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Nasdaq Index AnalysisOn 2010-02-02, By MarketVolume.com TeamNasdaq Composite index comprises stocks (public companies) that are traded on the Nasdaq exchange. Nasdaq exchange is the biggest over-the-counter stock market exchange in the world. More than three thousands stocks are traded on this electronic stock exchange.
At the end of the twentieth century majority of the professional stock market analysts and big institutional investors were mainly focused on the analysis of the New York Stock Exchange (NYSE). At that time NYSE analysis was the main tool that allowed getting clear picture about stock market sentiment and the health of the United States economy. Now, the US stock market is split mainly between two biggest exchanges: NYSE exchange and Nasdaq Exchange. As a consequence, more and more professional stock market analysts are looking at the Nasdaq Composite index analysis as a necessary addition to the NYSE Composite index analysis in order to receive a complete picture of the US stock market. Each exchange is characterized by the corresponding composite index. And each index like a stock has trend that describes this index. Nasdaq Exchange is not an exception. Nasdaq Composite index price trend movements describe this exchange sentiment. However, there is a substantial difference in technical analysis applied to an exchange and to a stock. When it comes to the technical analysis of the exchanges, there are four main parameters that are analyzed. The same as with stock's technical analysis the first parameter that is analyzed is the price of the Nasdaq Composite index. The second parameter that is analyzed is volume. However, while stock volume represents the volume of a single stock, in case of the exchange, the volume covers summary volume of all companies listed in the index. Such Nasdaq Composite index volume is the sum of volume of all stocks traded on the Nasdaq Exchange for a given period of time. The third parameter is volatility. In similar ways to the stocks, the low volatility of the Nasdaq Composite index would indicate confidence and bullish sentiment of the traders on the stock market and high volatility of the Nasdaq Composite index would signal uncertainty and dominance of bearish sentiment on the Nasdaq stock market. The last forth parameter that is used in the Nasdaq Composite index analysis is the number of advance and declines stocks as well as volume associated with advancing and declining stocks (advance/decline volume). Advance/decline (also called Breadth) indicators cannot be applied to a single stock, yet they are very important when it comes to the analysis of the indexes and exchanges. Stocks or ETFsOn 2010-01-10, By MarketVolume.com TeamAll traders, when they first come to the market are facing a simple question what to trade and what trading vehicle to choose for investments. While there could be different ambitions and some investors are coming to the market for gambling with a purpose of becoming rich in short period of time I would like to focus on simple investors who have came to the market with confusion and would prefer some not extremely big but stable increase in investments.
Majority of people are coming to the stock market without knowing anything how the market works. All they usually know is that you may invest into stock. They start to look for good stocks and very soon they become frustrated - they start to understand that in order to select a few good stocks they are required to go through hundred of stocks, compare their performance, their reports, study fundamentals, etc. When I ask some of my friends-traders about ETFs (Exchange Traded Funds) I hear the standard answer that they became familiar with stocks and they prefer to trade stocks. My second question usually is about how he/she does analysis to see what to trade and where to trade (long or short). Now comes interesting part. I would spread their stock analysis in several steps. Step 1: Spend 1-2 month going through hundreds of stocks from different industries. As a rule, this stage of analysis includes going through earnings and other reports, comparing stock's performance, analyzing the market sector the stocks belongs to, etc. All this ends with selection of 2-10 stocks that a trader became familiar with and considers that they are good for investments. Step2: Subscribe to the reports, charts, quotes that cover selected stocks and could be used for further analysis on regular basis. Step 3: Start to trade by analyzing the selected stocks on the regular basis (doing fundamental and technical analysis). In addition a stock trader continues to analyze selected industry and the whole market - you need to know where the industry and market are going do not to lose the stocks. Doesn't it look complicated? Especially when it comes to the fundamental analysis of all the reports... People are learning in the universities how to correctly analyze and evaluate a public company. Do you think an "average Joe" has time and is able to learn all the aspects of the fundamentals and apply it on practice? I am sorry for being sarcastic, yet, I am a little bit skeptical about retail traders (including me) and their abilities to perform liable fundamental analysis of stock. Maybe you can skip fundamentals if you are day trader and trade stocks in short-term, however if you are investing your pension for longer-term you have to do fundamentals - otherwise it is not an investment but a gambling. So, what is the solution? For me, I trade Exchange Traded Funds. There are plenty of very active ETFs: QQQQ, SPY, DIA, XLF, IWM, etc. The biggest advantage of ETF is that I do not have to do fundamental analysis - no complicated and time consuming job - all fundamentals are done by professionals who manage indexes that are tracked by ETFs. All I do is the technical analysis of indexes I trade. Index analysis is a stock, industry and market analysis at the same time. For instance when I analyze S&P 500 index, the result of the analysis could be applied to trade SPY stock (S&P 500 index tracking stock). At the same time S&P 500 is considered as a barometer of the US stock market and S&P 500 index analysis reflects sentiment on US stock market. So, tell my why should I not to trade SPY, QQQQ and other ETFs and why should I go into complicated stock analysis. Russell 3000 TradingOn 2010-01-09, By MarketVolume.com TeamThe Russell 3000 Index measures the performance of the 3,000 largest companies, which represents approximately 92 percent of the total market capitalization. The Russell 3000 Index is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected.  When interpreting the chart above, you need to remember that the most important factor is the relationship between Index Price and the Volume Moving Average (VMA). This signal shows us that just before the index drops substantially, there was very large increase in the VMA. Since the index was in a slight upwards trend when the VMA surge occurred, that is a signal that professional investors are selling and that the index will soon drop substantially. It is at or before this peak in the VMA that we would make a trading decision. After the market has dropped substantially, we look for another peak in the VMA which signals a bottom in the market. In this example the VMA peak (and width) were very substantial, and therefore it signals that the market will reverse direction quite dramatically.
Details of the above trades, and the derivatives used for this index, can be found in the detailed overview and in the member's section of our site. Russell 2000 TradingOn 2010-01-09, By MarketVolume.com TeamThe Russell 2000 index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8 percent of the total market capitalization of the Russell 3000 Index.  When interpreting the chart above, you need to remember that the most important factor is the relationship between Index Price and the Volume Moving Average (VMA). In this example we see that the index is trading sideways for the first part of the day, and then VMA begins to increase quite rapidly. In this case, the index and the VMA are both increasing, this is because the professional traders are selling AND covering their shorts. Generally when an index and the VMA both increase, that signals that the index will begin to decrease after the VMA has peaked. In this example you can see that not long after the VMA peaked the index began to decline. It is just after the VMA begins to fall that you should make your trading decision.
Russell 1000 TradingOn 2010-01-08, By MarketVolume.com TeamThe Russell 1000 Index measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92 percent of the total market capitalization of the Russell 3000 Index.  When interpreting the chart above, you need to remember that the most important factor is the relationship between Index Price and the Volume Moving Average (VMA). In this example we see that the index is trading sideways for the first part of the day, and then VMA begins to increase quite rapidly. In this case, the index and the VMA are both increasing, this is because the professional traders are selling AND covering their shorts. Generally when an index and the VMA both increase, that signals that the index will begin to decrease after the VMA has peaked. In this example you can see that not long after the VMA peaked the index began to decline. It is just after the VMA begins to fall that you should make your trading decision.
S&P 600 TradingOn 2010-01-08, By MarketVolume.com TeamThe S&P Small Cap 600 Index consists of 600 domestic stocks chosen for market size, liquidity, (bid-asked spread, ownership, share turnover and number of no trade days) and industry group representation.  When interpreting the S&P 600 chart above, you need to remember that the most important factor is the relationship between Index Price and the Volume Moving Average (VMA). In this example, the index has been in a downward trend for 2 days. The downward trend continues until the VMA has reached a peak and this sharp increase in the VMA signals that a bottom has been reached for the day and that professional investors are buying. Once the VMA has peaked, that signals the safest point in which to make a trading decision, as it is here that the index has confirmed a new upwards trend.
Details of the above trades, and the derivatives used for this index, can be found in the detailed overview and in the member's section of our site. S&P 500 TradingOn 2010-01-07, By MarketVolume.com TeamThe S&P 500 Composite Stock Price Index is a market-value-weighted index (shares outstanding multiplied by stock price) of 500 stocks that are traded on the New York Stock Exchange (NYSE), American Stock Exchange (AMEX), and the NASDAQ National Market System (NASDAQ).  When interpreting the chart above, you need to remember that the most important factor is the relationship between Index Price and the Volume Moving Average (VMA). These two signals are excellent indicators to when to short the market. In the first example we see that the index has been trending up for a short period, and that the VMA during that period has been begun increasing. This increasing VMA signals that there is a some selling pressure and that the market will change direction. The peak of the VMA signals that the market will take this new direction. But what happened was that the index only declined a short bit before resuming an upward trend on no volume. When this occurs we expect that the index will decline again soon as it did not have buying volume on it's move upwards.
NYSE TradingOn 2010-01-07, By MarketVolume.com TeamThe New York Stock Exchange (NYSE), the largest equities marketplace in the world, is home to about 1 companies worth more than $17 trillion in global market capitalization.  When interpreting the chart above, you need to remember that the most important factor is the relationship between Index Price and the Volume Moving Average (VMA). These two signals are excellent longer-term indicators of where the market is heading. In the first example we see that the index has been trending down for over a week, and that the VMA during that period has been steadily increasing. This steadily increasing VMA signals that there is a lot of buying pressure and that the market will change direction. The peak of the VMA signals that the market will take this new direction. On the second signal we can see that the market did change direction substantially and that the only reason for an increasing VMA here is profit-taking. This profit-taking will cause the index to change direction again until there is renewed buying pressure in the future.
S&P 400 TradingOn 2010-01-06, By MarketVolume.com TeamThe S&P Mid Cap 400 Index consists of 400 domestic stocks chosen for market size, liquidity, and industry group representation. It is also a market-value weighted index and was the first benchmark of midcap stock price movement.  When interpreting the S&P 400 chart above, you need to remember that the most important factor is the relationship between Index Price and the Volume Moving Average (VMA). Here we see that the index has been trading down for almost 2 weeks, and at the end of those two weeks the VMA begins to increase substantially. This sharp increase signals that a bottom has been reached and that professional investors are buying. Once the VMA has peaked, that signals the safest point in which to make a trading decision, as it is here that the index has confirmed a new upwards trend.
Details of the above trades, and the derivatives used for this index, can be found in the detailed overview and in the member's section of our site. Nasdaq 100 TradingOn 2010-01-06, By MarketVolume.com TeamThe NASDAQ 100 Index includes 100 of the largest domestic and international non-financial companies listed on The NASDAQ Stock Market based on market capitalization. The Index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies including investment companies.  When interpreting the chart above, you need to remember that the most important factor is the relationship between Index Price and the Volume Moving Average (VMA). Since the index was trending down when the VMA surge occurred it is a signal that professional investors are covering shorts and buying, that means that the index will soon change direction and go up. It is during or just after this peak in the VMA that we would make a trading decision. As the index begins to fall we see that the volume moving average is beginning to increase quickly. It is at the peak of his new VMA surge that we should look at making another trading decision as this VMA surge signals an end to the downward trend.
Details of the above trades, and the derivatives used for this index, can be found in the detailed overview and in the member's section of our site. |
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