The S&P 500 is one of the most popular stock market indices having a ticker symbol of .SPX. The index is calculated based on the capitalization of the top 500 American joint stock companies.
The owner of the instrument is Standard & Poor’s. The company selects the companies to include them in the index.
The index was first published on March 4, 1957. It’s interesting to note that this is now that the index shows all-time highs. Below is the chart of the index over the last years:
The shares of all companies included in the S&P 500 index are traded on the leading U.S. stock markets, the NASDAQ and NYSE.
The S&P 500 index mirrors the total capitalization of the companies included in it. The list of the companies the index composed of is not just a list of the largest U.S. companies. The S&P 500 index doesn’t include the companies privately owned or having an insufficient liquidity rate.
It’s interesting to note that while preparing the list, Standard & Poor’s tends to cover as many different economic sectors as possible. Therefore, a trader dealing with this instrument needs to follow the changes in all economic sectors.
The S&P 500 is a reflection of an average price of the entire U.S. market.
The National Bureau of Economic Research considers the S&P 500 index the gauge of the business cycles. Also, the S&P 500 is an aggregated indicator of the equity prices. By the way, the market capitalization of the 45 largest companies in the list makes up more than half of the total capitalization.
The index is composed of the following companies:
American Express Co
Bank of America Corp
Exxon Mobil Corp.
Johnson & Johnson
Philip Morris International
Sprint Nextel Corp.
United Parcel Service
Walt Disney Co.
Yum! Brands Inc
Quite a few foreign investment funds buy the shares of the companies included in S&P 500 to have the same chances for a profit as S&P 500.
Forecasts of S&P 500
As you see, there is no need in analyzing each company included in the index. The Dow Jones index mirrors the state of the U.S. industrial sector, while S&P 500 expresses the American business state and sentiment.
To forecast a price of the index, you need to follow not only export/import, production volumes, demand and supply, but also commodity market sentiment that can significantly affect the price of the top companies included in the index.
As the index mirrors the U.S. economy, you can use information on the U.S. economy in your analysis. You need to keep track of not only the senior managers’ speeches, but also the U.S. Treasury reports, the Fed’s officials’ speeches etc.
Along with the fundamental analysis, you can perform technical analysis because the U.S. dollar has a direct impact on the price of the index. Almost all experts specializing in the index base their projections chiefly on technical analysis.
Technical analysis works well with short-term forecasts of S&P 500.
The basic tools can be the lines of support and resistance, trend lines. Besides, professional binary options traders use indicators and various strategies of technical analysis.
The price of the index is affected by multiple factors; therefore, combining different kinds of analysis is the best option. You can follow the latest economic news, market events, and do technical analysis as well.
How to Make a Profit on the S&P 500 index
For instance, today, the positive reports on the crude oil have supported the U.S. dollar. Besides, the business sector sentiment shows to a seasonal.
No wonder the S&P 500 index is rising all the day.
To make a profit on the S&P 500 index, I advise you to pay your attention to binary options. Exclusively this financial instrument can produce a 70% profit in just 10 to 15 minutes. To get a return, you need to forecast the priceaction during a certain period of time, or, in other words, you need to figure out whether the price will go up or down, say, during next 15 minutes. If your forecast works out, you immediately get a fixed profit.
So, I browse the broker’s webpage and choose S&P 500 as an underlying asset. I set the expiry to 9:00 p.m., the amount of investment to $40, and click the CALL button as I expect the price to rise:
If the price climbs up by even 0.001 during these 30 minutes, I will get an 80% return.
Statistics say that 93% of investors are currently buying CALL options:
After expiry, I check the result of the trade:
As you see, if you trade binary options, making a profit on S&P 500 is not difficult, anyone can do it!
Along with the S&P 500 index, AnyOption has a wide choice of assets including the leading indices of the U.S., Europe, Asia, and the shares of the world’s top companies.