How to read charts the Dow Jones Utilities Index Indicator?

The Dow Jones Utility Average is the youngest of the three Dow Jones Averages, having made its debut in January 1929. According to analysts who study the averages, a rise in utility stock prices indicates investors anticipate falling interest rates.

When interpreting the chart above, you need to remember that the most important factor is the relationship between Index Price and the Volume Moving Average (VMA). In this example we have several signals of when to make a trading decision, but for this purpose we will only explain the two in the circles. The first signal shows us that just before the index drops substantially, there was very large increase in the VMA, since the index was only on a small downwards trend before this VMA surge, we assume that the index was still trending up. Because the index is in an upwards trend when the VMA surge occurred, that is a signal that professional investors are selling and that the index will soon drop substantially. It is just after this peak in the VMA that we would make a trading decision.

In the second signal we see that once again the index is in an upwards trend, and that the increase in the VMA can only mean that investors are once again selling and that the index will begin a new trend downwards. Since the second signal is not as substantial, we know that the index will not decrease as much or as quickly as in the first signal.

Below is an example of how one of our exclusive institutional investors used this signal for the index to maximize profits by trading some of the derivatives of the Dow Jones Utilities index:

Details of the above trades, and the derivatives used for this index, can be found in the detailed overview and in the member's section of our site.

Listed below are some of the derivatives which you can trade using this indicator:

By trading index securities using our volume indicators instead of stocks, you gain stability and predictability that stocks do not have. An index is a far more logical in it's actions than the individual stocks it's based upon.

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