Watch NASDAQ 100 or NASDAQ Composite For Intraday Market Direction?

[RichieC]

If you mostly trade NASDAQ 100 stocks is it best to watch the NASDAQ 100 index or the NASDAQ composite for market direction?

On the surface the 100 would seem the more logical but most people seem to use the Composite for market direction then it is likely the that Composite would lead the 100.

The difference between the two is fairly minimal but sometimes significant enough to stop you making a trade. I really need to stop looking at both at once but am undecided on which one to focus on so I was just after some other people’s opinions on the matter.

Thanks.

 

[Pollux]

Richie, A good & pertinent question. My view is the NDX is the more useful one if you need to choose. Apart from correlating with the E Mini NQ, which makes monitoring those two easier, it is also the benchmark that will be moved by the major Nasdaq names first & foremost. I focus on NDX, QQQQ, NQ, SMH, OIH (the new new thing), as well as INDU & SPX of course. The caveat on NDX is that if MSFT, INTC and 1-2 others are having a poor day, while new Nasdaq names are flying, you will get some temporary looser correlation in the short term. It's a bit like the oscillator dilemma, I think at the end of the day: decide on one and then stay with it, through thick & thin.

 

[RichieC]

Thanks for the advice. I think the NDX is the logical one but when I started trading I used the composite and haven't been able to stop looking at it. I still keep looking at the two, but I think I'll follow your advice and pick one (the NDX) and only use that from now on.

Thanks again for your input.