Technical Analysis. |
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Highlight Investments Group |
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May 30th, 2004
NOTE: We discuss our “best trades of the week” here mainly for educational purposes. The trading examples we illustrate are based principally on our volume indicators and market commentaries. Our main intent is to show you how you can apply our volume indicators and to explain the specific correlations that exist between volume spikes and the movement of the indexes. We do not mean to imply that you should follow our exact trades, but rather wish to suggest that you may make use of our volume analytics to develop your own trading style. We also urge you to paper trade before committing your money to the markets.
| Security | Return |
| Call #1 (QQQQ May) | +38.24% |
| Call #2 (QQQQ June) | +35.71% |
| Call #2 (QQQQ July) | +16.13% |
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Total Profit: |
+$15,250 |
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Nasdaq 100 Indicator |
Even though the trades shown above were not entirely without risk, they resulted in a profit of $15,250
In last week’s “Best Trade of the Week”, you left a trade open. Why was
this not the case this week?
This week, we did not receive a strong volume signal that would have prompted us
to leave a trade open. We would like to remind you that options trading is very
risky. We believe it's often better to make fewer trades; also, we initiate
trades only in the presence of strong, unambiguous signals.
| Trade | Volume Motivation |
| Buy Call #1 03/11/2004 |
By 14:00 the market generated moderate supportive VMA spikes to the downside. Throughout the rest of the day the market continued to decline, spurring a moderate end-of-day supportive VMA spike to the downside, but despite this supportive volume the market closed at its lows of the day. |
| Sell Call #1 04/02/2004 |
The market moved higher throughout the morning and into the early afternoon, when two large resistive VMA spikes to the upside appeared, one at 11:45, the other at 12:30. Although these resistive VMA spikes slowed the market’s ascent, they did not bring it to a stop. By 14:00, the market had generated a further resistive VMA spike to the upside. Although it was not nearly as large as the previous spikes, this third resistive VMA spike brought about a short-lived down move. |
| Buy Call #2 04/16/2004 |
After a slight move down, the market almost immediately generated supportive volume to the downside. A moderately supportive VMA spike to the downside at 13:45 helped slow the market’s decline. Whereas the S&P 500 traded more or less sideways after this supportive volume, the NASDAQ 100 maintained a slight downward bias for the remainder of the afternoon. Shortly before the close, both indexes generated a further, albeit modest supportive VMA spike to the downside. |
| Sell Call #2 04/23/2004 |
Trading began with a gap up this morning, followed by a large resistive VMA spike to the upside that peaked at 10:15. By 13:30, the market encountered a further moderately resistive VMA spike to the upside, yet it did little to halt the advance, only slowing its pace for the remainder of the afternoon. The market closed the week on a high note. |
| Buy Call #3 04/30/2004 |
The market opened slightly higher but began to move lower after 9:45. By 10:30, a moderate amount of supportive volume to the downside was generated. The large and broad supportive VMA spike that peaked around 13:00. During the late afternoon descent, an additional another supportive VMA spike to the downside was generated. It peaked toward the close, where the market ended the day at its lows |
| Sell Call #3 05/26/2004 |
As the market moved higher, it generated a small amount of resistive volume to the upside at 11:00, and more at 12:00, but this resistive volume had a relatively small impact on the market as it continued to move higher shortly thereafter. At approximately 12:45, the market generated another resistive VMA spike to the upside. The market moved higher through to 13:45 where it encountered a moderately large resistive VMA spike to the upside. During the market's ascent, it continued to generate more resistive volume to the upside, coming to a peak at 14:30. |
These are the trades which netted the returns shown above:
Date |
Trade | Strike | Expiration | Contracts |
Contract Price |
Amount | Profit |
| 03/11/2004 | Buy Call #1 | $35 | May | 100 | $1.7 | -$17000 | |
| 04/02/2004 | Sell Call #1 | $35 | May | 100 | $2.35 | +$23500 | +$6,500 |
| 04/16/2004 | Buy Call #2 | $36 | June | 120 | $1.4 | -$16800 | |
| 04/23/2004 | Sell Call #2 | $36 | June | 120 | $1.9 | +$22800 | +$6,000 |
| 04/30/2004 | Buy Call #2 | $35 | July | 110 | $1.55 | -$17050 | |
| 05/26/2004 | Sell Call #2 | $35 | July | 110 | $1.8 | +$19800 | +$2,750 |
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Total: |
+$15,250 (+30%) |
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To see any of our past best trades, simply select from the list below.
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