Technical Analysis.

Our mid-term trader has made some trades based on our advice and analysis, he was able to make two promising trades that could lead to a tidy profit.

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.

Over the past week we have been seeing an increasing amount of support in the market, which lead us to perform the following trades. One can see that as the market moved higher on Monday and Tuesday, most of the VMA spikes occurred during small downswings in the market, which is an excellent sign of support in the market. On Wednesday, the market was somewhat erratic in which it generated a significant amount of resistive volume to the upside early in the morning, but as the market declined it generated even more supportive volume to the downside, which moved the market higher throughout most of the afternoon. Despite the supportive volume seen on Wednesday, the market continued to move lower on Thursday, but as it moved lower it generated a significant amount of supportive volume to the downside once again. Thursday's volume combined with Wednesday's volume helped move the market higher on Friday and we think that it could move higher next week as we don't think the market has finished reacting to last week's supportive volume.

This chart will be an excellent example of MarketVolume's analytical abilities, as you will see in the future when the market moves higher.

Motivations behind Trades: As the market moved higher on Monday and Tuesday, we saw supportive volume generated during each small dip, which is a good sign that the market can continue to move higher. The fact that a large amount of supportive volume was generated during the dip on Wednesday was an excellent indicator for opening a new long-position; therefore, we opened a new QQQQ call position by buying 50 September call contracts with a strike price of $32. As we expected, the market did move higher immediately after the supportive VMA spike on Wednesday, but on Thursday the market moved quite a bit lower. As the market moved lower on Thursday, it generated a substantial amount of supportive volume to the downside. The large supportive VMA spike on Thursday was an excellent point to enter into another QQQQ call position, but this time we bought 100 shares as to average down the price of the contracts we had already purchased. In effect, because we purchased 100 QQQQ call contracts at a lower price, the average price for all of our contracts now becomes $1.55. That means that we don't have to wait for the NASDAQ 100 index to move all the way back up to 1,290 in order to make a profit, but instead we have already began to see profits on our trades after the NASDAQ 100 rose above 1,275.

Why did you trade QQQQ options?
Generally we trade options, and in this case QQQQ (NASDAQ 100 index shares) options because they offer a high return, but are less risky than futures for the NASDAQ 100 index. One can trade NASDAQ 100 index futures, QQQQ stocks, QQQQ options (as we did), or even NASDAQ 100 options on futures. There is a wide array of trading vehicles that are tied to the NASDAQ 100 index, and it's mostly up to the individual trader as to which is preferred to trade.

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.

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.

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: Our mid-term trader, based on our Market Commentaries and Volume Signals, thinks the market will probably continue to move higher in the mid-term so that the Dow Jones and S&P 500 indexes can retest their recent highs. This means that in all likelihood, the NASDAQ 100 will also continue to move higher as it is rare to see much divergence in the market.

The same principles mentioned above work 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.

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