Technical Analysis. |
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Highlight Investments Group |
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September 25th, 2003
Our mid-term index options trader traded QQQQ options for this best trade of the week, but one could have traded NASDAQ 100 index shares or index options using the same method. These trades were based on volume indicators 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 |
| Call #1 (QQQQ November) | +24.1% |
| Call #2 (QQQQ November) | +33.3% |
| Put #3 (QQQQ November) | +23.8% |
| Put #4 (QQQQ November) | +36.8% |
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Total Profit: |
+$15,750 |
Even though all the above trades were not entirely without risk, we came out on top with a profit of $15,750
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 options will not change when trading something like NASDAQ 100 index
options, futures or QQQQ
shares.
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. 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.
I trade 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.
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 the motivations that led to the above trades as clear as possible; therefore, we have created what we call a 'Table of Motivation', in which we try to make the purpose behind each of the above trades as clear as possible.
| Trade | Motivation | MV's Commentary on Members Home Page during the trade |
| Buy Call #1 | MarketVolume's Market Commentary mentioned that the market could be due for a mid-term correction in order to generate more supportive volume to the downside. As the market moved lower today, it did generate a substantial supportive VMA spike to the downside, so we decided to buy some QQQQ calls to capitalize on the market moving higher. | The behavior that we've been seeing over the past couple days is indicative of the market being in the upper reaches of a resistance corridor. Overall, we believe that due to the resistive volume seen over the past several days, as the market was approaching new highs, that the market is due for a short-term correction. After a short-term correction, we expect to see more supportive volume that should lead the market to move higher in the mid-term. |
| Buy Call #2 | Despite the fact that the market moved higher after the last trade, we decided to hold on to the position for a longer period, but the market moved lower. As the market moved lower it generated more supportive volume, so we decided to average down the cost of our call position by purchasing more QQQQ call options. MarketVolume's Market Commentary also mentioned that the mid-term trend should still be up as the market has yet to compensate for the supportive volume on September 5th. | By the end of the day there was a small amount of supportive volume to the downside, but this was not enough to compensate for the resistive volume seen over the past few days. Overall, we believe that the resistive volume seen yesterday and today will cause the market to continue its short-term correction. Our mid-term prospectus remains up, as there has not been enough resistive volume to cover the supportive VMA spike on September 5th. |
| Sell Call #1 & 2 | MarketVolume's market commentary mentioned a chance that the market could begin to move lower in response to the resistive volume seen over the past several days, but if the market encountered more supportive volume during this move it would likely begin to move higher again. As a result of the market commentary and the fact that we saw a large resistive VMA spike to the upside, we decided to close all of our open QQQQ call options. | The resistive volume combined with the supportive volume caused the market to move sideways in a fairly tight trading range throughout the rest of the afternoon. Overall, we believe that most of today's supportive and resistive volume cancelled each other out, which means the market is likely to move lower in the short-term. We still expect to see more supportive volume to the downside, which should cause the market to move higher in the mid-term. |
| Buy Put #3 | As the market moved higher, it encountered even more resistive volume to the upside, which signals the market could begin to move lower again. MarketVolume's market commentary stated that the market could move lower in the short-term in order to generate more supportive volume to the downside. We decided to purchase QQQQ put options to take part in the market's move down and we would sell when we saw a significant supportive VMA spike to the downside. | As the market descended, it encountered a large supportive VMA spike to the downside, which stopped the decline, but didn't move the market much higher by closing. Overall, we believe that today's supportive volume will cause the market to move higher in the short and mid-term, but there is a chance that the market has not finished reacting to yesterday's resistive volume. If this is the case, the market could move slightly lower in the short-term in order to generate more supportive volume to the downside. |
| Buy Put #4 | In the morning there was a large resistive VMA spike to the upside, which signaled another good point to add more put options onto our current QQQQ position. | At 13:10 and 14:30, we saw two supportive VMA spikes to the downside, the former of which was mixed with resistive volume. These two supportive VMA spikes helped move the market even higher throughout the rest of the afternoon, but by the end of the day we saw more resistive volume to the upside. Overall, we believe that today's resistive volume could cause the market to move lower in the short-term, but we believe that the market will continue to generate more supportive volume and move higher in the mid-term. |
| Sell Put #3 & 4 | As the market moved lower today, it encountered a very large supportive VMA spike to the downside, which signaled that the market could begin to move higher shortly. As a result we exited our QQQQ put position in order to be safe. The Market Commentary mentioned that the market could continue to move lower in the short-term in order to generate a more substantial supportive VMA spike, which it did, so we sold. | Overall, we believe that today's large amount of supportive VMA spikes to the downside should cause the market to move higher in the short and mid-term. Keep in mind that there is still a chance for the market to move slightly lower, but if it does we expect to see even more supportive volume to the downside, which would only add to a future uptrend. |
The same principles mentioned above works for trading NASDAQ 100, S&P 100, Dow Jones, as well as 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 |
| 09/05/03 | B C1 | 100 | $1.45 | 1,362.81 | 34 | 1,208,200 | $14,500 | |
| 09/10/03 | B C2 | 100 | $1.35 | 1,347.85 | 34 | 1,195,400 | $13,500 | |
| 09/16/03 | S C1 | 100 | $1.80 | 1,378.61 | 34 | 1,371,400 | $18,000 | $3,500 |
| 09/16/03 | S C2 | 100 | $1.80 | 1,378.61 | 34 | 1,371,400 | $18,000 | $4,500 |
| 09/18/03 | B P3 | 100 | $1.05 | 1,392.33 | 33 | 1,318,700 | $10,500 | |
| 09/19/03 | B P4 | 150 | $0.95 | 1,392.98 | 33 | 1,537,800 | $14,250 | |
| 09/24/03 | S P3 | 100 | $1.30 | 1,351.30 | 33 | 1,609,500 | $13,000 | $2,500 |
| 09/24/03 | S P4 | 150 | $1.30 | 1,351.30 | 33 | 1,609,500 | $19,500 | $5,250 |
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Total: |
+$15,750 | |||||||
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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