Technical Analysis.

One of our mid-term options traders has made some anticipatory traces over the past couple of weeks, and since he has not close his position as of yet, there are no returns to tell you about.

This week our professional trader has made several trades in anticipation of the continuation of the current uptrend. To date there is too much supportive volume, and not enough resistive volume for the NASDAQ 100 and S&P 500 indexes to say that the market has changed from it's general uptrend. What we are experiencing right now is simply a mid-term correction which has been caused by a moderate amount of volume to the upside which occurred this week. We still expect the market to continue on an uptrend once more, but before it does it will probably retest it's local support level in order to generate more supportive volume. If the market does retest the local support level it would be an excellent point for our professional trader to purchase more options.

Our mid-term options trader based his purchasing decisions over the past couple of weeks simply on the fact that we believe the market is still in a general uptrend, and that it is only now in a mid-term correction. Due to this, it was a good time for him to buy calls at dips in the market where a moderate amount of supportive volume appeared.

Why didn't you buy any Puts?
Although there were some volume signals that pointed towards short-term downtrends, we found that it was better to keep current call positions open since there was not yet enough volume to move the market much lower at those points. Also, MarketVolume's Market Commentary signaled that the market would continue to decline.

Why buy expensive December Calls?
Even though December 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.

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

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