Technical Analysis.

Our short-term options trader has made some profitable trades recently. Based on our advice and analysis he was able to make a $11,157 return, and he has not yet closed 2/3 of his position.

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.

MarketVolume, in early December, predicted that the market is now in a downtrend and has been fairly accurate in this prediction. The end of the year holiday season has traditionally been a low volume period for the market as traders step out of the office to go on holiday. Even through this low volume period there have been some very definitive volume signals for short and mid-term traders, although most were signals for short traders. Sometimes generally low volume can be an asset for volume analysts, as it allows us to see local support and resistance levels even more clearly. In any case, the volume signals for the past week worked out very well for our short-term options trader, as he was able to enter the market on three separate occasions. The three entry points were all covered by clear VMA spikes to the upside that signaled the indexes eventual downturn, and in the end the index did move down substantially.

Motivations behind Trades: The first three trades were motivated by MarketVolume's Market Stage (see our Market Commentary), that predicts the market will continue in a downtrend, and the three very clear VMA spikes that appeared as the NASDAQ 100 index was moving up. These resistive VMA spikes indicated that the market will move lower, which it eventually did after a large VMA spike on December 24th. As the index was declining, there were moderately sized volume spikes to the upside that our professional trader felt he should act upon, and therefore sold 2/3 of his position. Our short-term trader didn't want to sell all his positions on these volume signals as he still believes that the market will move lower still.

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.

Conclusion: Despite the supportive volume seen on December 30th, MarketVolume and its professional options trader believe that the market has room to move lower still. If the market does move higher in the short-term, it will only serve as a good point to enter into another put option position.

The same principles mentioned above works for trading S&P 500, S&P 100, Dow Jones, and other indexes.

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

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