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. MarketVolume's market commentary did a fairly good job predicting the short-term correction that has recently occurred and has also done an excellent job predicting the short-term movements of the market. Last Thursday we saw a large resistive VMA spike to the upside, which caused the market to move lower on Friday, but supportive volume on Friday morning helped move the market higher. Because there was a general lack of any real resistive VMA spikes until Tuesday, the market continued in a short-term uptrend.

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

Motivations behind Trades: Based on MarketVolume's Market Commentary and JavaVolume charts, our trader was able to produce some excellent trades throughout the week. The first trade, the purchase of QQQQ put options, we motivated by a large resistive VMA spike to the upside. Although the market didn't immediately react to this volume, it was too large to ignore. The market moved lower in reaction to Thursday's resistive VMA spike to the upside, but as it moved lower it generated more supportive volume. Because of the supportive volume generated on Friday, our trader decided to close out his QQQQ put options and buy some QQQQ call options in order to take advantage of any short-term run up in the market. Since there was very little resistive volume since Friday, our trader didn't close his QQQQ call options until today, as today was the first time since last Thursday that we have seen any appreciable resistive VMA spikes to the upside.

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.

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.

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.

Conclusion: Our short-term options trader was able to make MarketVolume's Market Commentaries and Volume Signals in order to make several successful options trades. The first trade was based on a very clear signal that was hard to ignore, but the second trade took some courage and confidence, as our trader closed his QQQQ put options and immediately entered into a new long position with QQQQ call options. Overall, MarketVolume's volume signals worked out very well for this week of trading.

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.