Index Volume Analysis
Best Trade Newsletter: QQQ Options Trade - Sunday, December 7, 2003
Our short-term index options trader traded QQQ options for this best trade of the week, but one could have traded NASDAQ 100 index shares or options using the same method. These trades were based on strong volume indicators and Market Outlook.
This week's Best Trade of the week is a continuation on our previous "Best Trade" where we left a QQQ Call position open. This trade was closed with 38.46%of profit.
NOTE: This trade 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.
In this trade of the week the trade "Buy QQQ Call #1" is opened
in order to close it later with profit if the index moves in our favor.
| Security | Return |
| Call #2 (QQQ January) | +38.46% |
| Put #1 (QQQ January) | +35.29% |
Total Profit: | +$7,600 |
Even though all the above trades were not entirely without risk, we came out on top with a profit of $7,600
Notes:
- We define the Market Stage as the prevailing trend of the index. This trend can be defined as an Uptrend, Downtrend, Resistance Corridor, or a Support Corridor. Our members are notified through the Market Commentary in advance of a change in trend.
- Because moving averages are lagging indicators, meaning they appear on a chart somewhat later than the actual volume surges, it is sometimes difficult to differentiate a selling from a buying surge. When in doubt, use a one-day intraday period with a 15-minute VMA, and look at where the actual volume surges appear.
We would like to show the motivations that led to the above trades; therefore, we have created what we call a 'Table of Motivation':
| Trade | Motivation | MV's Commentary on Members Home Page during the trade |
| Buy Call #2 11/26/2003 Was left opened last week | As the market moved lower, it encountered a couple moderately large buying VMA surges to the downside at 11:00 and 11:45. | Based on Monday's selling volume to the upside, the market may move lower in the short-term. In the mid-term, however, we still see the market moving higher as we have not seen any significant selling VMA surges to the upside. |
| Sell Call #2 12/01/2003 | As the market opened, it encountered two selling VMA surges to the upside, which, at 10:15 | Based on the small selling volume today and Wednesday's selling volume, the market could move slightly lower in the short-term. |
| Buy Put #1 12/03/2003 | After about 10:15 the market began to move higher throughout the rest of the morning. During this move, the market generated two large selling VMA surges to the upside at 11:45 and 12:45. | There is a chance that in the short-term market could go lower. |
| Sell Put #1 12/04/2003 | As the market started a downward move from an early high at around 11 am, buying volume built in 3 stages, culminating in the large VMA surge seen around 2 pm. | We believe that the markets have room yet to move higher over the medium -term, although there may be some short-lived declines (due to the selling volume encountered during the market's afternoon rally). |
| Buy Call #1 12/05/2003 Left opened | Today's largest VMA surge occurred around 1:45 p.m. It was clearly buying to the downside. | We believe that the markets are in an accumulation phase, "collecting" more buying volume to prepare for a near-term up move. |
The same principles mentioned above also work for trading the NASDAQ 100, S&P 100, Dow Jones, as well as other indexes.
| 2003 | |
| Date | Indicator |
| December 21, 2003 | QQQ Options |
| December 14, 2003 | QQQ Options Trade |
| December 7, 2003 | QQQ Options |
| November 30, 2003 | QQQ |
| November 23, 2003 | QQQ Options |
| November 9, 2003 | QQQ Options Trading |
| October 31, 2003 | QQQ Options |
| October 24, 2003 | QQQ |
| October 17, 2003 | QQQ Options |
| October 10, 2003 | S&P 500 (SPX) |
| October 3, 2003 | QQQ Options |
| September 25, 2003 | QQQ |
| September 16, 2003 | QQQ Options |
| September 11, 2003 | S&P 500 (SPX) |
| September 5, 2003 | S&P 500 (SPX) |
| August 27, 2003 | QQQ Options |
| August 15, 2003 | QQQ Options Trading |
| August 4, 2003 | QQQ Options |
| July 28, 2003 | NASDAQ 100 |
| July 25, 2003 | S&P 500 (SPX) |
| July 12, 2003 | NASDAQ 100 |
| July 2, 2003 | NASDAQ 100 (NDX) |
| June 27, 2003 | NDX |
| March 28, 2003 | NASDAQ 100 (NDX) |
| March 11, 2003 | NASDAQ 100 |
| March 4, 2003 | NASDAQ 100 (NDX) |
| February 12, 2003 | NDX |
| February 4, 2003 | S&P 500 |
| January 29, 2003 | S&P 500 (SPX) |
| January 24, 2003 | S&P 500 |
| January 22, 2003 | NASDAQ 100 (NDX) |