MARKET INDEX TECHNICAL ANALYSIS - MITA Message Board

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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA

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To: stockman_scott who wrote (9108)	10/22/2001 1:43:51 PM
From: James F. Hopkins	of 19219

Just Looked her up, it get index value Sum of Component Prices ( divided by ) Base Market Divisor .8714108 will give the index value. What this is called is a price weighted index, ( like the DJI ) what it amounts to is that a $1 move of any component is the same as any other that moves $1. Hence the thinnest traded stocks have as much control on which way the index goes as the heavy traded ones, ( MOST OFTEN MORE SO ) as thinner traded stocks can be made to move faster.. Roughly this amounts to a $1.15 change in the index per $1 change of ANY and each stock in it. There are 16 stocks in it. quote.yahoo.com Note a $1 move in RMBS with a market cap of less than 1Bill effects the index just as much as a $1 move in INTC , but INTC's maket cap is OVER 167 times as much as RMBS...thus you can see how he baby stocks in the SOX can be used to JACK her UP or DOWN with less dollars changing hands.. Hence if your not looking at which stocks in that index are causing her to run; TA on her can be very misleading. Jim

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