How to read charts the S&P 500 Index Indicator?

The 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.

On the second signal we can see that the market did change direction substantially and that the main 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.

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 S&P 500 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.

Listed below are some of the derivatives which you can trade using this indicator:

By trading index securities using our volume indicators instead of stocks, you gain stability and predictability that stocks do not have. An index is a far more logical in it's actions than the individual stocks it's based upon.

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