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SML - Stock Market Directory

Russell 3000 Trading

By: MarketVolume.com Team

Article Category: SML Index Trading

The 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.

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 Russell 3000 index:

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.