Technical Analysis. Nasdaq 100, |
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Highlight Investments Group |
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August 31st, 2004
This “best Short-term trade”
is a continuation of the
previous best
trade,
where we left a QQQQ Put position open.
| Security | Return |
| Put #2 (QQQQ October - QAVVH) | -17.86% |
| Put #3 (QQQQ October - QAVVH) | +35.29% |
|
Total Profit: |
+$1,725 |
|
NASDAQ 100
Indicator NYSE:
Advance/Decline Volume Ratio |
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':
| Trade | Volume Motivation |
| Buy
Put#2 08/19/2004 Was left opened in previous "Best Trade" |
The market moved higher throughout the end of the day by producing some resistive volume to the upside. The majority of today's volume activity turned out to be supportive volume to the downside, but this supportive volume may not entirely compensate for the resistive volume seen during yesterday's rally. As a result, there still remains a chance that the market will move lower. |
| Buy
Put#3 08/25/2004 |
As the market moved higher it produced more resistive volume to the upside, which caused the market to slow its advance after 11:00. However, by 12:00 the market began to shoot higher as the price of oil began to move swiftly lower. During the market's rally it also produced a great deal of resistive volume to the upside, which came to an initial peak at approximately 12:30. A second resistive VMA spike to the upside at 13:15 caused the market to temporarily halt its advance and move slightly lower. This move, however, was relatively short-lived as the market continued its rally shortly before 14:00: As the market continued to move higher it also produced more resistive volume to the upside, which came to a peak at approximately 14:30. |
| Sell
Put#2,3 08/31/2004 |
As the market moved lower it began to generate more supportive volume to the downside. The first of these supportive VMA spikes to the downside came shortly after 10:15, but this supportive volume only had a very short-lived impact on the market as the market continued its decline shortly thereafter. By 11:15 the market produced a second, but larger, supportive VMA spike to the downside, which when combined with the supportive volume seen over the past couple of days, enabled the market to halt its decline and move sideways for the remainder of the morning and early afternoon. The market progressed in this fashion until approximately 13:00 where a moderate supportive VMA spike to the downside catalyzed the market into moving higher throughout the remainder of the afternoon. |
These are the trades which netted the returns shown above:
|
Date |
Trade | Strike | Expiration | Contracts |
Contract Price |
Amount | Profit |
| 08/19/2004 | Buy Put #2 | $34 | October - QAVVH | 50 | $1.4 | -$7000 | |
| 08/31/2004 | Sell Put #2 | $34 | October - QAVVH | 50 | $1.15 | +$5750 |
-$1,250 (17.8%) |
| 08/25/2004 | Buy Put #3 | $34 | October - QAVVH | 120 | $0.85 | -$10200 | |
| 08/31/2004 | Sell Put #3 | $34 | October - QAVVH | 120 | $1.15 | +$13800 |
+$3,600 (35.3%) |
|
Total: |
$2,350 (9.9%) |
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Disclaimer: We discuss our “best trades” here mainly for educational purposes. 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.
To see any of our past best trades, simply select from the list below.
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