Nasdaq-100 Pre-Market Indicator

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DEFINITION

An index of trading activity based on pre-market open prices for the Nasdaq-100. The Nasdaq-100 Pre-Market Indicator (PMI) was developed by nasdaq.com to give traders and investors a big-picture view of market activity based on actual trading data for Nasdaq-100 stocks. The PMI helps investors gauge pre-market trends, based on market reaction to overnight news, and use them to predict opening prices. The PMI uses the same calculation used for the Nasdaq-100 index during regular market hours. It is calculated based on the last sale prices of the Nasdaq-100 stocks during pre-market trading, which takes place from 4 a.m. to 9:30 a.m. EST.

INVESTOPEDIA EXPLAINS

The Nasdaq-100 comprises the top 100 domestic and international non-financial companies listed on the Nasdaq in terms of market capitalization. Major industry groups on it include computer hardware and software, biotechnology and telecommunications. The Nasdaq-100 includes some of the best-known companies and brands on the planet such as Amazon.com, Apple, Facebook, Gilead Sciences, Google, Intel, Microsoft and Qualcomm.

Despite its heavy technology weighting, the index is widely considered to be a good overall market barometer because of the Nasdaq-100 constituents' importance to the U.S. and global economy. The Nasdaq-100 PMI is therefore useful to investors as a leading market action indicator during regular trading hours. It also helps traders assess the likely opening price for a stock and the extent of market support for that price.

The Nasdaq-100 PMI is calculated using last sale prices during pre-market trading, but if a Nasdaq-100 security does not trade in the pre-market, the calculation uses the previous day’s 4 p.m. close price. The indicator also uses editing logic to filter out bad trades and provide a more accurate reading of market trends.

The Nasdaq-100 PMI, together with the Nasdaq-100 After Hours Indicator (AHI), gives investors and traders valuable insights into extended-hours trading trends.


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