What actually moves an index, and when

Four companies are nearly a third of the Nasdaq contract. Twenty-five of the five hundred are half the S&P. And the reports that move them all arrive in the hours when nobody can trade properly.

Lesson 12 of 12, and the last page of the course. Two factors: which stocks carry the index, and which hours carry the volume.

In this lesson

The two things his whole analysis divides into
Pre-market, regular hours and after-hours, and what each is good for
When the futures actually trade, and where the volatility concentrates
The same session boundaries in your own time zone
What a market mover is, and the two weighting formulas
How few names really make up each index
The four stocks that appear in all three
Earnings: what is in a report, and when it lands

Two things move an index

He divides the movement of the market into two main components, and the whole of this last lesson is those two.

The first is the weighting of stocks in the index. Each stock affects the index differently according to its market capitalisation. Stocks with greater weight are pivotal — a change in the price of a large one can determine the direction of the broader market on its own.

The second is the opening and closing times of the market. Markets operate within specific hours, and pre-market, regular trading and after-market each offer different opportunities across the day.

There is a connection here that is easy to miss and it is why this matters to someone trading futures rather than shares. An index carries the weight of the stock market it measures. So in addition to the standard futures trading hours, the opening and closing times of the stock exchanges are significant for a futures trader too. Volume arrives when the exchange opens, and volatility arrives with it.

The two components he divides market movement into: the weighting of the stocks inside the index, and the hours in which it is traded — Weight and time. The second one reaches across from the share market into the futures contract, which is the connection this lesson turns on. Click to enlarge

The three sessions, and what the edges cost

The American stock market day divides into three, all times Eastern:

He treats pre-market and after-hours as the same problem seen twice. What they are good for: financial reports and major economic announcements are often released outside regular hours, so both let you react immediately. Pre-market performance gives an early indication of where the regular session may go; after-market performance does the same for the following day.

What they cost: fewer buyers and sellers means lower liquidity and wider bid-ask spreads, and lower volume means price changes are more rapid and more pronounced. Some brokers charge additional fees outside regular hours and some do not offer the sessions at all.

And the cost that matters most for everything taught earlier in this course: lower trading volume makes the data harder to analyse. Everything from lesson eight onward is built on reading volume, and there is not enough of it at the edges of the day for that reading to be reliable.

Pre-market, 4:00 AM to 9:30 AM. Limited trading and order placement before the official open. Moderate volatility, but a chance to read the day before it starts.
Regular market, 9:30 AM to 4:00 PM. The official hours for NYSE and NASDAQ, and the period with the highest volume and volatility.
After-hours, 4:00 PM to 8:00 PM. Trading continues with lower volume and liquidity — and lower volatility, except when earnings land in it.

Pre-market, regular hours and after-hours with their Eastern Time boundaries and the trade-off each carries — Three sessions, and the two at the edges share the same three costs — thin liquidity, wider spreads, and too little data to analyse properly. Click to enlarge

When the futures actually trade

Index futures trade 23 hours a day, with a one-hour daily break for settlement and adjustments. On the CME:

Trading starts Sunday at 6:00 PM ET and the week ends Friday at 5:00 PM ET.
The daily break runs 5:00 PM to 6:00 PM ET.
Futures for the NASDAQ, Dow and S&P trade during the pre-market and after-hours sessions too, so decisions can be made before the regular market opens.
The best time for volatility is where major regional markets overlap. European markets run 3:00 AM to 11:30 AM ET and the US session runs 9:30 AM to 4:00 PM — so the overlap is 8:00 AM to 11:30 AM ET, when the highest volume and volatility are observed.
And the data lands inside it: GDP, unemployment and Federal Reserve decisions are usually released between 8:00 AM and 10:00 AM ET, which is what creates the significant volatility in that window.

The twenty-three hour futures day with its one hour break, and the overlap between the European and American markets where volatility concentrates — The futures day runs almost around the clock, but the volume does not — it concentrates where two regions are open at once. Click to enlarge

The same hours where you are

Every time on this page so far has been Eastern, and he does not leave the conversion to the reader. One slide in the range is a table that translates every boundary — pre-market start and end, the open, the regular-hours break, the close, after-market start and end, and the futures start, end and break — into local time for seven regions.

The offsets he lists: Canada Eastern at 0, the European Union at +6, Turkey and Saudi Arabia at +8, Iran at +8.5, Tajikistan at +10 and Sydney at +16.

Worked through for Iran, since it is the one he singles out with a half-hour offset: pre-market runs 12:30 to 18:00, the regular session opens at 18:00 and closes at 00:30, after-market runs 00:30 to 04:30, and the futures break falls between 01:30 and 02:30.

Which puts the 8:00 to 11:30 ET overlap — the window with the volume in it — at 16:30 to 20:00 local. Worth knowing before planning a trading day around a number quoted in New York time.

His conversion of the American session boundaries into local time for several regions, including Iran at eight and a half hours ahead — He does the arithmetic for you. Note that for most of these regions the American close falls after midnight. Click to enlarge

A table converting the American pre-market, regular and after-hours boundaries and the futures session into local time for seven regions — Every session boundary converted for seven regions — Iran at eight and a half hours ahead among them.

What a market mover is

Market movers are stocks with a significant impact on the overall market or on a specific index — usually large companies with high market capitalisation holding substantial weight in the major indices. Apple, Microsoft, Amazon and Alphabet are his examples. Their price movements can pull the index in the same direction.

His four characteristics:

A high weight in the index — a stock making up a significant portion of it.
A high market capitalisation, usually with substantial investment backing behind it.
An impact on market sentiment: a price change in one of these influences how everyone else decides.
Influence across sectors, because their connections are wide enough that their performance reflects the state of the economy generally.

The definition of a market mover, and the two formulas by which a stock earns its weight in an index — Two formulas, and which one applies decides whether size or share price is what gives a company its influence. Click to enlarge

How concentrated the indices really are

This is the part worth sitting with, and it comes off his constituent tables rather than his prose. Each table lists the holdings in order with a running cumulative weight, and the cumulative column is the finding.

S&P 500 — the top 25 holdings out of 500 come to 50.23 per cent. Apple alone is 7.60, NVIDIA 6.61, Microsoft 6.29, Amazon 4.12.
Nasdaq-100 — the top 10 out of 100 come to 52.24 per cent. Apple is 9.79 of it on its own, and the tenth name, Costco, is still 2.58.
Dow Jones — the top 9 out of 30 come to 51.1 per cent. Being price weighted, the order is different: Goldman Sachs leads at 8.27, then UnitedHealth 7.31, then Microsoft 6.09.
So "the market went up today" means, more often than not, that a handful of companies went up. Half of each of these indices sits in single figures of names.

The cumulative weight of the largest holdings in each index, showing how few names make up half of it — Twenty-five, ten and nine names for half of each index. The Nasdaq is the most concentrated of the three. Click to enlarge

Constituent tables for the S&P 500, Nasdaq-100 and Dow Jones with each holding's weight and the running cumulative total, beside the sector split of all three — The whole argument on one slide: cumulative weight down each index, the four shared names, and the sector split underneath.

Four stocks, three indices

Four names appear near the top of all three: Apple, NVIDIA, Microsoft and Amazon. Their combined weight, which he states in prose and which the tables confirm:

S&P 500 — 24.62 per cent. NASDAQ — 32.35 per cent. Dow Jones — 15.41 per cent.

Nearly a third of the Nasdaq contract is those four companies. And look at Apple across the row: 9.79 per cent of the Nasdaq, 7.60 of the S&P, and 3.62 of the Dow. Same company, same day — the price weighting from lesson eleven is the entire difference.

His conclusion is the practical one: these four are the primary market movers in all three indices, so tracking the news about them and studying their price movement is essential — the performance of their stock can define the direction of the market. He adds that sector weights are worth considering the same way.

Apple, NVIDIA, Microsoft and Amazon with their weight in each of the three index contracts and the total for each — The same four companies weighted three different ways — and Apple in the Dow is a third of Apple in the Nasdaq. Click to enlarge

The sector behind each contract

The same table carries the sector split, and it explains the range figures from the previous lesson.

ES — technology 16.30 per cent, industrials 13.92, financial services 13.52, healthcare 12.33, consumer cyclical 10.93, consumer defensive 7.36, utilities 6.36, real estate 6.16, then communication services, basic materials and energy at 4.37 each.
NQ — technology 33.33 per cent, communication services 20.00, utilities 13.33, industrials 10.00, consumer cyclical and healthcare 6.67 each, then real estate, consumer defensive and financial services at 3.33 each.
YM — technology 20.0 per cent, financial services 16.7, industrials 13.3, consumer cyclical 13.3, healthcare 13.3, consumer defensive 10.0, communication services 6.7, then energy and basic materials at 3.3 each.
Which is why the Nasdaq contract has the widest daily range of the three: a third of it is one sector, so one sector's news is the whole index's news.

The sector distribution of the three indices, with technology the largest in all three and dominant in the Nasdaq — The S&P spreads across eleven sectors with none above 17 per cent. The Nasdaq puts a third of itself in one. Click to enlarge

Earnings, and what is in one

If a handful of companies carry the index, then the reports those companies publish are among the most important things in the market. Earnings reports come out quarterly and carry revenue, net income, earnings per share and other financial data.

Why he treats them as a market-level event rather than a company-level one: earnings from Apple, Microsoft or Amazon can indicate the overall market direction, precisely because of the weights above. They also shape investor sentiment, which moves more than the arithmetic alone would.

The four elements he lists:

EPS — net income divided by the total shares outstanding. Profitability per share.
Revenue — total income generated during the reporting period.
Guidance — the company's own forecast of future performance, which can heavily influence sentiment on its own.
Surprise factor — the difference between the actual result and what analysts estimated. A positive surprise typically lifts the price and a negative one drops it.
Which puts the emphasis in an unobvious place: it is not the result that moves the price, it is the distance between the result and the expectation.

The four elements of an earnings report he singles out, and why each one moves the price — Four numbers, and the fourth is the one that moves price — because it is the only one the market had not already priced. Click to enlarge

When the reports land, and what to do about it

Earnings are usually released during pre-market or after-market, so the company can publish without immediately disrupting the regular session. Which means the single most price-moving event of a quarter arrives in the session with the least liquidity — the one his own list called hardest to analyse.

And they cluster. When multiple heavyweight companies report simultaneously or over consecutive days, the market experiences its highest volatility. His table shows it plainly: four windows a year, in late January, late April, late July and late October, with the largest names falling within days of each other — and a couple, NVIDIA and Salesforce among them, reporting about a month behind the rest.

The dates in his table are the 2025 reporting cycle and have passed; what carries forward is the shape of it, not the days. Check a current calendar before the quarter.

He offers two approaches to that period, and does not pretend one is obviously right:

Avoid trading during the specified period. His example is Microsoft's release — because it holds significant weight in all three major indices, it may be wise to refrain from trading around it.
Or analyse the financial reports and align them with technical analysis, using the two together to identify entry points and capture longer trends.
And the closing note of the whole course: being aware of the timing of these reports, and preparing for the volatility they bring, is as important as the analysis itself.

Earnings released outside regular hours, clustering into four windows a year, with the heaviest names reporting within days of each other — The pattern from his table. Four windows a year, and the heavyweights inside days of each other in each of them. Click to enlarge

A quarterly earnings table for eleven heavyweight tickers, with most reporting within days of each other in each quarter — His earnings table. The dates are the 2025 cycle and have passed — what carries forward is the clustering.

What to take from this one

Three things, and then the course is finished:

A handful of names is the index. Four companies are 32.35 per cent of the Nasdaq contract, and twenty-five of five hundred are half the S&P. When you trade an index you are mostly trading those names, so their news is your news.
The hours decide when it moves. The futures run 23 hours, but the volume is in the 8:00 to 11:30 ET overlap and in the regular session behind it. The edges of the day are for information, not for the volume reading the rest of this course depends on.
Earnings arrive outside those hours, four times a year, bunched together. It is the surprise against expectation that moves price, not the result — and his own advice about the heaviest of them is that staying out is a legitimate choice.

Three panels: a handful of names carry the index, the hours decide when it moves, and earnings arrive outside them — The last picture of the course — and it points back at the first one, because location and timing were the argument all the way through. Click to enlarge

That is the twelve

From what a trend is, through the order book and the footprint, to the contracts themselves and the four companies that move them. The lessons are meant to be read in order, and the index page keeps them that way.

Back to the twelve lessons