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SML - Stock Market Directory

DJI Trading

By: MarketVolume.com Team

Article Category: SML Index Trading

The 30 stocks now in the Dow Jones Industrial Average Index (DJI) are all major factors in their industries, and their stocks are widely held by individuals and institutional investors. At the end of 1999, these 30 stocks accounted for about 28 percent of the $12 trillion-plus market value of all U.S. stocks.

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). Here we see that the index has taken an advancing trend with not much supporting volume to cause this change. This occurs because investors are taking profit from covering their short orders; this causes the market to increase. When the VMA has peaked, professional investors once again enter into a short position by selling; this action causes the index to trend down again. It is just after this VMA peak that one should make a trading decision.

Below is an example of how one of our exclusive institutional investors used this signal for the index to maximize profits by trading some of the derivatives of the Dow Jones Industrials index: