Liquid Millionaire - isaco

Priceless Information about How
the Market Works
141
Liquid Millionaire
Observing how the four main indexes are acting is essential to helping
you read the market’s future trend or direction. However, there are some
key indicators that almost every time give you a head start when spotting
market turning points–such as market tops and market bottoms. Let
me explain.
My philosophy on how the market works is based on numerous factors,
rules and principles. One of the things that I like to see happening to
confi rm that the market is strong and vibrant is the way that the Nasdaq,
the Nasdaq 100 and the chip sector are acting.
The Nasdaq 100 includes 100 of the largest domestic and international
non-financial securities listed on the Nasdaq market. These include
giants such as Microsoft, Google and Cisco Systems. Chips is a
common term for semiconductors. The main index for chips is
the PHLX Semiconductor SectorSM and is commonly known
as the SOX. The SOX is a price-weighted index composed of 18
companies involved in the design, distribution, manufacture, and
sale of semiconductors.
If the market is rising but being led by the Dow or the S&P 500,
meaning the Nasdaq, the Nasdaq 100 and the chip sector are lagging,
this normally means that the rally (uptrend) is more prone to fail. But if
the Nasdaq, the Nasdaq 100 and the chip sector are leading the market
higher, that tells you the rally is more likely to succeed.
You see, by watching the market every single day, I’ve noticed that these
three key indicators act like a kind of giant magnet. In other words, when
they are weak, they tend to pull and lead the market down but when they
are strong, they tend to pull and lead the market up. I like to watch the
Nasdaq 100’s action in two ways. I look at the chart of the Nasdaq 100
and I look at the chart of the QQQQ, which is the exchange-traded fund
(ETF) that tracks the movement of the 100.