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. Alphabet, Inc. Class A, more commonly known as GOOGL stock is in focus today…
This journal entry looks at the recent market movements of Alphabet Inc. NASDAQ: GOOGL
VantagePoint Trading Journal GOOGL Stock
The FOMC is holding its last policy meeting of 2017. Many expect it will result in interest rates getting bumped up a quarter point on Wednesday. The wildcard for the markets, however, is what the Fed says and does with regard to tax legislation. Many expect the central bank to retain its three-rate-hike forecast for next year. Still, some feel the Fed could add a fourth rate hike based on the improving economy and stimulus from tax cuts.
As we take this market environment into consideration, 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. After utilizing our VantagePoint platform, I am open to considering a set up to the upside in a robust sector. Today, Alphabet, Inc. A Shares (GOOGL) is in full focus. 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 12/08/17. 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 I am willing to entertain a setup to the upside.
If one were a straight stock trader, simply buying GOOGL stock in the $1050.00 area could prove to be prudent. You are anticipating a continuing move to the upside. It’s also a conservative way to enter GOOGL without the limitation of time associated with other strategies. It would also be good practice to place a sell-stop order in the $1040.00 area to mitigate potential losses.
For more active traders with a shorter investment time horizon, consider a setup utilizing options. Given the price action as outlined above combined with the indicators we have highlighted on the VantagePoint platform, an active approach to the upside could prove to be sensible.
The purchase of a debit call spread may be one way to approach this market. The critical piece here is to identify a target price. We can determine that with three simple inputs. Those inputs are the current price, time to expiration (expiration date) and at the money volatility for this time horizon. In this case, we’ll use a price of $1049.700, an expiration of 1/19/18 and at the money volatility of 16.9%. This yields a target price of $1,100.00. We can consider the January (monthly) 1085/1100 call vertical trading $3.20 at the time of this writing. This spread has a maximum risk of $3.20 (what one paid for the spread). The maximum reward is the width of the spread of $15.00 less any premium paid, in this case, $3.20. That leaves us with a potential net profit of $11.80. That gives a reward to risk ratio of 3.69:1 (11.80/3.20).
Given the trading and market environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.