HOG Stock | Harley-Davidson 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. Harley-Davidson, HOG stock, is in focus today…

This journal entry looks at the recent market movements of Harley Davidson NYSE: HOG

VantagePoint Trading Journal HOG Stock

The market continues to react to the FOMC’s decision on Wednesday to hike interest rates another 25 bps. Although this move was already priced in, the market did not react in any sudden manner. The main issue here is its trajectory for 2018.  From Bill Gross on CNBC: “The Fed has to stop around 2 to 2.25 percent before it really starts to bite,”

“A lot [of mortgages] are variable, floating-rate mortgages. And to the extent that the Fed has already raised interest rates by 75 to 100 basis points and is expected to rise by another 50 to 100 that affects the average monthly payments,” said the Janus Henderson portfolio manager in an interview with “Power Lunch.”

Taking this market environment into consideration, the VantagePoint platform provides potential and direction using the powerful tools at our disposal. 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 open to considering that the market has again taken a moment to pause and perhaps has lost some upward momentum.  This is not an outright about-face to the downside.  Today, Harley-Davidson (NYSE: HOG) is in full focus.  Here’s the chart:

image of HOG stock trading diary with VantagePoint
The VantagePoint platform recently indicated a potential downside breakout in HOG. This could be forming due to the bearish crossover on Wednesday, 12/13/17.

Using the predictive indicators embedded within VantagePoint 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 10-day moving average on 12/13/17. We can combine that with the VantagePoint propriety neural index indicator moving from the one (1) to the zero (0) position. This indicator measures strength and weakness for a 48-hour period. The move to the zero (0) position further makes the case for a potentially bearish scenario. That’s why I am willing to entertain a setup that allows traders to profit on a move to the downside.

Strategy Discussion

If one simply traded stocks, shorting HOG stock in the $50.00 area could prove to be prudent. You are anticipating a continuing move to the downside. It’s also a conservative way to enter HOG stock without the limitation of time associated with other strategies. It might also be suggested to place a buy-stop order in the $51.25 area to mitigate potential losses.

For more active traders with a shorter investment time horizon, consider a setup utilizing options. Given the price action combined with the indicators we have highlighted on the VantagePoint platform, a passive approach to the downside could prove to be sensible.

The sale of a credit call spread may be one way to approach this situation. To capture the most premium from our credit sale, one may want to sell a very close “at-the-money” call vertical.  HOG is presently trading $50.02. We can consider the January (monthly) 50/52.5 call vertical which is trading $1.00 presently. This spread has a maximum risk of the width of the spread ($2.50) less and premium collected for a net risk of $1.50. The maximum reward is whatever premium is collected, or $1.00 in this case. That gives us a risk to reward ratio of 1.50:1 (1.50/1.00).

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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