I love investing, and I love just about everything about the stock market in particular. But I find that many people get confused and don’t really know what to watch for when it comes to paying attention to the stock market.
Sure, if you flip on the news in the evening they will probably tell you what the Dow Jones Industrial Average did for the day, whether it was up or down, but that doesn’t really give you the overall view of how the market is doing on any given day.
In this article I want to spend a few minutes discussing several other things you should keep your eye on besides the Dow Jones index that will give you a broader picture of exactly what the market has been up to on any given day.
So the first thing to watch besides the DOW is the S&P 500. It is an index fund made up of 500 of the best stocks as chosen by the good folks over at Standard and Poors. When people say the “Stock Market” many times they are referring to the S&P 500. It’s a fairly good indicator of what the market is doing on the whole. Also, most evening news shows and radio news spots will mention this index each night.
Next you should pay attention to the TRIN, which is the trading index, because it attempts to measure the volume of trading that was done on any given day. If the TRIN goes from above 1.20 to below.70 during any day, that usually means that the stock market has turned Bullish. On the other hand, if the TRIN goes from below.70 up to 1.2 then the market has turned Bearish. A TRIN of 1.0 means that the market was mostly steady throughout the day.
Next you may want to watch the activity on the Over-The-Counter market, which is a market of thinly traded very small companies. If it outpaces the general stock market, that might be a sign of a BULL market. Likewise if its volume is much less than the broad market, that might indicate a Bear market.
Also you should keep an eye out on the old Quotron change because it measures the daily percent change for all the stocks on the New York Stock Exchange with it’s QCHA index and all shares on the American Stock Exchange with its QACH index. Many mutual funds pay especial attention to this index, even more so than they do to the Dow Jones index.
And of course you are going to want to keep an eye or two on the general financial news of the day. There are many ways to do this, but my favorite is to read both the Wall Street Journal and the Financial Times Newspapers every day. The Financial Times is a newspaper out of London, but they deliver daily to most major cities in America and daily or every other day via postal mail outside of most major cities.
Both these papers are excellent sources for staying up to date in all the financial news of the day. I’m sure with the advent of the Internet there are even better ways to keep current on financial news, but for me I like my daily routine of reading the old fashioned newspapers!
So there you have it, several things to watch each day to keep abreast of the stock market and stay informed to protect your investments.