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. The Dow Jones Industrial Average ETF, DIA ETF, is in focus today…

This journal entry looks at the recent market movements of the Dow Jones Industrial Average NYSEARCA: DIA

VantagePoint Trading Journal DIA ETF

Monday, February 5th, 2018 was one for the record books and many traders are going to remember where they were that day. The insane volatility often makes it difficult to trade an individual equity except for the most liquid underlying securities. Even with a sufficiently liquid underlying, which one equity are you willing to trade in this marketplace? Technical support and resistance levels can basically be thrown out the window. We do have two powerful tools available to use that can provide some dampening of this uncertainty.  The use of highly liquid ETFs and the VantagePoint platform.

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, let us look at an ETF that tracks the Dow Jones Industrial Average.  It’s called the Diamond and its ticker is DIA (NYSEARCA: DIA). Let’s look at the chart:


The VantagePoint platform recently indicated a potential downside breakout in IP could be forming due to a bearish crossover on 1/31/18.

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 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 1/30/18. 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 potentially bearish scenario. That’s why one could consider entertaining a setup to the downside.

Strategy Discussion

If one were a straight stock trader, simply selling the DIA ETF in the $245.00 area could prove to be prudent. You are anticipating a move to the downside. It’s also a conservative way to enter DIA without the limitation of time associated with other strategies. It would also be good practice to place a buy-stop order in the $260.00 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 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. That information includes the present price of the stock, the date of options expiration, and at-the-money volatility for that time period. Performing this calculation indicates a target price of approximately $229.00. This will be the short leg of our debit put spread. One can consider using the regular monthly February 229/232 put spread, paying $0.55.  This would yield a reward to risk ratio of 4.45:1. You calculate this by taking your maximum reward, subtract any premium you pay and then divide that by the premium you 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.

Use smart software to your advantage

VantagePoint Software uses the power of Artificial Intelligence, which traders use 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.