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On many occasions the tail wags the dog. The SnP future will start its move
before the indexes. That is why the premium expands. A prime example would be
what happens in the morning when the night session takes the future down or up
several points. It could be the hedge funds, the arbs or anyone else, it
doesn't make any difference, when the price moves you either make or lose
money. Ira
Earl Adamy wrote:
> I suppose this is subject to some interpretation, however I'm of the opinion
> that wherever the dog (cash market of s&p stocks) goes, the tail (futures)
> will follow. This is not to say that there is not arbing of cash to futures
> which shows up in the premium differential to fair value and that the
> size/direction of that differential is not, at times, a good indication of
> market direction. Also, one should keep in mind that only a small percentage
> of the pit trades are reported via real-time feed and that those reports lag
> the actual trade by the time required for the pit clerk to manually enter
> the trades.
>
> Earl
>
> -----Original Message-----
> From: swp <swp@xxxxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Date: Saturday, January 30, 1999 8:15 AM
> Subject: Re: Dow Jones Industrials Futures
>
> >The futures prices tend to lead the cash market, at least in the S&P
> >500. I assume it is also so in the Dow.
> >
> >Steve Poser
> >--
> >Steven W. Poser, President
> >Poser Global Market Strategies Inc.
> >http://www.poserglobal.com
> >
> >> Brendan R Smyth wrote:
> >>
> >> Is it feasible to day trade DJI futures contracts by monitoring price
> >> movement on the actual index with e.g. a 1-minute bar chart or do you
> >> need to monitor price movement on the contract you are trading?
> >>
> >> Anyone with comments or advice appreciated
> >>
> >> Brendan Smyth
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