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-----Original Message-----
From: larry williams <larrywms@xxxxxxxx>
To: omega-list@xxxxxxxxxx <omega-list@xxxxxxxxxx>
Date: Tuesday, February 02, 1999 10:25 AM
Subject: Re: cash ,,,,
:Cash can be of value, but cash is often not the same as the futures,
:as an example the cash ma have a diffrent protien content or moisture
:as in the grains, a strange delivery point, etc. So , don;t draw too
:many conclussions from cash, at least as to the difference in price
:between cash and futures,
:
:Breakout is cash (ala trend lines, turtle strategy, et.) tend to be
:better than breakouts in just futures--but---it seems to me only on
:the long side. That's about all I;ve been able to figure out about
:cash in the last 30 some years.
:
:Larry Williams
:
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*************************
Dear Larry,
Your point is well taken re anomalies between deliverable and
non-deliverable grade cash commodities. However, to say that you would not
draw too many conclusions regarding changes in the basis is slightly
misleading. As I'm sure you are aware, virtually the entire commercial
trading community lives and dies by changes in the basis.
If you think about it Larry, you have for many years been a proponent of
analyzing inter-month spreads. The relationship between the basis and near
month futures is quite similar and in some respect more foretelling. The
problem for specs like us is obtaining accurate and timely basis data
whereas inter-month spread data is not a problem.
Even you have written, Larry, how changes in the SP500 premium (or basis)
precede changes in SP500 futures. The principle is the same whether you are
talking stocks or grains.
Dtrader
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