What is the point of knowing whether the entire DOW or NASDAQ is up or down?

Jake: What is the point of knowing whether the entire DOW or NASDAQ is up or down?
Why is it important to know if the entire composite is up or down rather than only the stocks one invests in?

Answers and Views:

Answer by azgreybeard
buy low sell high

Answer by betmoneyonit
It simply gives you a direction of the overall market. If an entire indice is up or down it can give you a picture of the overall health of the broad market. The DOW however is a poor indicator for the NYSE overall market as it represents only 30 large cap companies. The S&P 500 is a better representation.

Answer by UncommonSense
if the stock you own simply doesn’t follow the overall market, there is no point knowing the direction of the overall market because it doesn’t affect you anyway.

if you play index ETFs (like dia,qqqq,spy, etc), then it’s important to follow the “market”

Answer by Ted
Each index shows something else. The S&P 500 is regarded as the whole market. The Dow industrials are a sample of established blue chips. The NASDAQ has more new tech companies and show how more speculative stocks are doing.

If the Dow is up and the NASDAQ is down, it means that people are nervous and looking for better quality stocks.

If your stock is down, when the market is moving up, there may be a problem with it. I like buying stocks that have good days when the Dow and the NASDAQ are both in the tank.

Answer by robe
You have your thinking backwards and that will cost you money.

The most important aspect of successful investing is learning to read market trends so you can maximize your individual stock investments’ entry points.

First, determine market direction to a high probability, putting odds in yoru favor for a successful investment.

Second, invest in individual stocks when the market index is positioning to move with an upward bias, putting the advantage in your favor. Stocks respond to market up movements with a corresponding upward trend bias. In fact, the best stocks will typicallyoutrun the pace of the index upward movement rate. The trend of an index such as S&P’s 500 stocks is far more powerful than the trend of an individual stock. Aligning with it is far more profitable than randomly investing in individual stocks based on their trend profile alone.

Third, be sure to select those stocks with the best opportunity for accelerated growth. Tools like Investors Business Daily do an outstanding job of helping you discern the above critical points, and provide excellent education for when to enter, and when to stand aside from the markets. Their pre-screened high potential stock lists have annihilated the S&P 500 averages since IBD 100’s inception.