What Is the Nasda🍷q-100 Pre-Market Indicator (PMI)?

The Nasdaq-100 Pre-Market Indicator (QMI) reflects trading activity based on pre-market open prices for the Nasdaq 100 Index,🌳 and gives an indication of the opening price for the index each trading day.

Nasdaq developed the indicator to give investors and traders a better view of market activity prior to the official opening at 9:30 a.m. Eastern Time, based on actual price and volume data for 澳洲幸运5官方开奖结果体彩网:Nasdaq 100 stocks.

𝓡Understanding the Nasdaq-100 Pre-Market Indicator (PMI)

Some of the most important market moves can take place outside the 9:30 a.m to 4 p.m. Eastern Time regular trading sessions of the 澳洲幸运5官方开奖结果体彩网:New York Stock Exchange (NYSE) and Nasdaq.

The often-volatile pre-market trading session is widely followed to gauge the market outlook ahead of the regular open. Price 澳洲幸运5官方开奖结果体彩网:volatility is driven by forces outside the regular trading session, and knowing how to trade stocks and futures during t꧋his period is an opportunity for investors looking to profit.

After close is important as well, as investors take stock of the day and make trades that might have caused too ꦕmuch volatility immediately before the close.

The Nasdaq-100 Pre-Market Indicator (PMI) provides direct insights for Nasdaq 100 stocks but is also an important tool to gauge pre-market sentiment for the overall stock market. This is because index components include well-known and heavily traded 澳洲幸运5官方开奖结果体彩网:large-capitalization stocks, such as Amazon.com, Apple, Netflix, Meta (formerly Facebook), Alphabet, Intel, Microsoft, and Qualcomm.

The Nasdaq 100 PMI is, therefore, useful to many market participants. It also helps traders assess the market’s level of overall activity and the degree of technical price support.

The Nasdaq 100 Index

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 represented include computer hardware and software, industrials, biotechnology, and 澳洲幸运5官方开奖结果体彩网:telecommunications.

The rebalance that Nasdaq made to the Nasdaq-100 Index affected the PMI as well because it changed the weights of the companies in the index. This means that the PMI will be more influenced by the price movements of the companies whose weights increased, such as Alphabet, Facebook, Netflix, and Costco, and less influenced by the price movements of the companies whose weights decreased, such as Apple, Microsoft, Amazon, and Tesla.

Pros and Cons of the Nasdaq-100 Pre-M𝐆arket Indicator

The Nasdaq 100 PMI is especially useful to traders, and soundly beats the old way of doing things: Prior to its introduction in the year 2000, traders relied on 澳洲幸运5官方开奖结果体彩网:futures contracts and individual pre-market stock trades to try to figure out where the index might open. This took both time and effort to decipher, so the Nasdaq 100 PMI eli𝓰minated needless work prior to the market open.

Also, the indicator uses editing logic to filter out bad trades and thus provide a more accurate reading of market trends than traders might determine on their own. For this reason, the Nasdaq 100 PMI is used by those who trade individual securities, as well as index 澳洲幸运5官方开奖结果体彩网:exchange-traded funds (ETFs) like the QQQ.

The indicator isn't used by 澳洲幸运5官方开奖结果体彩网:long-term investors nearly as often, ho𝓰wever. Given their longer holding periods, many investors have little need to know where the Nasdaq 100 or th🐠e general market might open. As a result, watching either the Nasdaq 100 PMI or its sister indicator, the Nasdaq 100 After Hours Indicator (AHI), might not be all that important, unless investors happen to be making portfolio changes that particular day.

The Bottom Line

The Nasdaq-100 Pre-Market Indicator (PMI) is an index that measures pre-market trading activity for the Nasdaq 100 Index, which consists of 100 of the largest and most actively traded U.S. and international companies listed on the Nasdaq sto🌜ck exchange. The PMI gives investors an indication of how the Nasdaq 100 Index may open and perform during the regular trading session, as well as the overall market sentiment before the market opens.

However, the PMI isn't a definitive forecast, as it is based on a limited number of trades and may not account for all factors that affect the market. Investors should use the PMI as one of many tools to assess market conditions and trends, and not rely on it exclusively.

Investopedia does not provide tax, investment, or financial services and advice. The information is presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Investing involves risk, including the possible loss of principal.