IP Stock Trading Journal

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. International Paper, IP stock, is in focus today…

This journal entry looks at the recent market movements of International Paper NYSE: IP

VantagePoint Trading Journal IP Stock

Total nonfarm payroll employment rose by 200,000 in January. Employment continued to trend up in construction, food services and drinking places, health care, and manufacturing. The market consensus was 800,000 so at least on the top line, things seem to be chugging along at least on the employment side of thing.

To keep our trading account chugging along, we can use the artificial intelligence forecasting software VantagePoint to analyze markets at all levels. Whether you are looking for individual stocks, futures or ETFs, stock sector rotations, or broad indexes like the S&P, Dow, and the Russell, VantagePoint can easily compile that data. Today, we will focus our efforts on International Paper, (NYSE: IP). Let us look at the chart:

image of IP stock trading diary with VantagePoint
The VantagePoint platform recently indicated a potential downside breakout in IP due to a bearish crossover on 1/31/18.

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 10-day moving average on 1/31/18. We can combine that with the VantagePoint propriety neural index indicator moving from the GREEN to the RED position back on 1/29/18. 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. That’s why one could consider entertaining a setup to the downside.

Strategy Discussion

If one were a straight stock trader, selling IP stock in the $62.50 area could prove to be profitable. You are anticipating a move to the downside. It’s also a conservative way to enter IP without the limitation of time associated with other strategies. It would also be good practice to place a buy-stop order in the $64.75 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. You want to establish where the market considers a probably move from now until expiration. You need three pieces of information to accomplish this; present price of the stock, date of options expiration and at-the-money volatility for that time period. Performing this calculation indicates a target price of approximately $59.00. This will be the short leg of our debit put spread. One can consider using the regular monthly February 59/60.5 put spread, paying $0.30. This would yield a reward to risk ratio of 4:1. This is calculated by taking the width of the spread less any premium you pay and dividing by the premium paid.

Given the trading and market 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

tylerr@tradermarketinggroup.com'

Leave a Reply

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

Translate »