Technical Analysis.

Our mid-term trader has made some profitable trades recently. Based on our advice and analysis he was able to make a 9.7% return, and he has not yet closed 2/3 of his position.

If one had even traded February options, they could have made more than 40% on each trade, but we don't generally recommend options trading for our new members.

NOTE: This chart of the week is meant mainly for educational purposes only. We don't recommend that our customers follow these exact trades. We suggest that you develop your own trading style and try doing some paper trading before using our volume analytics.

The trades shown in our chart of the week do not always mirror our QQQQ trades or our Market Commentary. It is only an example of how, using our volume indicators, one trader was able to make a profit on the market.

Over the past few weeks we have seen a change in the general trend of the market. This first began around November 21 where the market  began showing signs of entering a resistance corridor with the large resistive VMA spike as the market moved up. Coupled with the second large VMA spike to the upside on December 2 we believe that the market has entered a resistance corridor. The volume that we have been seeing over the past week only serves to confirm that the market is now in a resistance corridor. During a resistance corridor the market can retest it's resistance level many times and this causes a larger amount of market volatility as the indexes swing up and down. When the market is in a resistance corridor it becomes more difficult to find clear volume signals and we generally only recommend that experienced traders take advantage of this type of volatility.

Motivations behind Trades: Our professional trader was able to make some excellent trades based on MarketVolume's Market Commentary and some very clear VMA spikes. On November 21 there was a very large VMA spike to the upside which signaled that the market should react and move lower, but instead of a quick reaction the market had a delayed reaction to the resistive volume of November 21. Our professional trader held on to that position as there were not any clear volume signals that would suggest closing the position. On December 2 there was another very large VMA spike to the upside which prompted our professional trader to add more to his short position as this volume signal served to confirm that the market is indeed seeing a lot of resistance and should move lower, which it did. The main reason for selling 1/3 of his position on December 9 was due to MarketVolume's Market Commentary and, to a lesser degree, the moderate, but clear, VMA spike to the downside of the index on that day. He knew that the volume generated on December 9 was not enough to cause the market to move substantially higher, but it could cause a short-term retracement if anything.

Should I try to paper trade before trading options?
Yes! We suggest that anyone who is new to our signals and analysis try doing some paper trading to start, at least until they are comfortable with interpreting our signals.

How can this chart be used by me?
Our main reason for publishing these charts is to allow our members to learn by another trader's example  how they can make trades based on our volume signals and Market Commentary. Members can gain a better understanding of how to enter and exit the market, based on when a signal is generated. To learn from these charts, you don't need to trade the specific security mentioned in this publication, but whatever security you feel comfortable with. The principles for trading QQQQ shares will not change when trading something like S&P 500 futures.

I trade the S&P 500 / SPDRs. How does this apply to me?
The S&P 500 and NASDAQ 100 indexes have generally the same behavior. If you overlaid a chart of each of them during a short period such as this one, their general dynamic would be the same. Because of this, you can trade S&P 500 index shares, and options.

Why trade only stocks (index shares) and not options?
Due to the current climate in the market, and the fact that this trader's goals were to make a decent return but still remain fairly safe in his trades, he decided only to trade stocks. Even if the market had not changed in his favor, he could have held onto these shares for months without having to worry about losing a lot of money as he could if trading options or futures. Simply put, he wanted to make secure trades.

Conclusion: Our mid-term trader, based on our Market Commentaries and Volume Signals, thinks the market will probably continue in a resistance corridor for the mid-term.

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