Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

carltonp

Most Influential Stocks of Dow & Nasdaq

Recommended Posts

Hello Traders,

 

I have style of trading that monitors the components of the DJIA to trade YM and the components of Nasdaq 100 to trade NQ.

 

I was advised the best approach would be to monitor a select few stocks of each index rather than the whole set of components. It was suggested that a select few will dictate which direction the whole index takes.

 

I was wondering if someone could advise on the best approach to selecting the most influential stocks of each index?

 

I believe one approach is to monitor the stocks with highest weighting for each index, but I would love to hear your opinions.

 

Cheers

 

Carlton

Share this post


Link to post
Share on other sites

Basically yeah. If they're big they'll more likely bias the index they're in. Also though it does vary. If this is your approach you really should be noting sector strength and weakness too. You could even spread the two off against each other if say techs are outperforming industrials or vice versa.

Share this post


Link to post
Share on other sites
  carltonp said:

I have style of trading that monitors the components of the DJIA to trade YM...

 

I was wondering if someone could advise on the best approach to selecting the most influential stocks of each index?...

 

Which components are you currently using? the precise choice of stocks will depend on your current methodology. Also, how exactly do you monitor it?

Share this post


Link to post
Share on other sites
  Do Or Die said:
Which components are you currently using? the precise choice of stocks will depend on your current methodology. Also, how exactly do you monitor it?

 

I use all the components of the nasdaq 100.

 

I use an Excel formula to monitor the components realtime. Why do you ask?

 

I was interested to know if someone could tell me the best approach in selecting those components that will move the index?

 

Cheers

Share this post


Link to post
Share on other sites
  carltonp said:
I use all the components of the nasdaq 100.

 

I use an Excel formula to monitor the components realtime. Why do you ask?

 

I was interested to know if someone could tell me the best approach in selecting those components that will move the index?

 

Cheers

 

I was asking about your methodology. Instead of watching the DOW itself, you watch ALL individual components, right? If you're using comparative relative strength as suggested by poster before me, your choice of components should depend upon those related to your method rather than which have more weighting in DOW.

Share this post


Link to post
Share on other sites

DorD,

 

Thanks for responding.

 

Yes I do watch ALL individual components.

 

I don't think the last poster mentioned anything about comparative relative strength. However, I would be very grateful if you would elaborate.

 

cheers

Share this post


Link to post
Share on other sites

Comparative Relative Strength is when you compare the performance of one ticker against another. It is the general term for sector strength comparison: http://www.traderslaboratory.com/forums/technical-analysis/10189-relative-strength-2.html#post126645

 

For example if you see BAC gapping up 10% and make a conclusion that it will drag the financials upwards with it. OR if you see financials showing extremely weakness you make an estimate that they will drag the entire market down.

 

What makes you track ALL DOW components instead of the DOW itself?

Share this post


Link to post
Share on other sites
  Do Or Die said:

 

What makes you track ALL DOW components instead of the DOW itself?

 

Thanks for the explanation.

 

I find that tracking the Dow components allows me to assess the eventual direction of the YM.

 

I have Interactive Brokers feed 100 components into my Excel program and assess the strength or weakness of any move with the help of my formula.

Share this post


Link to post
Share on other sites
  carltonp said:
Thanks for the explanation.

 

I find that tracking the Dow components allows me to assess the eventual direction of the YM.

 

...assess the strength or weakness of any move with the help of my formula.

 

If your formula puts more weight on certain components, pick the top 7-10.

 

If the formula always factors the movement of all components equally try picking the top 15 which have most weight in Dow; using less than 10 components may not work.

 

This is just my wild guess because I have no clue about what information the formula is extracting.

Share this post


Link to post
Share on other sites
  Do Or Die said:

This is just my wild guess because I have no clue about what information the formula is extracting.

 

Before I answer reply to quote, just wanna say I've been reading some of your posts and they provided plenty of food for thought. Thanks.

 

I think you have made a really good suggestion on possible ways to pick top components to monitor.

 

In answer to the quote, at present the formula applies the Trade Value Index to all 100 components in realtime. I'm not sure if you're familiar with TVI, however when each individula component are inline with the index there is a message of either strength or weakness with the YM (if looking at the 30 components of the DJIA). Alternatively, if I'm monitoring each individual component of the nasdaq 100 then there is a message in the NQ.

 

I hope that makes sense :-)

Share this post


Link to post
Share on other sites

the question may be: wich one moves the other

 

index traders will look at stocks, stocks traders will look at futures. I'm personnally not that sure that stocks will decide since derivatives became so important in modern trading

Share this post


Link to post
Share on other sites

icon10.gif I've heard about trade value index with reference to NBA only. I did a google search and could not find the maths formula representing it.

 

  carltonp said:
... however when each individula component are inline with the index there is a message of either strength or weakness with the YM.

 

Anyways seems to me you are using the concept similar to market breadth. That is, if all components are showing strength then there is momentum in YM until it peaks out. Instead of dropping components I will suggest to use a heatmap for ALL 30 components (S&P 500 Map Heatmap ) or a similar map 'trend strength' which I posted in the link mentioned.

Share this post


Link to post
Share on other sites
  Do Or Die said:
I did a google search and could not find the maths formula representing it.

 

The formula for Vb.Net is

 

' Get the volume of the symbol, indexed by bar index.

Define volume() As Number = BarVolume(_symbolIndex, barIndex, length + 1)

' Get the closing prices of the symbol, indexed by bar index.

Define close() As Number = BarClose(_symbolIndex, barIndex, length + 1)

' Use for the latest trade volume index.

Define TVI As Number = IndicatorIndexValue()

' Use for the calculated indicator script values, indexed by bar index.

Define results(length - 1) As Number

' Calculate the indicator script values for the specified bar range.

For i As Integer = length - 1 To 0 Step -1

' Calculate the indicator script value for the current bar.

If (close(i) - close(i+1) > _MTV) Then

TVI = TVI + volume(i)

Else

TVI = TVI - volume(i)

End If

results(i) = TVI

Next

Return results

 

The formula I have programmed into Excel is:

 

=IF(E15-E14>1,H14+F15,H14-F15)

 

I reviewed the Heatmap, however I think I prefer 'trend strength.

Share this post


Link to post
Share on other sites

This is a great formula! it tracks performance of components and also weights recent volumes. I would suggest do not drop any components... just design a custom map for components which uses similar measures using bar range and volume. use the map as well as TVI.

Share this post


Link to post
Share on other sites
  Do Or Die said:
This is a great formula! it tracks performance of components and also weights recent volumes. I would suggest do not drop any components....

 

Brilliant, that's exactly what five other traders said at Trade2Win and few others at ET(don't know if its frowned upon to mention other forums) :crap:

 

However, I do like the idea of picking 7 - 10 components and putting them at the top of list.. uhmmmmmm ...

Share this post


Link to post
Share on other sites

Welcome on the questions.

 

The 'awesomeness' of the formula is in the fact that it dynamically weights each component based on recent volumes. Consider a case: suppose you kick out the 5 stocks with least weight. Now suppose heavy volume comes in that discarded stock- because of 52 week high, earnings or whatever. In this case it will drag Dow along with it up or down, but you will miss on this significant information.

 

Many pro traders use maps for visualization- go ahead and design you own. Should be easy since you are alreadt acquainted with macros and there are lot of resources on net.

Share this post


Link to post
Share on other sites
  carltonp said:
Hello Traders,

 

I was advised the best approach would be to monitor a select few stocks of each index rather than the whole set of components. It was suggested that a select few will dictate which direction the whole index takes.

 

Carlton

 

The person that advised the approach didn't help you ???

 

erie

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • TDUP ThredUp stock, watch for a top of range breakout above 2.94 at https://stockconsultant.com/?TDUP
    • TDUP ThredUp stock, watch for a top of range breakout above 2.94 at https://stockconsultant.com/?TDUP
    • NFLX Netflix stock watch, local support and resistance areas at 838.12 and 880.5 at https://stockconsultant.com/?NFLX
    • Date: 8th April 2025.   Markets Rebound Cautiously as US-China Tariff Tensions Deepen     Global markets staged a tentative recovery on Tuesday following a wave of volatility sparked by escalating trade tensions between the United States and China. The Asia-Pacific region showed signs of stability after a chaotic start to the week—though some pockets remained under pressure. Taiwan’s Taiex dropped 4.4%, dragged lower by losses in tech heavyweight TSMC. The world’s largest chipmaker fell another 4% on Tuesday and has now slumped 13.5% since April 2, when US President Donald Trump first unveiled what he called ‘Liberation Day’ tariffs.   However, broader sentiment across the region turned more positive, with several markets rebounding sharply after Monday’s dramatic sell-offs. Japan’s Nikkei 225 surged over 6% in early trading, rebounding from an 18-month low. South Korea’s Kospi rose marginally, and Australia’s ASX 200 gained 1.9%, driven by strength in mining stocks. Hong Kong’s Hang Seng rose 1.6%, though still far from recovering from Monday’s 13.2% crash—its worst day since the 1997 Asian financial crisis. China’s Shanghai Composite added 0.9%.   In Europe, DAX and FTSE 100 are up more than 1% in opening trade. EU Commission President von der Leyen repeated yesterday that the EU had offered reciprocal zero tariffs on manufactured goods previously and continues to stand by that offer. Others are also trying again to talk to Trump to get some sort of agreement that limits the impact.   Much of the rally appeared to be driven by dip-buying, as well as hopes that the intensifying trade war could still be defused through negotiations.   China Strikes Back: ‘We Will Fight to the End’   Tensions reached a boiling point after Trump threatened to impose an additional 50% tariff on all Chinese imports unless Beijing rolled back its retaliatory measures by April 8. ‘If China does not withdraw its 34% increase above their already long-term trading abuses by tomorrow... the United States will impose additional tariffs on China of 50%,’ Trump declared on social media.   If implemented, the new tariffs would bring total US duties on Chinese goods to a staggering 124%, factoring in the existing 20%, the 34% recently announced, and the proposed 50%.   In response, China’s Ministry of Commerce issued a stern warning, stating: ‘The US threat to escalate tariffs is a mistake on top of a mistake... If the US insists on its own way, China will fight to the end.’ The ministry also called for equal and respectful dialogue, though signs of compromise on either side remain scarce.   Beijing acted quickly to contain a market fallout. State funds intervened to support equities, and the People’s Bank of China set the yuan fixing at its weakest level since September 2023 to boost export competitiveness. Additionally, five-year interest rate swaps in China fell to their lowest levels since 2020, indicating potential for further monetary easing.   Trump Talks Tough on EU Too   Trump’s hardline approach extended beyond China. Speaking at a press conference, he rejected the European Union’s offer to eliminate tariffs on cars and industrial goods, accusing the bloc of ‘being very bad to us.’ He insisted that Europe would need to source its energy from the US, claiming the US could ‘knock off $350 billion in one week.’   The EU, meanwhile, backed away from a proposed 50% retaliatory tariff on American whiskey, opting instead for 25% duties on selected US goods in response to Trump’s steel and aluminium tariffs.     Volatile Wall Street Adds to the Drama   Wall Street experienced wild swings on Monday as investors processed the rapidly evolving trade conflict. The S&P 500 briefly fell 4.7% before rebounding 3.4%, nearly erasing its losses in what could have been its biggest one-day jump in years—if it had held. The Dow Jones Industrial Average sank by as much as 1,700 points early in the day but later climbed nearly 900 points before closing 349 points lower, down 0.9%. The Nasdaq ended up 0.1%.   The brief rally was fueled by a false rumour that Trump was considering a 90-day pause on tariffs—rumours that the White House quickly labelled ‘fake news.’ The market's sharp reaction underscored how desperate investors are for any sign that tensions might ease.   Oil Markets in Focus: Goldman Sachs Revises Forecasts   Crude prices also reflected the uncertainty, with US crude briefly dipping below $60 per barrel for the first time since 2021. As of early Tuesday, Brent crude was trading at $64.72, while WTI hovered around $61.26.   Goldman Sachs, in a note dated April 7, lowered its average price forecasts for Brent and WTI through 2025 and 2026, citing mounting recession risks and the potential for higher-than-expected supply from OPEC+.       Under a base-case scenario where the US avoids a recession and tariffs are reduced significantly before the April 9 implementation date, Goldman sees Brent at $62 per barrel and WTI at $58 by December 2025. These figures fall further to $55 and $51, respectively, by the end of 2026. This outlook also assumes moderate output increases from eight OPEC+ countries, with incremental boosts of 130,000–140,000 barrels per day in June and July.   However, should the US slip into a typical recession and OPEC production aligns with the bank’s baseline assumptions, Brent could retreat to $58 by the end of this year and to $50 by December 2026.   In a more bearish scenario involving a global GDP slowdown and no change to OPEC+ output levels, Brent prices might fall to $54 by year-end and $45 by late 2026. The most extreme projection—based on a simultaneous economic downturn and a full reversal of OPEC+ production cuts—would see Brent plunge to below $40 per barrel by the end of 2026.   Goldman noted that oil prices could outperform forecasts significantly if there was a dramatic shift in tariff policy and a surprise in global demand recovery.   Cautious Optimism, But Warnings Persist   With both Washington and Beijing showing no signs of backing down, markets are likely to remain volatile in the days ahead. Investors now turn their attention to upcoming trade meetings and policy decisions, hoping for clarity in what has become one of the most unpredictable trading environments in recent years.   Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Andria Pichidi HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • CVNA Carvana stock watch, rebound to 166.56 support area at https://stockconsultant.com/?CVNA
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.