Simple Technical Analysis of the Volume on the NYSE Chart

The New York Stock Exchange (NYSE) is the largest stock market in the world based on traded volume and market capitalization. As one of the oldest and strongest stock exchanges in the world, it has become a barometer not only for the US economy, but also the world's economy. The NYSE Composite index (traded under the NYA symbol) comprises stocks listed on the NYSE stock market. It has become a measure of the economy’s health and is used by many analysts all over the globe to define the mood of the US stock market.

Chart 1: NYSE Composite index charts - volume analysis.

Volume and price are used to describe the stock's/index's trend. They cannot be analyzed separately. Only an analysis of volume and price together will provide a complete picture of the mood.

In the NYSE chart above you see a perfect proof of the importance of volume analysis and the dependence of price trend changes on Volume Moving Average (VMA) surges. The two VMA signals (two volume surges) in the chart above are excellent indicators of when the market is most likely to reverse its trend. The first volume surge was the first signal. After this volume surge, the NYSE index reversed its trend from bullish to bearish. The second volume surge occurred during the NYSE price recovery. Again, the volume surge caused a change in the trend direction. The NYSE index started to decline after this volume surge as trading volume slowed. In the case of the first signal (first volume surge), professional investors started to buy from bearish traders in large volumes and their buying pressure reversed the trend upward. The same professional investors began to take profits during the second volume surge by overcoming the bullish traders and pushing the market down. As you can see, volume helps to reveal the actions of professional and institutional traders (also called "big money bags"). In turn, this helps you to follow the "big money" and trade with profit.

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

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

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

Table 2: List of the NYSE Composite index derivatives.

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