Chart Analysis - Index Indicators
Russell 1000 (^RUI) Index
Simple Technical Analysis of the Volume Indicators on the Russell 1000 Chart
The Russell 1000 Index (traded under the RUI symbol) is a subset of the Russell 3000 index and is based on shares of the 1,000 largest companies in the Russell 3000 Index. The Russell 1000 index represents more than 90 percent of the total market capitalization of the Russell 3000 Index. The Russell 1000 index is managed and maintained by the Russell Investments Group.
Chart 1: Russell 1000 index charts - index reversal followed by volume surge.
The Russell 1000 chart above is a perfect example of price reaction to the high volume surge during the price advance. The relationship between the Index Price and the Volume Moving Average (VMA) is a key factor in the volume analysis. A price moves up because there are more buyers than sellers. The physics behind the volume surge is very simple:
- High volume surge during the price advance indicates that a large group of investors (we call them professional investors) are attracted by the high price and have decided to take their profit and have begun to sell in large volume by satisfying the demand of greedy bullish traders (those who pushed the price up).
- When the VMA starts to decline after hitting a high level, it may indicate two things: whether bearish traders who wanted to take a profit have decided to sell no more or that the number of bullish traders is exhausted.
- If the price has started to move down, it confirms that the number of bullish traders is exhausted and that professional bearish traders have taken over the market and that probably the price will continue to decline.
Below you can see how one of our exclusive institutional investors used this signal to trade some of the derivatives of the Russell 1000 index:
Table 1: Return that could be achieved by following
the volume signal on the Russell 1000 chart above
Below are some of the Russell 1000 derivatives which can be used to trade the volume signals generated by the Russell 1000 trading system.
Table 2: List of the Russell 1000 index derivatives.
|Securities||Issuer||Type||Symbol / Root|
|Russell 1000 Growth Index Fund||AMEX||ETF||IWF|
|Russell 1000 Index Fund||AMEX||ETF||IWB|
|Russell 1000 Value Index Fund||AMEX||ETF||IWD|
By trading Russell 1000 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 Russell 1000 market sector. The Russell 1000 index is far more logical and far more consistent in its actions than the individual stocks of the Russell 1000 index basket.