Geopolitical risk and macroeconomic factors are now dominating the market.  There is fear.  And with that fear, there is greed.  But more than anything, there’s a lot of unpredictability in the stocks subject to that fear and greed.

We’ve seen a ton of noise in these markets as the money flow chases ideas and rotates from stock to stock, sector to sector, and the S&P 500 chops up and down without a true direction.  Tuesday felt different in the morning, but then the buyers came in and saved the day.  Panic set in thanks in large part to concerns over the escalation in Iran, but it didn’t last long, at least for this particular 7.5-hour market session.

When this happens, the natural instinct is to look at the sectors that can be impacted most: oil companies, defense stocks, etc.  We all have the tendency at times to get tunnel vision, and we all want to focus on the same things, but those things are often the hardest to predict.  So, for me, the best thing I can do is to get away from the noise and get away from the sectors with a fundamental driver.  My trades focus on technicals and artificial intelligence signals, not on interpretation of geopolitical policies and actions.

I’ve said it before, and I’ll say it again, this is the perfect time for me to filter out the noise by using the Stock Forecast Toolbox!

Being that there are a number of sectors that I’m avoiding, the Forecast Toolbox is particularly helpful for me in times like this.  I can review the stocks that are getting large volume money flow and eliminate those that are doing so because of strong ties to the geopolitical arena.  In doing just that, I found a name that’s intriguing to me and appears to be performing independently of the fundamental inputs.

The stock I’ll highlight today is Fidelity National Information Services (FIS), a FinTech company:

Over the last few months, FIS has been undeniably weak.  Earnings on February 24th were a non-event.  But I like the way the technical setup is aligning, with a series of higher highs and higher lows after bottoming on February 12th.  This looks like a stock where shorts are covering their positions, and that could set up for some explosive upside if the short position gets squeezed and must get more aggressive buying.

When I look at the forecast toolbox’s projections, it’s quite bullish, and I can see why:

With a short-squeeze, I like to keep things simple and focus on a long call entry.  There’s a decent probability that this is just a bounce back before further downside, but if the buying catches hold, I don’t want to constrain my upside leveraged payout with an options spread.  And in the case of FIS, the options are priced reasonably well for a leveraged payout.  For example, the April 17th $52.50 calls are trading for about $1.55.  If we hit the price target from the Forecast Toolbox of $55+ over the next 2 weeks, those would already be $2.50 in-the-money, and these calls would easily be a 100%+ winner.  If the stock hits the projected high in the next 2 weeks of around $57, this would be a homerun.  And while the odds of a full squeeze are under 50%, the payout makes this worth it for me, where I see a reasonable probability of 100%+ returns and a potential for 300% or more, and that’s an exciting opportunity that I would have missed without the Forecast Toolbox.

If you’d like to get your hands on the Stock Forecast Toolbox and see what it can do for you, you can access a free trial HERE.

And if you have any questions, never hesitate to reach out.

Keith Harwood

Keith@OptionHotline.com