Investing Success by Studying the General Market Indicators Page
May 26th, 2006 (Investing)
If you sincerely want to do well investing in the stock market or be more accurate in predicting what the American economy is likely to do, then you must be able to correctly interpret the direction of the daily general market averages.
To do this properly, you can’t just look at one market average. Investor’s Business Daily provides you with the Dow Jones 30 Industrials, two broader indexes, the S&P 500 index and Investor’s Business Daily stock index, which covers 6000 New York Stock Exchange, American, and over-the-counter common stocks, and is the broadest possible market-value-weighted index of the equities market.
The NYSE daily advance-decline line, which measures cumulatively the number of stocks on the New York Stock Exchange advancing in price versus the number declining, plus a 200 day moving average price line for each market index, rounds out the measurements that you will need.
At other strategic turning points, the Dow Industrials may break below one of its important earlier price support zones and the Investor’s Business Daily stock index, which represents the entire market, may hold above its previous lows established during the same period thereby flashing a positive sign. These are refinements you need to recognize on a day-to-day basis.
Scanning this data once a week is not enough, because these signals occur on one specific day, and it’s important to spot them when they happen. Do you think good piano players get that way by practicing only once a week?
Psychological Market Indicators: Items such as the percentage of investment advisory services that are bearish or bullish, odd lot short sales as a percentage of total odd-lot sales (the higher the percentage of short selling by small investors, the more positive it should be for the stock market), and cash positions of mutual funds are some of the more important psychological measurement tools that can be viewed along with the several market averages.
Key Market Sector Graphs: Nine different major market sector graphs appear daily at the bottom of the general market indicators’ page. The economy is divided into broad economic sectors. You can rapidly monitor every significant sector such as high-tech, junior growth stocks, consumer companies, health care securities, and even a new issue index.
The percentage change in each index is quoted every day in a small market sector box so you can separate the best-performing sectors of the market from the below-par areas. The New York Stock Exchange composite, the Dow Jones Transportation, and the utilities index are also shown in this box each day.