The AMEX Composite index (traded under the XAX symbol) represents about 5% of the market value of all US stocks and covers approximately 800-900 US publicly-traded companies. The AMEX index is a market capitalization-weighted index. It is based on price changes only and does not include income. Although the companies that are listed on the AMEX are not as large as the public companies that are listed on the NYSE, the AMEX index is widely used to evaluate the health of the US economy.
Chart 1: Amex Composite charts with simple analysis of volume.
The AMEX chart above perfectly illustrates the relationship between Index Price and the Volume Moving Average (VMA). After almost two days of negative trading, a strong volume surge (increase in the Volume MA) is seen on November 6th. This sharp increase in the VMA generates the signal that the support has been hit and that professional investors, attracted by low price, have begun to buy. As soon as the VMA has peaked and begun to decline could be a safe time to make a trading decision, as it is here that the index has confirmed a new upwards trend.
Below you can see how one of our exclusive institutional investors used this signal to trade some of the derivatives of the AMEX index:
Table 1: Return that could be achieved by following
the volume signal on the Amex Composite chart above
By trading Amex Composite 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 Amex Composite market sector. The Amex Composite index is far more logical and far more consistent in its actions than the individual stocks of the Amex Composite index basket.