What indexes do you watch for trading Naz stocks?

Emini S&P, Emini Nasdaq, NDX, Trin, Comp, SMH

in tandem, in combination, you can usually see moves as they are happening.

given current market conditions, when a buy/sell is exhausted and completed, then the major QQQ stocks in the Nas seem to return to their previous movement pattern.

for example if there's positive news, you'll see the futures spike, followed/preceeded by the Emini futures, then the other lagging indicators (Composite, DowJones, Trin, SMH, NDX) usually reflects the futures being unwound in the actual underlying equities.

after that move is over then the trending seems to return to whatever it was previous to the move, for example baselining, or dropping/unwinding or reversing into a rally.

difficult to make money outside of these "rushes", most trends aren't of any significant duration.
 
There are some programs which will allow you to essentially create your own index. As in you can input "X" number of stocks and assign them a percentage weight, then you can chart that self created index that you have created. That might be helpful because you have 4-5 stocks making up 15-20% of the naz 100.

On some days there is an obvious "tell" stock where msft or csco seems to lead the futures, but other days it isn't so obvious. In retrospect you have to look back and go, no wonder the futures were so strong, MSFT was up 3 bucks today. :-P

if you have access to a program that will do that, you might think about putting the top 5 or 6 stocks in the QQQ's in a self created index and watching that trade as it will sometimes move before the nq's IMO or you can watch it for divergences.

If you can't do that, most nasdaq traders watch the sox.x and the goldman sachs software index (IGV.X) I think on most feeds.

Avalanche
 
avalanche - excellent comments, that also reminds me

if you can configure your screen to focus on 2 stocks, with a 1min chart and an associated hourly chart, along with the Level2 and the T&S, then:

configure 6 smaller charts for the top "volume" leaders in the NDX or QQQ's, these will inevitably showcase that "pre-leader", which precipitates the futures movement.

remember the component nature of the ETF's and the over-arching futures' contracts have to at some time synchronize (i.e. actually translate into trades in their component stocks) at some point in time. The house that created these ETF's or trades/clears these ETF's has to contractually translate "creating these contracts" / selling future/contract/ETF by buying the underlying, and the inverse when doing the opposite.

Because these are essentially day traded mutual funds (i.e. ETF's and the Emini contracts) the correlation between them and the top 8 stocks in their component indexs will almost always follow this pattern.

((disclaimer.. this is my limited understanding, and its being proffered so that others can weigh in and either add to, clarify upon, change or contradict these statements... some wheres in all this we will find the truth) SCULLY - the truth is out there!)



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