Simple Technical Analysis of the Volume on the NASDAQ Stock Exchange Chart

The NASDAQ Composite index covers stocks traded on the world's largest over-the-counter (electronic) stock market exchange - the NASDAQ Exchange. NASDAQ trading is executed through NASDAQ's telecommunications network by allowing a virtually unlimited number of investors to trade in stocks listed on the NASDAQ Exchange.

Chart 1: NASDAQ Composite charts - volume spike and index reversal.

This NASDAQ Composite index chart above provides an excellent example of a Volume Moving Average (VMA) signal that confirms the bottom (support level) in the index's decline. This chart example shows clearly the relationship between the Index Price and the Volume Moving Average (VMA). You see a very large increase in VMA after the 13:30 index, which would signal the possibility of changes in the trend. However, when the VMA began to decline, this VMA signal was not confirmed by a price movement upward. Instead, the NASDAQ Composite index continued to decline until the second volume surge (high VMA) occurred around 15:00. The VMA began to decline after the second volume surge. This VMA signal was confirmed by a price advance, which indicated that professional bullish traders had taken over from the bearish traders and started to push price up - which could be a good time to buy.

In the table below you will see how one of our exclusive institutional investors used the volume signal to maximize profits by trading NASDAQ index derivatives:

Table 1: Return that could be achieved by following
the volume signal on the NASDAQ Composite chart above

By trading NASDAQ 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 NASDAQ market sector. The NASDAQ index is far more logical and far more consistent in its actions than the individual stocks of the NASDAQ index basket.