HPQ Stock 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. Hewlett-Packard, HPQ stock, is in focus today…

This journal entry looks at the recent market movements of Hewlett-Packard. NYSE: HPQ

VantagePoint Trading Journal HPQ Stock

Rex Tillerson is out as Secretary of State after a series of disagreements with President Donald Trump, ending a rocky tenure as the chief U.S. diplomat. Trump has tapped CIA director Mike Pompeo to run the State Department, hailing his experience in the military and Congress.

Reuters commented on today’s CPI report by saying “U.S. consumer price growth slowed in February amid a decline in gasoline prices and a moderation in the cost of rental accommodation. The latest indication that an anticipated pickup in inflation probably will be only gradual.”

With the uncertainty of market movement, it’s helpful to have a tool like VantagePoint to generate forecasts of market movement 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. The market is looking for a reason to move on way or the other. I want to have balance in my portfolio, so I’m willing to entertain a potential short in Hewlett-Pacakrd (HPQ). Here’s the chart:

image of HPQ stock trading diary with VantagePoint
VantagePoint recently indicated a potential downside breakout in HPQ due to a bearish crossover on 3/12/18.

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 moving average on 3/12/18. We can combine that with the VantagePoint propriety neural index indicator moving from the GREEN to the RED position that trading day before. This indicator measures strength and weakness for a 48-hour period.  The move to the RED position indicates weakness and further makes the case for a potential bearish scenario.

Strategy Discussion

If one were a straight stock trader, simply selling HPQ stock in the $24.00 area could prove to be wise. You are anticipating a move to the downside. It’s also a conservative way to enter HPQ without the limitation of time associated with other strategies. It would also be good practice to place a sell-stop order in the $24.50 area to mitigate potential losses.

For more active traders, 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. That info consists of the current price, expiration date and at-the-money volatility for that timeframe. This calculation yields a target price of approximately $23.00. One could consider the potential opportunity of the March 23rd weekly expiration 23/24 put vertical paying $0.27. This has a maximum risk of what you paid for the spread, or $0.27. The maximum reward is the width of the spread less any premium paid or $1.00 – $0.27 = $1.90.  This gives us a reward to risk ratio of 2.7:1.

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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