Chart Analysis - Index Indicators
S&P 500 Index
Simple Technical Analysis of the Volume Indicators on the S&P 500 Index Chart
The S&P 500 Composite Stock Index (traded under the SPX symbol) is one of the most recognized indexes throughout the world. It is a market-value-weighted index (shares outstanding multiplied by stock price). SPY stock (S&P 500 index tracking stocks) is one of the most traded stocks not only in the US, but in the whole world.
1: S&P 500 index charts with technical analysis of volume.
In the S&P 500 chart above you can see clearly the relationship between index price reversals and Volume Moving Average (VMA) surges. The signals generated by the Volume MA are excellent indicators of when to act in the market. The first volume surge on this chart occurred on November 29th during the price decline and marked the bottom (support level) of the decline. The second volume surge is seen during the price advance and marked the top (resistance level).
The increase in volume (Volume MA) during the price decline (the first volume surge in the S&P 500 chart above) indicates that buyers, attracted by low price, are beginning to come into the market. The peak of the VMA signals that point at which the greatest number of sellers were leaving the market (buyers bought from them and they left). The VMA decline after its peak signals that the mood is shifting from bearish to bullish. That could be a good time to buy.
The opposite is true for the volume surges during the price advance. The second volume surge during the S&P 500 price advance (see the S&P 500 chart above) has shifted the supply/demand balance in favor of the selling traders. As a result, when the Volume MA began to move down after hitting its peak, we see that the S&P 500 index reversed into a downward correction. This volume surge marked profit taking. A large number of Bullish traders left the market (took their profit) and this caused the index to change direction.
In the table below you see the possible profit that could be achieved by trading S&P 500 volume signals on the chart above. One of our exclusive institutional investors used this signal for the index to maximize profits by trading the S&P 500 index derivatives:
Table 1: The return that can be achieved by following
the volume signal in the S&P 500 chart above
The table below lists S&P 500 index derivatives that can be used to trade signals generated by the S&P 500 analysis. The derivatives below were developed to track the performance of the S&P 500 index and, consequently, only the S&P 500 index indicators can provide a correct analysis and generate profitable trading.
Table 2: List of the S&P 500 index derivatives.
|Securities||Issuer||Type||Symbol / Root|
|S&P 500 Index Fund||AMEX||ETF||IVV|
|S&P 500/BARRA Growth Index Fund||AMEX||ETF||IVW|
|S&P 500/BARRA Value Index Fund||AMEX||ETF||IVE|
|SPDRS (Standard & Poor's Depositary Receipts)||AMEX||ETF||SPY|
|S&P 500 Index Linked Notes||Bank of America||ETF||BOA.A|
|S&P 500 "MITTS"||Merrill Lynch||ETF||FML|
|S&P 500 "MITTS"||Merrill Lynch||ETF||MLF|
|S&P 500 "MITTS"||Merrill Lynch||ETF||MPF|
|S&P 500 Callable Notes||Morgan Stanley||ETF||JMS.A|
|S&P 500 Index "TIERS"||Salomon Smith Barney||ETF||RSB|
|S&P 500 Principal Protected Notes||Salomon Smith Barney||ETF||ASB|
|S&P 500 Index "TIERS"||Structured Products Corp.||ETF||HSB|
|S&P 500 Index "TIERS"||Structured Products Corp.||ETF||SRB|
|BULS linked to the S&P 500 Index||UBS AG||ETF||BUL.D|
|BULS linked to the S&P 500 Index||UBS AG||ETF||BUL.E|
|S&P 500 Index Options||CBOE||Options||SPX|
|S&P Long-Dated Options||CBOE||Options||SPL|
|Emini S&P 500||CME||Options on Futures||ES|
|S&P 500||CME||Options on Futures||SP|
|S&P 500 Barra/Growth Index||CME||Options on Futures||SG|
|S&P 500 Barra/Value Index||CME||Options on Futures||SU|
|Emini S&P 500||CME||Futures||ES|
|S&P 500 Barra/Growth Index||CME||Futures||SG|
By trading S&P 500 index securities instead of stocks from this index basket, you gain stability and predictability that stocks do not have. Our volume-based technical analysis may help you to see the mood in the S&P 500 market sector.The S&P 500 index is far more logical and far more consistent in its actions than the individual stocks of the S&P 500 index basket.