GLD | Streettracks Gold Trust 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. GLD is in focus today….

This journal entry looks at the recent market movements of Streettracks Gold Trust NASDAQ: GLD

VantagePoint Trading Journal GLD

The global rally in equities is showing no signs of letting up as investors drive stocks to all-time highs. Japan’s Nikkei hit its best level since 1992 overnight. Meanwhile, Germany’s DAX scored a record high and all three of Wall Street’s major indexes just closed at fresh peaks.

“You’ve had almost a perfect backdrop for equities,” said Pictet Asset Management’s Luca Paolini. “You have acceleration in nominal growth, earnings are between 10%-15% globally and whatever you look at is pretty much in double digits.”

Using the artificial intelligence forecasting software VantagePoint, we can analyze individual stocks, futures or ETFs and broad indexes like the S&P, Dow, and the Russell. After utilizing our VantagePoint platform, I am looking for value plays to the upside or protective plays. Let’s take a look at the Gold ETF (GLD):

image of GLD trading diary with VantagePoint
Global rallies in equities lead to VantagePoint indicating a new bullish crossover on 11-6.

Using the predictive indicators of VantagePoint, we will note two important things. We have a bullish crossover indicated by the blue predictive indicator line crossing above the black simple 10-day moving average on 11/06/17. We couple that with the VantagePoint proprietary neural index moving from a zero (0) to a one (1) position. This indicator measures strength and weakness for a 48-hour period. The move to the one (1) position indicates strength and further makes the case for a potential bullish scenario. That’s why I am willing to entertain a setup to the upside or a protective play.

Strategy Discussion

If one traded just stocks, buying GLD in the $121.25 area could prove to be prudent in anticipation of a predicted move to the upside. This would be a conservative way to enter GLD because you don’t have the limitation of time associated with other trading strategies. In this scenario, placing a sell-stop order in the $120.00 area to mitigate potential losses would also be prudent.

For more active traders with a shorter investment time horizon, a play with options could also be advantageous. Due to the layered uncertainty in the market, I believe it is wise to buy ourselves some more time by going out to the regular December options.

From three simple inputs we can compute the magnitude of the projected move through expiration.  Those three inputs are the underlying price, at-the-money implied volatility and the date of expiration.  Performing this calculation for GLD yields a project move of approximately $3.30 or 2.75%. This targets the $125.00 price level through the December expiration. Let us consider then as a possible bearish set up using the GLD December 123/125 call vertical paying $0.45. This will have a maximum risk of what one would pay for the spread, $0.45. The maximum reward will be the width of the spread less any premium paid or $1.55. This yields a reward to risk ratio of 3.44:1. Given the trading environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.

image of vantage point software banner'

Leave a Reply

Your email address will not be published. Required fields are marked *

Translate »