SWKS 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. Skyworks Solutions, SWKS stock, is in focus today…

This journal entry looks at the recent market movements of Skyworks Solutions NASDAQ: SWKS

VantagePoint Trading Journal SWKS Stock

The volatile stock market will see a major test in the coming weeks as traders size up Q1 results. Tax cuts should help Corporate America post its biggest quarterly profit growth in seven years, with S&P 500 profits expected to rise 18.4%. However, any disappointments could further upset investor sentiment.

President Trump backed off of his comments regarding potentially launching missiles into Syria which would have a profound effect on the area as well as riling up Syria’s ally Russia. The market was not looking too kindly at fighting a proxy war in the Middle East again. With those fears largely in the rearview mirror, we can begin to look at some bullish plays again.

VantagePoint generates forecasts of market movement 1-3 days in advance 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. Today we consider Skyworks (SWKS):

image of SWKS stock trading diary with VantagePoint
VantagePoint recently indicated a potential upside breakout in SWKS due to a bullish crossover on 4/11/18.

Chart Interpretation

Using the predictive indicators embedded within the VantagePoint platform and its predictive AI technology, we will point out three significant things.

  1. We have a bullish crossover indicated by the blue predictive indicator line crossing above the black simple moving average between prior to 4/11/18.
  2. We can combine that with the VantagePoint propriety neural index indicator moving from the RED to the GREEN position one day earlier from on 4/10/18.  This indicator measures strength and weakness for a 48-hour period, in this case, strength.  The move to the GREEN position further makes the case for a potential bullish scenario.
  3. The predicted high and low for today’s range is above the actual high and low from yesterday’s session.

Because of these things, I am looking to play the VantagePoint bullish indication.

Strategy Discussion

If one were a straight stock trader, simply buying SWKS stock in the $98.50 area could prove to be prudent. You are anticipating a move to the upside. It’s also a conservative way to enter SWKS without the limitation of time associated with other strategies. It would also be good practice to place a sell-stop order in the $97.75 area to mitigate potential losses.

For more active traders with a shorter investment time horizon, 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 call spread may be one way to approach this situation. First order of business is to determine your target strike. This will serve as the short leg of our debit put spread. We need three pieces of information to perform this calculation: the current price, date of expiration and ATM implied volatility. In this case, SWKS stock yields a target strike of ~$104. You can consider the SWKS April 20th 102/104 call spread paying $0.50. The maximum risk of this spread is the amount of premium you paid and the maximum reward is the width of this spread less the premium paid. The max risk = $0.50 while the max reward = $1.50. This gives us a reward to risk ratio of 3:1.

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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