of market movement 1-3 days in advance 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 or futures, stock sector rotations, or broad indexes like the S&P, Dow, and the Russell, VantagePoint can easily compile that data. This morning we visited Facebook (NASDAQ: FB). 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 bearish crossover indicated by the blue predictive indicator line crossing below the black, simple moving average on 3/16/18. We can combine that with the VantagePoint propriety neural index indicator moving from the GREEN to the RED position that trading day. 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 potentially bearish scenario. That’s why one could consider entertaining a setup to the downside.
If one were a straight stock trader, simply selling FB stock in the $170.00 area could prove prudent. You are anticipating a move to the downside. It’s also a conservative way to enter FB without the limitation of time associated with other strategies. It would also be good practice to place a buy-stop order in the $176.00 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 put 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: the current price, expiration date, and at-the-money volatility. This calculation yields a target price of approximately $163.00. One could consider the potential opportunity of the March 29th weekly expiration 162.5/165 put 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 his or her own reward/risk ratio and tolerance.