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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (9108)	10/22/2001 12:57:57 PM
From: James F. Hopkins	Respond to of 19219

Thanx Scott; While I watch the SOX out of the corner of my eye I haven't been doing TA on it. I know it is watched a lot and effects the over all tech bias. It seems to me doing TA on the SOX is not going to be apples to apples vs doing TA on say the NDX or other Market Cap weighted indexes. The last I looked the SOX had the same amount of shares in to each of it's components so in that respect it's not weighted. If this is still true then the SOX can be skewed ( manipulated ) easy by large traders if they buy/sell the thinner & less liquid stocks in it. At one time I had it set up both ways to try and tell if the dog was wagging the tail; or if the tail ( less liquid ) was wagging the dog but my set up got out of date and I never caught it back up. Do you know if they still run the SOX index un-weighted ? Jim

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