Technical Analysis. |
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February 12, 2003
Our long-term conservative index trader was able to make some promising trades with NASDAQ 100 index shares - QQQQ. With these trades, our professional based his decision on strong volume signals and our published Market Commentary.
NOTE: This chart of the week is meant mainly for educational purposes. 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.
| Security | Return |
| Short QQQQ 1 | +7.0% |
| Short QQQQ 2 | Holding |
| Short QQQQ 3 | Holding |
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Total Profit: |
+$4,070 |
Even though all the above trades were not entirely without risk, we came out on top with a profit of $4,070
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.
When should I pay attention to the Market Stage in your
Market Commentary?
If you are planning to do long-term or even some longer mid-term trading,
then we suggest that you follow the trend that is set in our Market Stage
section of the Market Commentary. The Market Status section is mostly meant for
mid- and short-term traders who have trades that last less than a week or two.
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.
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.
We would like to make clear to our members what the motivations were that led to the above trades. We have created what we call a 'Table of Motivation', in which we try to make clear the purpose behind each of the above trades.
| Trade | Motivation | MV's Commentary on Members Home Page during the trade |
| Sell QQQQ 1 | The very large resistive VMA spike to the upside, coupled with MarketVolume's Market Commentary, led to the decision that this would be a great point to sell QQQQ shares short. The main decision to sell short was MarketVolume's market stage where MarketVolume's analysts dictate that the market is in a long-term downtrend. |
Market Stage Excerpt: The market is in a downtrend, as confirmed by MarketVolume, and this fact is exemplified by the resistive volume spikes to the upside of the NASDAQ 100 and S&P 500 indexes on January 7th and 10th. Our analysts still believe that there is room for the market to continue its downtrend. |
| Sell QQQQ 2,3 | Because the market continued to move up on ever accumulating amounts of resistive volume, decided that it would be a good point to increase the open QQQQ short position for the long term as the market HAS to react to the resistive volume soon. |
Market Status Excerpt: The market reacted to the supportive VMA spike in the morning and proceeded to move higher throughout the morning and early afternoon. In the mid-afternoon there was a moderate VMA spike to the upside that caused the market to move slightly lower by market close. In our opinion the market is still in a downtrend... |
| Buy QQQQ 1 | A moderately large VMA spike to the downside lead to the conclusion that a mid-term correction could take place. Even though a mid-term correction should not substantially alter any long-term short position, decided that it would be a good idea to take some profit anyhow. |
Market Status Excerpt: Overall, the cumulative amounts of resistive volume for the past few days is much higher than the supportive volume, and because of that we believe the market will most likely continue on its downtrend. |
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:
| Date | Action | Shares | Price |
Index Value |
VMA | Amount | Profit |
| 1/7/03 | S 1 | 2,200 | $26.60 | 1,071.56 | 1,454,500 | $58,520 | |
| 1/13/03 | S 2 | 2,000 | $27.04 | 1,101.23 | 1,262,600 | $54,080 | |
| 1/13/03 | S 3 | 2,000 | $27.04 | 1,101.23 | 1,262,600 | $54,080 | |
| 1/24/03 | B 1 | 2,200 | $24.75 | 996.33 | 1,264,500 | $54,450 | $4,070 |
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Total: |
$4,070 | ||||||
To see any of our past best trades, simply select from the list below.
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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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