The chart below is the NASDAQ100 hourly chart overlaid with an hourly Apple (AAPL) chart. Notice how well the two correlate.
Why is that? Because stocks that belong to an index, in this case Apple belongs to the NASDAQ100 index, will generally follow that index. It is rare that a stock will out-perform its index both on the upside or downside. And this is why we recommend using indexes when investing in stocks or products that are related to stocks (mutual funds, ETFs, etc).
We’ll spare you the details of discussing the actual numbers. As they say, a picture is worth a thousand words – see below for the hourly chart and further down for the daily chart.
We added in the daily chart, below, of the same NASDAQ100 over Apple and once again, the correlation is blatantly obvious. We use Elliott wave and technical analysis to forecast pricing. While fundamentals are important, we find that Elliott wave coupled with technical analysis provides the best and most realistic probability of where a stock is headed, when that stock is viewed in the context of its member index.
Once again, this is why we recommend using indexes when investing in stocks or products that are related to stocks (mutual funds, ETFs, etc).
Feel free to share this. Good investing everyone.