Technical Analysis. |
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Highlight Investments Group |
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March 14th, 2004
For this week’s “trade of the week”,
"Buy QQQQ Call #1, 2, 3" are opened
in order to close it later with profit if the index moves
in our favor.
Even though the trades shown above were not entirely without risk, they resulted in a profit of $0
Recommendation:
We do not recommend that you commit more than 30% of your options portfolio to a single trade. If the market doesn't move in your favor, but indicators remain strong, you may choose to invest another 30% of your options portfolio on a second signal, and perhaps even on a third signal. By proceeding in this way, each time you enter the market in a better position, and usually the profit from the last trade will more than compensate for the loss from your first trade.
Why were only call options were purchased?
In the following, we would like to show you the motivating factors that led us to take above trades. For this purpose, we have created what we call a 'Table of Trade Motivators':It's very risky to buy put options when general market trend is defined as an up-trend. This is because the market does not always react to supportive volume in a timely manner, or sometimes the reaction is not as large as expected. In the majority of the case, the market will react to supportive volume during an uptrend, but resistive volume will be somewhat diluted, unless it is a very large amount of resistive volume.
| Trade | Volume Motivation | Market Commentary on Members Home Page during the trade |
| Buy Call #1 03/05/2004 Was left opened last week |
With the decline came a large supportive VMA spike to the downside, which peaked at 11:15. This supportive VMA spike was larger than the previous resistive VMA spike. | Our mid- and long-term views remain unchanged, because we currently see no indication that the market will deviate from its bullish mid- and long-term uptrend. |
| Buy Call #2 03/08/2004 Left opened |
By 11:00 there was a moderate supportive VMA spike to the downside, but it was only enough to halt the market's decline until 12:00, at which point the market began its decline anew and with more veracity. At 12:45 the market ran into a slightly larger supportive VMA spike to the downside, but again this was only enough to cause a short reaction in the market. After 13:15 the market's decline quickened, but at 14:15 it hit upon a very large supportive VMA spike to the downside. | Despite the large supportive VMA spike, the market didn't have an immediate reaction, as it is delaying its reaction like we have seen in the past. As a result, we feel that today's supportive volume will likely lend more valuable support to the mid-term and long-term bullish up-trend. In the short-term we fell that the market still has a chance to move slightly lower before continuing to move higher. Otherwise, our mid-term and long-term outlook remains decisively bullish as we see no need for the market to diverge from its current up-trend. |
| Buy Call #3 03/10/2004 Left opened |
At 11:45 the market encountered moderate supportive VMA spike to the downside, but this supportive VMA spike only enabled the market to halt its descent temporarily. By 13:00 the market began to move lower again, but this time the descent was more pronounced than earlier on in the day. During the market's decline it encountered a very large supportive VMA spike to the downside at 13:30. | Another very large supportive VMA spikes marked today’s market activity, similar to the one we saw on Monday of this week. Despite the fact that we saw a good deal of supportive volume to the downside, we still feel that the market may continue to move lower in the short-term in order to generate even more supportive volume to the downside. Otherwise, our mid-term and long-term outlook remains bullish as we see no real reason for the market to diverge from its current mid-term and long-term uptrend, especially in light of recent large supportive VMA spikes. |
These are the trades which netted the returns shown above:
Date |
Trade | Strike | Expiration | Contracts |
Contract Price |
Amount | Profit |
| 03/05/2004 | Buy Call #3 | $36 | April | 100 | $1.5 | -$15000 | |
| 03/08/2004 | Buy Call #2 | $36 | April | 70 | $1 | -$7000 | |
| 03/10/2004 | Buy Call #3 | $36 | April | 100 | $0.8 | -$8000 | |
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Total: |
+$0 | ||||||
For this week’s “trade of the week”,
"Buy QQQQ Call #1" is opened
in order to close it later with profit if the index moves in our favor.
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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