Technical Analysis.

Our short-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 mainly intended 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.

The past week has been an excellent week for any traders following our Market Commentary and our volume signals. Last Thursday we saw a large supportive VMA spike to the downside, which signaled the market will move higher in the short-term, but resistive volume countered this move on Friday. As the week progressed we didn't see much volume at all, but on Tuesday we saw another moderately large supportive VMA spike to the upside that caused the market to move higher until Wednesday when we saw a second resistive VMA spike to the upside, which in combination with Tuesday's resistive volume may cause the market to move lower in the short-term.

This chart will be an excellent example of how mid-term options traders can use MarketVolume's volume charts to make several successful trades during a single week.

Motivations behind Trades: The main motivation for the purchase of QQQQ call options last Thursday was because of the large supportive VMA spike to the downside, which MarketVolume's Market Commentary suggested would cause the market to move higher in the short-term. On Friday, the market moved higher in response to the previous day's supportive volume, but in doing so it generated a moderately large amount of resistive volume to the upside. Because of the resistive volume it was a safer move to close all open QQQQ call options instead of holding onto them for a longer period. During the end of last week and the beginning of this week there was relatively low amounts of volume, which make it difficult to confidently trade based on volume signals. On Tuesday we saw the first large supportive VMA spike to the downside, which was an excellent signal for the market to move higher in the short-term. As a result of the supportive volume more QQQQ call options were purchased. By Wednesday there was more resistive volume to the upside, which in combination with the resistive volume seen at the end of Friday could cause the market to move lower in the coming days. Because of these two resistive VMA spike the remaining QQQQ call options were closed.

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 NASDAQ 100 index options 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.

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 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.

Conclusion: Our mid-term options trader was able to make use of our Market Commentaries in combination with our Volume Signals in order to make several successful options trades. The first trade was rather cut and dry as there were two very clear volume signals to support entry and exit points. The second trade was not as clear-cut as our mid-term options trader decided to assign less weight to the first resistive VMA spike and did not close on that point, but the second resistive VMA spike was enough for him to close all his remaining call options. Overall, when one is trading options, it is best to choose the most liquid strike price so that any open positions can be quickly closed at a moment's notice.

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.