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, ETFs and Cryptocurrencies. Diageo, DEO stock, is in focus today…

This journal entry looks at the recent market movements of Diageo NYSE: DEO

VantagePoint Trading Journal DEO Stock

President Trump will deliver his first State of the Union address tonight, marking an end to the first year of his presidency that has seen U.S. markets ascend to new heights. It will focus on five main policy areas: jobs and the economy, infrastructure, immigration, trade and national security.

To keep an eye on the state of your trading account, 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 Diageo, (NYSE: DEO). Let us look at the chart:

DEO Stock

VantagePoint recently indicated a potential downside breakout in DEO due to a bearish crossover on 1/26/18.

Using the predictive indicators within the VantagePoint platform and its predictive AI technology, we can 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 1/26/18. We can combine that with the VantagePoint propriety neural index indicator moving to the zero (0) position. This indicator measures strength and weakness for a 48-hour period. The move to the zero (0) position indicates weakness and further makes the case for a potentially bearish scenario. That’s why one could consider entertaining a setup to the downside.

Strategy Discussion

If one were a straight stock trader, selling DEO stock in the $142.00 area could prove to be prudent. You are anticipating a move to the downside. It’s also a conservative way to enter DEO without the limitation of time associated with other strategies. It would also be good practice to place a buy-stop order in the $145.00 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 a passive, premium credit approach may be the best path to success.

The sale of a credit call spread may be one way to approach this situation. It is optimal to collect the most premium in an options set up like this. Selling a strike close to at-the-money and buying a further out call as protection would be most prudent. Consider the sale of the monthly March 145/150 call spread collecting $1.50. This will yield a risk to reward ratio of laying odds of 2.33:1. This is calculated by taking the width of the spread. And then less any premium collected and dividing by the premium collected.

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

Use smart software to your advantage

VantagePoint Software uses the power of Artificial Intelligence. Traders use this to predict market direction and strength 1-3 days in advance with up to 86% accuracy.  With deep learning using neural networks, VantagePoint shows you what the market is going to do. Not what it’s already done. Request a personalized demonstration of VantagePoint Software today. Learn why more than 25,000 traders trust the software, which helps them achieve trading success.