Nasdaq-100 Pre-Market Indicator

DEFINITION of 'Nasdaq-100 Pre-Market Indicator'

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 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.

BREAKING DOWN 'Nasdaq-100 Pre-Market Indicator'

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, 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.