Technical Analysis. |
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June 27, 2003
Our mid-term index options trader traded NASDAQ 100 options for this best trade of the week, but one could have traded NASDAQ 100 index shares using the same method. These trades were based strong volume signals and our 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 |
| Put #1 (NDX July) | +140% |
| Call #2 (NDX July) | Holding |
| Call #3 (NDX July) | Holding |
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Total Profit: |
+$47,400 |
Even though all the above trades were not entirely without risk, we came out on top with a profit of $47,400
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 did you leave one call option
open?
We have confidence that the market will
move higher from this point due to the supportive volume seen over the
past couple weeks. Also, since the market has not shown any significant
signals of reversing its
current trend, we think it's a good idea to continue on the premise that
the market will move higher still.
Should I Trade Options?
Only very experienced traders should trade
options because of the high risk involved. You can always trade index shares
instead of options and still make a decent profit, but returns will not be as large.
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.
Can I trade Rydex or ProFund index funds using your Market
Commentary and signals?
Yes, our system is meant for index traders, and there are many Mutual Fund
options to choose from when trading indexes. So yes, our
indicators are good for trading Mutual Funds, especially dynamic Rydex funds.
We would like to make clear to our members the motivations 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 |
| Buy NDX Put #1 | MarketVolume's Market Commentary mentioned that because of the pending triple-witching day, the market could move lower. That fact combined with the fact that there was a very large resistive VMA spike to the upside led to the decision of buying NASDAQ 100 puts. This trade was place with a high degree of confidence because of the resistive volume and MarketVolume's Market Commentary. | We believe that this resistive volume spike, which is not as large as the supportive VMA spike seen on June 6th, could cause the market to move lower through Friday, a triple-witching day. |
| Sell NDX Put #1 | There was a very large supportive VMA spike to the downside, which led to the decision that the market will most probably begin to move higher. Volume data combined with MarketVolume's statement that the market could indeed move higher led to the decision to close the current NASDAQ 100 put position. Despite the large amount of supportive volume, opening a call position at this point seemed too risky; therefore, only the current put position was closed. | Overall, today's volume split between resistive volume in the morning and supportive volume in the afternoon. Therefore, the market could move higher in the mid-term as the supportive volume over the past week seems to outweigh the resistive volume. |
| Buy NDX Call #2 | The NASDAQ 100 index moved quite a bit higher in the morning, but as the index began to decline in the afternoon there was a significantly large supportive VMA spike to the downside. MarketVolume's Market Commentary stated that the market could move lower, but it was implied that supportive volume could move the market higher in the mid-term. These fact led to the decision to open a NASDAQ 100 call position. | Overall, we believe that the market could move lower in the short-term in response to the resistive volume seen this afternoon. Also, keep in mind that if the market moves higher it is a sign that the resistive volume seen today was simply the market covering the supportive volume yesterday. |
| Buy NDX Call #3 | After opening the previous call position, the market did move quite a bit higher, but then the market gave back some of those gains in the afternoon today. As the NASDAQ 100 index moved lower there was, once again, a significant supportive VMA spike to the downside. MarketVolume's Market Commentary for the previous day also mentioned that it is likely for the market to continue to move higher in the mid-term. Since the NASDAQ 100 index moved lower and generated a large amount of supportive volume, it was an excellent point to increase the current NASDAQ 100 call position by buying more contracts. | We believe that the market could continue to move higher and retest its highs in the mid-term, but the resistive VMA spikes seen at the end of the day today may cause the market to move lower in the short-term. |
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 |
Put/ Call |
Ctrcts |
Contract Price |
Index Value |
Strike | VMA | Amount | Profit |
| 6/18/03 | B P1 | 30 | $11.25 | 1,253.24 | 1,200 | 1,672,800 | $33,750 | |
| 6/23/03 | S P1 | 30 | $27.05 | 1,196.00 | 1,200 | 1,211,500 | $81,150 | $47,400 |
| 6/25/03 | B C2 | 40 | $8.15 | 1,189.00 | 1,250 | 1,444,500 | $32,600 | |
| 6/27/03 | B C3 | 40 | $10.78 | 1,206.37 | 1,250 | 1,339,600 | $43,120 | |
|
Total: |
+$47,400 | |||||||
To see any of our past best trades, simply select from the list below.
|
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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