MSI | Motorola 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. MSI stock is in focus today….

This journal entry looks at the recent market movements of Motorola NYSE: MSI

VantagePoint Trading Journal MSI Stock

How candid will Janet Yellen be? That is the burning question as she is participating in a moderated discussion at the NYU Stern School of Business. This discussion is expected to include discussion on the direction of policy and Wall Street oversight in the years ahead. It comes after Yellen announced she would resign from the Fed’s Board of Governors once Jerome Powell is sworn into the office, leaving yet another vacancy at the central bank.

What does provide potential and direction for us is 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 looking for value plays to the upside in strong sectors. Look at Motorola (MSI) today:

image of MSI stock trading diary with VantagePoint
VantagePoint recently indicated a potential upside breakout in MSI could be forming due to a bullish crossover on 11-20-17.

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 11/20/17. 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.

Strategy Discussion

If one were a straight stock trader, simply buying MSI stock in the $92.00 area could prove to be prudent. You are anticipating a continuing move to the upside. It’s also a conservative way to enter MSI without the limitation of time associated with other strategies. In this scenario, it would also be good practice to place a buy-stop order in the $90.00 area to mitigate potential losses.

For more active traders with a shorter investment time horizon, you can consider options. Because of the layered uncertainty in the market, I believe it is practical to buy 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 MSI stock yields a projected move of approximately $3.25 or 3.5%. This targets the $96.00 price level through the December expiration. Let’s consider a possible bullish set up using the MSI December 92.5/97.5 call vertical where one could potentially pay $1.45. This will have a maximum risk of what one would pay for the spread ($1.45). The maximum reward will be the width of the spread less any premium paid or $3.55. This yields a reward to risk ratio of 2.45:1. This reward to risk ratio is a bit slimmer than what you may be used to seeing in previous posts.  The important thing to be aware of is that this spread is already in the money by $0.35.

Given the trading environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.

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