Best Trade Newsletters
"Best
Trade" Newsletter (April 26, 2006)
In the following example, we have based our
QQQQ options trades on S&P 500 index volume indicators and on advance /
decline indicators. Using the principles outlined below, you may wish to trade
options on the SPDRs (SPY), ^SPX, DIAMONDS Trust, Series 1 (DIA), as well as on
other underlies that generally tend to move in concert with the S&P 500 index.
It is also conceivable that an analysis similar to the one shown below could be
used to trade options based on the NASDAQ 100,
Russell 2000, and other indexes.
For this "Best trade", A trade (Buy
Calls) is opened
in order to close it later with profit if the
index moves in our favor.
Below you will find a Table of Trade Motivations and a chart showing the trades,
including detailed trade calculations.
|
Chart 1: |
NASDAQ 100 Volume
Surges - April, 2006. |
 |
Chart 2: |
NASDAQ 100 Advance/Decline Volume Ratio - April, 2006. |
 |
In Table 1 - a 'Table of Trade Motivators'
- we show the motivating factors that led us to take the above trades.
Table 1: Table of Trade Motivators
|
Date |
Trading
Decision |
Motivation |
|
04/21/2006 |
|
On April 21, 2006 we noted a high-magnitude buying volume
surge to the index downside. The (1/10) PVO was 26.2%, which
indicates that the volume seen on this day exceeded the average volume
over the previous 10 trading days by 26.7%. The bulk of this volume surge
occurred between 13:50 and 16:00 during a time when the index was in
decline (see 5-day index volume charts using a 15-minute VMA).
On the same day we noted low market sentiment readings. The
NASDAQ 100 advance/decline (A/D) issues and A/D volume ratios reached strongly
bearish levels of 0.15 and 0.19 around 15:10, respectively. |
| 04/24/2006 |
|
On April 24, 2006 the
NASDAQ 100 advance/decline (A/D) issues and A/D volume ratios reached strongly
bearish levels of 0.19 and 0.12 around 9:55, respectively. This revealed an
extremely bearish market sentiment, indicating the market was oversold and thus
prone to trend reversals. |
| 04/25/2006 |
|
On April 25, 2006 we noted a high-magnitude buying volume
surge to the index downside. The (1/10) PVO was 16.7%, which
indicates that the volume seen on this day exceeded the average volume
over the previous 10 trading days by 16.7%. |
| 04/26/2006 |
Buy Calls |
On April 26, 2006 with delay we decided to buy July expiration
calls. |
Below we list in detail the actual trades made,
along with the netted returns achieved.
Table 2: Details of the trades
|
Date |
Trade |
Strike |
Expiration |
Contracts |
Contract
Price |
|
04/26/2006 |
Buy QQQGP Calls |
$42 |
7/21/2006 |
80 |
$1.40 |
Fast Answers:
If one of your trades has not yet been terminated (by
the time you report it as a "Best Trade), should I try to follow it?
We do not wish to suggest that you should mimic
these actual trades, even if they are still open. Only follow an open trade
if you are aware of the risks involved and if you have access to
real-time intraday volume and advance/decline charts (you can get these
from www.MarketVolume.com).
For logistical reasons, we cannot always send our newsletters out exactly at
the moment we open or close a specific trade. Even if we could, it might be
too late, since the market can react strongly to intraday volume surges or
negative/positive sentiment readings in our A/D indicators.
©HGH Associated Traders
Important:
The analysis results presented in the "Best Trade" may differ from
the outlook presented in the daily Market Commentaries. Results may also differ
from the trading signals generated for Exchange Traded Funds (ETFs), or from any
other research and analysis efforts shared with our members. These are products
developed by independent research teams, delivered to MarketVolume® members.
While sharing some research results, these autonomous research teams may use
different systems and may have dissimilar market outlooks.
| Disclaimer: This newsletter is intended
for educational purposes only – it does not constitute trading advice,
nor does it make or imply any market trend predictions. This newsletter illustrates
examples based
principally on MarketVolume® index volume indicators and advance/decline (AD)
indicators. 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
analytics to develop your own trading style. |
|
2006 (first part) |
|
Date |
Indicator |
|
June 28, 2006 |
QQQQ Options |
|
June 15, 2006 |
QQQQ Options Trading |
|
June 15, 2006 |
Options Trading |
|
May 17, 2006 |
Trading QQQQ Options |
|
May 12, 2006 |
Trading Options |
|
May 11, 2006 |
QQQQ |
|
May 8, 2006 |
QQQQ Trading |
|
April 27, 2006 |
Trading QQQQ |
|
April 26 2006 |
QQQQ Options |
|
April 18, 2006 |
Trading QQQQ Options |
|
April 17 2006 |
QQQQ Trading |
|
March 29, 2006 |
QQQQ Options |
|
March 28 2006 |
Options Trading |
|
March 14, 2006 |
QQQQ |
|
March 10 2006 |
QQQQ Options Trading |
|
March 8, 2006 |
Trading QQQQ Options |
|
March 3, 2006 |
QQQQ Options |
|
February 28, 2006 |
QQQQ Trading |
|
February 8, 2006 |
Options Trading |
|
February 2, 2006 |
QQQQ Options |
|
January 31, 2006 |
QQQQ |
|
January 29, 2006 |
QQQQ Options |
|
January 20, 2006 |
QQQQ Options Trading |
|
January 13, 2006 |
QQQQ Options |
|
|