Indices & the Nasdaq
Trading an index is betting on a whole economy in a single instrument, without single-company risk. But an index is not neutral: a few megacaps decide its direction, futures rule after hours, and there are marked days that spike volume. Here is what you need to know.
By the TradingCalculator.Pro team · Updated on · About us
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Cap weighting
The S&P 500 and especially the Nasdaq 100 are cap-weighted: the bigger the company, the more it weighs. Today a handful of tech megacaps make up a huge share of the index, so if those 7 rise, the index rises even if the rest doesn't. 'The index' can be at highs while most stocks fall: that is why breadth matters.
ES / NQ futures & overnight
The E-mini S&P 500 (ES) and Nasdaq 100 (NQ) are the most-traded futures in the world and trade nearly 24h (Globex). They set the mood before Wall Street opens: when you read 'futures are up', this is it. The regular session concentrates real volume, but the overnight session reacts to Asia, Europe and news, and often leaves the gap the cash market opens with.
VIX & the index
The VIX measures expected S&P 500 volatility and almost always moves inverse to the index: when the market falls hard, fear spikes the VIX; when it rises calmly, the VIX sinks. A VIX above 30 signals panic (and expensive options); below 15, complacency. It is the best fear thermometer for equities and mandatory context before trading the index.
Rebalances & triple witching
Indices are recalculated periodically: companies come in and out, and the funds that track them must adjust their portfolios, creating volume spikes. Four times a year, 'triple/quadruple witching' expires index and stock futures and options at once: the third Friday of March, June, September and December brings huge volume, odd moves and unusual liquidity. Mark them on your calendar.
Megacap earnings
Because a few giants weigh so much, their quarterly results move the whole index: a surprise from Apple, Nvidia or Microsoft can push the Nasdaq several percent in a session. Earnings season (four times a year) is a period of gaps and volatility. If you trade the index, always keep on your radar which megacap reports this week and when.