Expert: Paul Henneman - 12/17/2010

Question
Hello:

What is considered a good point gain for the Standard & Poors 500 index?

For example, when the DJIA has 100 points or more point increase, this increase is generally good for the number of stocks that trade in this index. But I have never seen the S & P 500 have a 100 point increase in one day even though it has more stocks in this index; so what is considered a good point increase for the
S&P 500?

I thank you for your reply.

Answer
Kenneth,
   Thank you for your question!
Yes, the Dow Jones Industrial Average and S&P500 use different metrics to create the score for each index. So while the Dow Jones trades at nearly 11,500, the S&P500 trades at just under 1250.  A one hundred point increase in the S&P500 would mean nearly a 10% increase, something that is certainly not likely to happen in a day.  But a 100 increase in the Dow Jones would just less than a 1% increase, much more likely to occur.
   The ultimate answer to your question is to simply look at the percentage increase or decrease in each index, not the actual number.  A one percent increase or decrease is a large day, two or three percent is a huge day.  This applies to both indexes.

I hope this helps. Please do not hesitate to follow up with me if I can be of any additional service,

Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com