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Chart School |
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Best Trade Newsletters
"Best
Trade" Newsletter (January 25, 2008)
+$1,720 in 1 weeks
This "best trade" is a continuation of previous "Best trade" newsletter
posted (sent to MV subscribers) on
January 23, 2008.
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.
Below you will find a Table of Trade Motivations and a chart showing the trades,
including detailed trade calculations.
|
Chart 1: |
NASDAQ 100 60-day Chart
|
 |
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 |
January 2-11,
2008 |
|
High-magnitude Buying
volume surges were noted in all market sectors. On some days the volume on the NASDAQ
100 exceeded the average daily volume over the last 10 sessions by more then 50%.
On January 3, 2008 the NASDAQ 100 Advance/decline volume and issues ratios hit
critically low levels. We saw following readings: 0.06 A/D issues ratio and
0.02 A/D volume
ratio.
On January 4, 2008 the S&P 500
Advance/decline volume and issues ratios hit
critically low levels. We saw following readings: 0.06 A/D issues ratio and
0.04 A/D volume
ratio for the S&P 500 and 0.06 A/D issues ratio and
0.01 A/D volume
ratio for the DJI. |
January 16,
2008 |
Buy Calls |
Although the indexes declined less then yesterday (specifically -1.15% today
versus -2.82% yesterday on the NASDAQ 100), today's decline was coupled with
large volume surges. Today's volume output exceeded the average volume generated
over the past nine sessions by 51% on the NASDAQ 100, by 22% on the S&P 500, and
by 49% on the DJI. From a historical perspective the volume output on the
NASDAQ
100 and DJI were the largest in their respective history. The only higher output
then today's S&P 500 volume was noted in the S&P 500 on August 16, 2007.
SBV oscillator started to advance based on the 60-day SBV(20) chart. This
reveals that there is a chance of a short-term move up. |
January 23,
2008 |
Buy Calls |
The advancing SBV oscillator would favor the possibility of the
recovery.
Today's strong buying volume surge centered at 13:00 EST may signal the start of
a mid-term up-trend.
By 15:00 EST we saw that during the today's recovery there were large selling
volume surges on the intraday charts, however they were ignored and the indexes
continued to rally higher. One of the characteristics of an up-trend is that the
market moves up while ignoring big selling volume.
We have the large amount of buying volume accumulation since January 4, 2008 and
we expect further recovery.
Shortly after 15:00 EST we decided to buy calls. |
January 25,
2008 |
Sell Calls |
SBV oscillator advanced below plus 20% based on the 60-day
S&P 500 and DJI SBV(20) chart and it dropped to plus 20 based on the 60-day
NASDAQ 100 SBV(20) chart. This
reveals that there is a chance of a short-term move down.
We may see similar situation on the 15-day NASDAQ 100 SBV(16) chart where the
SBV dropped below plus 20% line.
Even we assume that the odds are on the side of the mid-term up-trend, by
considering a possibility of the short-term move down we decided to sell previously
bought 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 |
Amount |
|
1/16/2008 |
Buy QQQCU Calls |
$47 |
March, 2008 |
60 |
$1.87 |
-$11,220 |
|
1/23/2008 |
Buy QQQCS Calls |
$45 |
March, 2008 |
100 |
$1.30 |
-$13,000 |
|
1/25/2008 |
Sell QQQCU Calls |
$47 |
March, 2008 |
60 |
$1.04 |
+$6,240 |
|
1/25/2008 |
Sell QQQCS Calls |
$45 |
March, 2008 |
100 |
$1.97 |
+$19,700 |
|
Profit:
|
+$1,720
(+7%) |
In this example, we have based our QQQQ options trade
on the NASDAQ 100 volume indicators. Using the principles outlined above, you may
wish to trade options on the QQQQ, ^SPX, DIAMONDS (DIA). 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.
©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. |
|
2008 |
|
Date |
Indicator |
|
July 31, 2008 |
QQQQ
Options |
|
July 29, 2008 |
QQQQ
Options |
|
July 8, 2008 |
QQQQ
Options |
|
March 19, 2008 |
SPY Options |
|
March 17, 2008 |
SPY Options |
|
February 26, 2008 |
QQQQ
Options |
|
February 22, 2008 |
QQQQ
Options |
|
January 25, 2008 |
QQQQ
Options |
|
January 23, 2008 |
QQQQ
Options |
|
January 16, 2008 |
QQQQ
Options |
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