Simple Technical Analysis of the Volume on the NASDAQ 100 Chart

The NASDAQ 100 Index comprises shares of 100 of the largest domestic and international non-financial companies. All the shares of companies in the index basket are listed on the NASDAQ Stock Market. The NASDAQ 100 index price is based on market capitalization. The NASDAQ 100 and the NASDAQ 100 financial index were lunched at the same time, which explains why the NASDAQ 100 index does not contain financial and investment companies' stocks. The NASDAQ 100 index is the most popular index of the group of NASDAQ indexes. QQQQ, a stock that tracks the index's performance, is one of the world’s most traded stocks. The NASDAQ 100 index covers companies across major industry groups, including telecommunications, computer hardware and software, biotechnology and retail/wholesale trade.

Chart 1: NASDAQ 100 index charts with technical analysis of volume.

On the NASDAQ 100 chart above you may see two big volume surges: first on November 27 and second on November 28. These two volume surges show a clear relationship between price trend and trading volume. The Volume Moving Average (VMA) is the basic technical indicator that helps to track changes in volume activity. The first VMA surge occurred during the NASDAQ 100 price recovery. After that, the index strongly reacted to that high volume by a downward move. A second volume surge (on November 28) on the chart occurred during the index decline. As a result, the index's reaction to that volume was a change in the trend from downward to upward.

The rules of trading volume are simple:

1. If you see an increase in the volume, the odds are high that you will see a change in the price trend;
2.  Wait when the volume begins to decline and check for any changes in the price direction;
3.  If you see that the price has begun to react on high volume by a reversal movement, you may consider opening a trade.

The NASDAQ 100 volume-based technical analysis helps to accurately foretell changes in the NASDAQ 100 Index trend. The same principles described above can be applied to other indexes, stocks, and commodities as well. A good result can be had from an analysis of the volume of the S&P 500 index, NASDAQ Composite Index, and NYSE Composite index, etc.

In the table below you will see how one of our exclusive institutional investors used the volume signal to maximize profits by trading NASDAQ 100 index derivatives:

Table 1: Return that could be achieved by following
the volume signal on the NASDAQ 100 chart above

Below are some of the NASDAQ 100 derivatives which can be used to trade the volume signals generated by the NASDAQ 100 trading system.

Table 2: List of the NASDAQ 100 index derivatives.

By trading NASDAQ 100 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 100 market sector. The NASDAQ 100 index is far more logical and far more consistent in its actions than the individual stocks of the NASDAQ 100 index basket.