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How to read the S&P 500 Indicator?
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:
| 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 |
|
(Reduced-value) LEAPS |
CBOE |
Options |
SPX |
|
S&P Long-Dated Options |
CBOE |
Options |
SPL |
|
E-mini 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 |
|
E-mini S&P 500 |
CME |
Futures |
ES |
|
S&P 500 |
CME |
Futures |
SP |
|
S&P 500 Barra/Growth Index |
CME |
Futures |
SG |
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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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