What drives the NASDAQ Composite Index?
The NASDAQ Composite Index contains nearly 5,000 stocks. All these stocks are traded on the NASDAQ stock market. Computers, telecommunications and biotechnology companies, which represent almost 75 percent of the market value of the index, dominate this index. Just as with the S&P 500, the NASDAQ is weighted by capitalization of the stocks included in its index and contains big technology stocks, such as Cisco, Microsoft and Intel, which have a huge influence on its movement. What other influences are there on the market? Other more specialized indices measure sectors of the market. You can find these sub-indices on any financial page of a daily newspaper. Although the three indices previously described in this article do not represent “the market”, they are a good proxy for what is happening in the marketplace. The purpose of technical analysis is to understand their action and have a sense of the likely direction of the market. To gain this kind of understanding, however, other infor
