Technical Analysis. Nasdaq 100,


Technical Analysis - NASDAQ 100 & S&P 500

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Best Short-Term Trade:
September 6, 2002

This week our professional trader was able to capitalize on our volume signals for the S&P 500 index.

Security Return
Call 1 (SPX Nov) Holding
Call 2 (SPX Nov) Holding
Call 3 (SPX Nov) +17.52%
Call 4 (SPX Nov) +17.52%

Total Profit:

+$8,320

Even though all the above trades were not entirely without risk, we came out on top with a profit of $8,320

Why SPX options?
Generally we trade options, and in this case SPX (S&P 500) options because they offer a high return, but are less risky than futures for the S&P 500 index. One can trade S&P 500 index futures, SPDRs stocks, SPX options (as we did), or even SPX futures options. There is a wide array of trading vehicles that are tied to the S&P 500 index, and it's mostly up to the individual trader as to which is preferred to trade.

Why buy expensive November Calls?
Even though November Call options are more expensive, they tend of to be less volatile in reaction to market swings, and they don't devalue as quickly as a current month option. By trading options that are at least one month ahead, we protect ourselves from unforeseen short-term fluctuations in the market. Also, if the uptrend continues on a long-term, one can hold these options for a longer period as they increase substantially in value.

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
Buy Call 1 Bought calls based on MarketVolume's Market Commentary which stated the market should soon resume an uptrend, and after a substantial decline with supportive volume, it was a good entry point. Today the S&P 500 and NASDAQ 100 continued their decline, and in doing so, generate more supportive volume to the downside which is beginning to cumulate. This cumulative volume will cause the market to move up shortly and continue it's uptrend.
Buy Call 2 Baed on the Market Commentary and the fact that there was a large amount of supportive volume after the indexes had a large correction was an excellent sign of a mid-term support level which indicates the uptrend should continue shortly after this point. Today the S&P 500 and NASDAQ 100 indexes declined substantially, but during this decline they generate a large amount of supportive volume to the downside which is a good sign that the uptrend will soon continue.
Buy Call 3
Buy Call 4
Sell Call 3 Sold 50% of all option positions in order to take some profit, and take advantage of a chance that the market might move lower before going up again. If the market does move lower it is an excellent point to buy more call contracts to lover the average price of purchase. Once again today we had supportive and resistive volume which roughly cancelled each other out. Due to this, the market could continue on a somewhat sideways trend until we see more supportive volume, but we still believe the market will continue its uptrend.
Sell Call 4

 

The same principles mentioned above works for trading NASDAQ 100, S&P 100, Dow Jones, and other indexes.

Here is a detailed list of our investor's trades, which netted the above returns:

Date Put/
Call
Ctrcts Contract
Price
Index
Value
Strike VMA Amount Profit
8/29/02 B C1 5 $52.90 904.33 910 2,272,700 $26,450
9/3/02 B C2 5 $51.76 887.84 890 2,663,600 $25,880  
9/3/02 B C3 5 $47.50 879.76 890 3,265,900 $23,750
9/3/02 B C4 5 $47.50 879.76 890 3,265,900 $23,750  
9/6/02 S C3 5 $55.82 899.00 890 2,361,000 $27,910 $4,160
9/6/02 S C4 5 $55.82 899.00 890 2,361,000 $27,910 $4,160

Total:

+$8,320

To see any of our past best trades, simply select from the list below.

Date Indicator
December 30, 2002 NASDAQ 100
December 19, 2002 S&P 500 (SPX)
December 10, 2002 NASDAQ 100
November 27, 2002 NASDAQ 100
November 20, 2002 NASDAQ 100 (NDX)
November 13, 2002 NASDAQ 100
November 6, 2002 S&P 500 (SPX)
November 1, 2002 NASDAQ 100
October 25, 2002 S&P 500 (SPX)
September 25, 2002 NASDAQ 100
September 18, 2002 S&P 500
September 6, 2002 S&P 500 (SPX)
August 21 2002 NASDAQ 100 (NDX)
August 14 2002 S&P 500 (SPX)
August 7, 2002 S&P 500 (SPX)
July 31, 2002 NASDAQ 100 (NDX)
July 24, 2002 NASDAQ 100 (NDX)
July 17, 2002 NASDAQ 100 (QQQQ)
July 10, 2002 S&P 500 (SPX)
June 26, 2002 NASDAQ 100 (QQQQ)
June 14, 2002 S&P 500
June 12, 2002 NASDAQ 100 (QQQQ)
June 5, 2002 S&P 500 (SPX)
May 31, 2002 S&P 500
May 29, 2002 NASDAQ 100 (QQQQ)
May 22, 2002 NASDAQ 100 (QQQQ)
May 17, 2002 S&P 500
May 15, 2002 NASDAQ 100 (QQQQ)
May 8, 2002 S&P 500 (SPX)
May 3, 2002 NASDAQ 100
May 1, 2002 NASDAQ 100 (QQQQ)
April 28, 2002 NASDAQ 100
April 22, 2002 NASDAQ 100
April 3, 2002 S&P 500
February 25, 2002 S&P 500
February 8, 2002 NASDAQ 100
January 30, 2002 NASDAQ 100
QQQQ Trading System
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As of 3/10/2010


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