The Market Measure list presents a spectrum of 53 large-cap, broad-market, volatility, sector and industry indices. Not all sectors and industries can be presented, but we have included the most important ones available. Very few indices provide volume, thus volumes are not given.

The purpose of the MM list is to gauge how the different indices are performing. The most basic information the MM list provides is whether a particular index is up or down and its volatility trend. However, we can also compare the performance of an individual stock to a relevant index.

For example, a large-cap stock can be compared to the Dow Jones Industrials or S&P 500, a large tech can be compared to the Nasdaq 100, a small tech to the Nasdaq Composite, a semiconductor stock to the semiconductor index, and so on.

But the MM list is much finer-grained than that. What we really want is a more detailed, usable comparison of stock to relevant index. We want to know more than, for example, whether a semiconductor stock is up when the SOX index is up. We want to know how much the index and stock each are up, on both the 20-day and 50-day time frames.

Performance is a far more valuable comparison.

We also include a couple of volatility indices, the VIX and VXN for those who like to keep an eye on market volatility.

I typically start my covered call process by looking at the market, as described in approaching the lists. I look at charts and get a feel for direction. Then I look at the MM lists. This gives me a feel for what important indices are doing - gives me something to which I can compare a stock's MADI and volatility. I'm looking to see where the strength is at the time; and the weakness.

In order to avoid going back and forth from the lists to the MM list, I will note the MADI values for the following indices on a notepad, along with 10-day and 30-day volatilities.

Industry/Sector Performance

After viewing market performance with the above indices, I first sort the indicies by MADI, seeing if any industries are showing more strength than the larger indices, which can indicate a cluster of good trades. I also look for industries faring worse, and avoid these. While we still can find trades in a weak industry, it certainly is not the first place to look.

I scan the MM list, looking to see how different sectors and industry indices are performing. If I see that a particular industry or sector is currently strong but not too overheated, I will also make a note of that. Remember, my method of trade selection involves putting as many of the odds as possible in my favor. This is how we find high-probability trades - those most likely to work.

Another way to sort through industry performance is available in our Research Page by clicking on the Ind. Rank link at the top of the Research Page.

I don't really use the VIX in trading much, but I like to know where it is. It is rough gauge of premium available at the time.

Once this process is finished, I head over to CallWriter's Global Select (Dividends) lists. Because it short-cuts a lot of the necessary fundamental research.

Here's more on using the Market Measure List.