Technical Analysis. |
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Highlight Investments Group |
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May 8th, 2002
Our analysis of volume over the past week has resulted in the following trades using SPX Options by our conservative long-term trader.
| Security | Return |
| Call 1 (SPX June) | -58% |
| Call 2 (SPX June) | +437% |
Even though not all the above trades were profitable, we still came out on top with a profit of 379%
Why deal in Options?
Options offer the potential of a high short-term
return. Compared to futures, options are less risky, and don't require as much
capital to trade. Those who trade options should reduce the risk by only trading
options that are at least two or three months away from expiration, or as
liquidity permits.
Why buy Call Options?
MarketVolume has recently seen volume signals that
indicate we are in a support corridor, and since we bought June QQQQ options, we
don't need to worry as much about short-term fluctuations as with futures, or a
May call option.
We would like to make it clear to our members what the motivation was to make the above trades; therefore, we have created what we call a 'Table of Motivation', in which we try to make it clear the motivation that was behind each of the above trades.
| Trade | Motivation | MV's Commentary on Members Home Page during the trade |
| B1 Call | Bought Call one based on the large increase in the VMA (Volume Moving Average) that occurred as the index was decreasing. | Based on the fact that the overall trend of the market has been down lately, coupled with unprecedented volume across most of the major US indexes, we believe that the market is in the lower levels of it's support corridor. |
| S1 Call | Unfortunately, the volume from which the purchase was based on was not enough to bring the market up. Was caught with a stop-loss on this call. | There is a bit of uncertainty as to the future short-term direction, as a lot of volume has been on the upside. |
| B2 Call | After the index finished declining, volume increased steadily to critical levels and remained there. Due to this, and the fact that the index was trading in a narrow range after a big decline, found that the best option would be to buy at this point. | Volume is still at critical levels, and the longer the market keeps this up, the bigger a direction change we will see. The NASDAQ 100 index has been giving us signals that it may continue going down until it's September 24th, support level. If this does happen, expect to see volume rise even further, and afterwards, expect a very dramatic reversal. |
| B3 Call | Volume once again increased as the index was moving down at the end of the day. Based on this fact, and the fact that volume was high all day, decided to buy another call option thinking that the market is going to go up on the very short-term. | |
| S2 Call | As the market increased quite dramatically, decided to close only one open position, as there is room for the market to move higher. | Based on the severity of today's move up, and the fact that volume for the past week has been at constant high levels, we are persuaded to say that the market has in fact hit it's support level, and is now in the process of reversing. This reversal point cannot yet be 100% confirmed. |
To see any of our past best trades, simply select from the list below.
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QQQQ Trading System QQQQ, SPY and DIA trading signals for conservative mid- and long-7 term traders ...
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