How To Stock Trade With A Must Have Trading System
Nasdaq, which has lesser standards for listing than the NYSE, used to be considered as an market for only smaller, speculative companies. Though stocks of that type continue to be set up in this trading sector, lately, major corporations such as Intel and Microsoft, amongst others, have preferred to remain on Nasdaq rather than seeking a listing on the NYSE. A number of companies consider jointly listing on both Nasdaq and the NYSE. While the number of Nasdaq's larger firms listed is ever-increasing, Nasdaq-listed companies, as a group, tend to be more speculative, more technology tilting, and smaller in size than those listed on the NYSE. The total daily trading volume on Nasdaq, however, now frequently surpasses the daily trading volume on the NYSE.
Both indices have a tendency to be very much correlated in the direction. The Nasdaq Composite Index tends to go up and fall at rates that are between 1.5 and twice that of the NYSE. Likewise, the Nasdaq Composite Index is expected to decline more speedily than the NYSE through declining market periods.
Relative strength relationships among both indices frequently affected by the nature of public attitude concerning the stock market. While investors are positive about the economy and stocks, they are more apt to place funds into speculative growth companies and to take risks with smaller, rising corporations and technologies. When investors are fairly gloomy regarding the economy and stocks, they are more apt to concentrate investments into more recognized, stable, defensive corporations and to look for dividend return as well as capital appreciation.
The stock market produces better gains during times when the Nasdaq Composite Index leads the NYSE Index in relative strength. That is true not just of the Nasdaq Composite Index. The NYSE Index, the Dow Industrials, and the Standard & Poor's 500 Index all are apt to perform best during periods when the Nasdaq Composite Index leads the NYSE Index in relative strength. That is not to say that conditions are essentially bearish when the NYSE Index leads in strength. Market action has typically been neutral when the NYSE Index outperforms the Nasdaq Composite Index. There are winning periods when the NYSE leads in relative strength. Nonetheless, these also are apt to be the periods when most dangerous market declines take place. Investments made during periods when the NYSE Index leads the Nasdaq Composite Index in strength are prone, on balance, to more or less just break even.
Using Stock Charts website, you can break up two tickers by a colon to automatically divide the two. Enter $compq:$nya. Set the chart time frame on Weekly, and add a 10 period (week) moving average. That's it!
As the line moves up, the Nasdaq is beating the New York Index, and when the line moves down, the New York Index is beating the Nasdaq.
If the Nasdaq/NYSE Index relative strength ratio stands above its ten-week moving average, consider the Nasdaq Composite to be leading the New York Index in relative strength. This is the time to buy or go long. If the Nasdaq/NYSE Index relative strength ratio stands below its ten-week moving average, consider the Nasdaq to be lagging the New York Stock Exchange in relative strength, which means you should park yourself on the sidelines.
Article Source: FxTradingStock.com
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I'm sure this article will make you money. For another great article on Double Tops go to how to trade stocks and to stay alive with only $200 in your trading account visit how to stock trade
by: Mike Smith
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Date: Wed, 30 Dec 2009
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