How can you read Indexes at the Stock Market? The increase of the index value compared to its value in the previous trading session indicates a positive trend. This implies development and prosperity. When there is a decrease, the interpretation is reversed. Indicators should also be analyzed for longer time intervals, in order to get rid of the influence of random fluctuations. This way you can simply interpret the indexes.
Apart from the already mentioned, in previous article, three indexes, Dow-Jones, there is a fourth one – a collective. It is the Dow-Jones Composite Index (DJCI so called Sixty-Five Stocks). This indicator is calculated based on the previous ones, and is based on 65 shares (20 + 30 + 15). In addition to the Dow-Jones indexes used in the United States there are yet other, according to the formula of “Standard and Poor’s”. These are the “S and P 100“, having as a basis one hundred of securities (defined in 1976 for the first time) and SP-500. Last one, ie. “Standard and Poor’s 500” (Composite Index) is based on 500 shares of the largest USA companies and includes 400 shares of industrial companies, 40 shares of public companies, 20 shares of transport companies and 40 shares of financial companies.
Another US index, which is worth mentioning is the NASDAQ Composite Index constructed in 1984 for electronic securities system of trading outside the stock exchange (National Association of Securities Dealers Automated Quotations System). It was created based on the securities traded in this system. Its value in 1984 was set as 100 (solution often practiced while constructing indexes).
German stock indices are DAX-30, Commerzbank-Index and FAZ-Index. First – Deutsche Aktienindex DAX-30 is calculated on the basis of 30 shares of German companies in the sectors: industrial, commercial and banks. It was constructed in 11.30.1987. The second is an indicator of the “Frankfurter Allgemeine Zcitung” – FAZ-Index. It is calculated on the basis of 100 best shares of German companies (almost all indexes take into account the primary securities companies as the most representative). Shares used in the FAZ are traded on the Frankfurt Stock Exchange. Third – Commerzbank-Index, is an index of Commerzbank AG bank. This index is calculated on the basis of shares of 60 companies and these shares are traded on the stock exchange in Dusseldorf.
In the UK, there are FT indexes in use (according to the “Financial Times”), for example FT-100. France has primarily one type of indicator called CAC. In Italy is used Comit Index, and in Switzerland SBC-Index.
It should be mentioned about the Value Line Composite Average Index constructed on the basis of the 1700 securities, which is a broad basis. It is typical that the indexes are often served simultaneously in section divided into country and time to allow assessment of the situation in different markets at certain intervals.
It may look as follows:
Date: 5.07.2014 6.21.2014 7.23.2014
Dow Jones 2 693,38 2737,81 2775,46
London FT-100 2 635,36 2551,45 2554,72
Tokyo Nikkei 23782,93 24 863,76 25 223,46
Frankfurt DAX 1 643,47 1636,36 1638,52
Paris CAC-40 1847,56 1 884,43 1 838,73
Apart from the stock market indexes there are other parameters used for assessing the market situation eg. amount of large transactions (big block transaction, which is a trade with holdings of more than 10,000 shares). However, the basic parameters for assessment of the situation on the stock market are indexes. Their advantage is the transparency that allows you to quickly understand trends in the capital markets and in the economy.