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Best Trade Newsletters
"Best
Trade" Newsletter (June 15, 2006)
For this "Best trade",
E trades (Buy
Calls) is opened
in order to close it later with profit if the
index moves in our favor.
This "best trade" is a continuation of previous "Best trade" newsletter
posted (sent to MV subscribers) on
May 11-17, 2006 where we left a QQQQ Call position open.
Below you will find a Table of Trade Motivations and a chart showing the trades,
including detailed trade calculations.
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Chart 1: |
NASDAQ 100 Volume
Surges - May/June, 2006. |
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Chart 2: |
NASDAQ 100 Advance/Decline Issues Ratio - May/June, 2006. |
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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 |
|
05/11/06 |
Buy Calls |
On May 11, 2006 we noted a high-magnitude buying volume
surge to the index downside. The (1/10) PVO was 9.4%, which
indicates that the volume seen on this day exceeded the average volume
over the previous 10 trading days by 9.4%.
On the same day the
NASDAQ 100 advance/decline (A/D) issues and A/D volume ratios reached extremely
bearish levels of 0.12 and 0.05, respectively. Last time the NASDAQ 100
index reached similarly critically low sentiment readings on January 20, 2006.
This revealed an extremely bearish market sentiment,
indicating the market could be oversold and thus
prone to trend reversals. |
|
05/12/06 |
Buy Calls |
On May 12, 2006 we read a high-magnitude buying volume
surge to the index downside. The (1/10) PVO was 9.3%, which
indicates that the volume seen on this day exceeded the average volume
over the previous 10 trading days by 9.3%.
On the same day the
NASDAQ 100 advance/decline (A/D) issues and A/D volume ratios reached strongly
bearish levels of 0.18 and 0.20, respectively.
|
|
05/17/06 |
Buy Calls |
On May 17, 2006, high-magnitude buying surges
were noted in all market sectors. The NASDAQ 100 (1/10) PVO was 17.6%,
indicating that the volume seen on this day exceeded the average volume over the
previous 10 trading days by 17.6%. The (1/10) PVO for S&P 500 was 19.1%, for the
Dow Jones Industrial it was - 26.5%, for the Dow Jones Transport - 24.2%, for
the NYSE - 18%, and for the AMEX - 39.6%.
On the same day, the NASDAQ 100 Advance/Decline
(A/D) issues and A/D volume ratios reached extremely bearish levels of 0.10
and 0.08, respectively. A similar situation was also found in other market
sectors. By the end of the session, the Advance/Decline issues ratio for the
S&P
500 was 0.09, for the Dow Jones Industrial - 0.03, for the Dow Jones Transport -
0.06, for the NYSE - 0.21, and for the AMEX - 0.21%.
Similarly negative sentiment readings
accompanied by large volume surges were last seen in April 2005.
During an index move down, the appearance of
significant volume surges means that a large number of shares are being
transferred from one group of market participants to another; it is at this
point that the market may become "oversold".
Low Advance/Decline issues and volume ratios
reveal an extremely bearish market sentiment, indicating a market that is
heavily oversold.
The fact that we noted large volume surges
as the indexes declined and that this move was accompanied by extremely low
sentiment readings (based on Advance / Decline indicators) leads us to believe
strongly in a coming price reversal (to the upside). |
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05/30/06 |
|
The NASDAQ 100
Advance/Decline
(A/D) issues and A/D volume ratios reached extremely bearish levels of 0.10
and 0.16, respectively. A similar situation was also found in other market
sectors. |
|
06/05/06 |
|
The NASDAQ 100 Advance/Decline
(A/D) issues and A/D volume ratios reached extremely bearish levels of 0.05
and 0.05, respectively. A similar situation was also found in other market
sectors. |
|
06/08/06 |
|
High-magnitude buying surges
were noted in all market sectors. The NASDAQ 100 (1/10) PVO was 40.6%,
indicating that the volume seen on this day exceeded the average volume over the
previous 10 trading days by 40.6%. The (1/10) PVO for S&P 500 was 44%, for the
Dow Jones Industrial it was - 43.7%. |
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06/12/06 |
|
The NASDAQ 100 Advance/Decline
(A/D) issues and A/D volume ratios reached extremely bearish levels of 0.12
and 0.12, respectively. A similar situation was also found in other market
sectors. |
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06/13/06 |
|
High-magnitude buying surges
were noted in all market sectors. The NASDAQ 100 (1/10) PVO was 23.7%. The (1/10) PVO for S&P 500 was
20.9%, for the
Dow Jones Industrial it was - 29.9%. |
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6/15/2006 |
Sell Calls |
Since we have stayed in the position for a month and only a month
remains until expiration, we have sold these calls. However, since our
indicators remains strong with respect to the resumption of the mid-term uptrend
we have purchased calls with expiration in September. |
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6/15/2006 |
Buy 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 |
|
05/11/2006 |
Buy QQQG0 Calls |
$41 |
7/21/2006 |
100 |
$1.15 |
|
05/12/2006 |
Buy QQQG0 Calls |
$41 |
7/21/2006 |
130 |
$0.90 |
|
05/17/2006 |
Buy QQQG0 Calls |
$41 |
7/21/2006 |
200 |
$0.60 |
|
06/15/2006 |
Sell QQQG0 Calls |
$41 |
7/21/2006 |
430 |
$0.15 |
|
06/15/2006 |
Buy QQQIL Calls |
$38 |
Sep. 2006 |
100 |
$2.00 |
©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. |
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2006 (first part) |
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Date |
Indicator |
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June 28, 2006 |
QQQQ Options |
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June 15, 2006 |
QQQQ Options Trading |
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June 15, 2006 |
Options Trading |
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May 17, 2006 |
Trading QQQQ Options |
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May 12, 2006 |
Trading Options |
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May 11, 2006 |
QQQQ |
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May 8, 2006 |
QQQQ Trading |
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April 27, 2006 |
Trading QQQQ |
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April 26 2006 |
QQQQ Options |
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April 18, 2006 |
Trading QQQQ Options |
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April 17 2006 |
QQQQ Trading |
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March 29, 2006 |
QQQQ Options |
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March 28 2006 |
Options Trading |
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March 14, 2006 |
QQQQ |
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March 10 2006 |
QQQQ Options Trading |
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March 8, 2006 |
Trading QQQQ Options |
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March 3, 2006 |
QQQQ Options |
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February 28, 2006 |
QQQQ Trading |
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February 8, 2006 |
Options Trading |
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February 2, 2006 |
QQQQ Options |
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January 31, 2006 |
QQQQ |
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January 29, 2006 |
QQQQ Options |
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January 20, 2006 |
QQQQ Options Trading |
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January 13, 2006 |
QQQQ Options |
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