Correlation between ES and S&P500

Quote from el pollo:

So I guess actual news that is released in the Asian/Middle East markets is purely fiction and does not effect the overnight ES markets? What about S&P 500 co's that release their earnings after 4PM, just a few of those!

ES does not mimick the CASH S&P index my friend.

I sometimes wonder if people post purely for the sake of seeing their name on this board!
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The original question in the thread was "what keeps the prices of the ES and the S&P so close to each other?". After several people gave their answer, I then added that outside of regular trading hours there is not an real time S&P Index to use as a benchmark.
Of course, as the OP said the ES and the S&P stay fairly close during most of the regular trading hours. They don't have to, but they usually do. Then, during the off hours it does not have this benchmark (I didn't use the word "mimick", you did.) From the CME website re ES: " All open positions at close of last day of trading are settled in cash to the Special Opening Price on Friday a.m. of the S&P 500 Index." I would think such a fact might make the S&P a benchmark.
Every trader knows that around the clock there are many exchanges, many indexes, and lots of breaking news that will LATER have an impact on our markets.
I wish some knowledgeable person (not you), would weigh in on this specific subject of what are major influences in our our off hours ES market, such as: do the big funds play in it, is it popular overseas, how and when is it manipulated, do many big hedgers use it to take positions, or is it mostly short term speculators? Hope you have a better year in '09? Stosh
 
Quote from Stosh:

I wish some knowledgeable person (not you), would weigh in on this specific subject of what are major influences in our our off hours ES market, such as: do the big funds play in it, is it popular overseas, how and when is it manipulated, do many big hedgers use it to take positions, or is it mostly short term speculators? Hope you have a better year in '09? Stosh
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Unless there is a major economic/world news event after RTH, the ES is mostly traded by overseas speculators, especially at 3:00 am ET when the Europeans weigh in with their opinions.

The volume is too light after hours to suggest that big hedgers are active.

And during RTH, ES is increasingly becoming a speculators market as the small guy continues to leave equities for a bigger bang for his buck.
 
It appears to me that "after-hours" when ES reopens, technical trading rules.

Supports that have been well defended encourage buying & vice-versa.

I've sometimes gotten the best possible fills overnight, usually around 3-4am Central time. Volume is generally light but it's about the level NOT ABOUT WHAT TIME OF DAY IT OCCURS.

Does this help answer the original question?

What guides ES after hours?

In my opinion, how the chart looks. Absent 'event driven' moves the market is a piece of art based on what "makes sense" visually.
 
To rolextrader and GCSICLRBC: Thanks very much for your info. I have been trading ES for a few months (a lot at night) and find it very fascinating, though difficult, to analyze, esp in the off hours. I have some books on stock index futures, but nobody seems to give much insight about the off hours. I hope some others will chime in with their observations on this. Stosh
 
Quote from GCSICLRBC:

It appears to me that "after-hours" when ES reopens, technical trading rules.

Supports that have been well defended encourage buying & vice-versa.

I've sometimes gotten the best possible fills overnight, usually around 3-4am Central time. Volume is generally light but it's about the level NOT ABOUT WHAT TIME OF DAY IT OCCURS.

Does this help answer the original question?

What guides ES after hours?

In my opinion, how the chart looks. Absent 'event driven' moves the market is a piece of art based on what "makes sense" visually.
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Good point.

Because the action is very slow, one can make money using conventional TA indicators that fail during RTH. Trendline breaks on short term charts in particular seem to work well as I view that overnight action in hindsight.

Good luck.
 
Quote from shark:

Does anyone know what exactly keeps the prices of the ES and the S&P so close to each other? If the price of the ES is determined solely by traders, wouldn't it stray away from the index's price?
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Technically, the difference between the cash market and the futures are the dividends you would earn if you held the s&p 500 stocks. Obviously, when the futures contract is close to expiration the spread is narrowest. Do you follow fair value? The ES trades basically 24/7. So, if the ES goes below the close of the cash market during the hours the cash market is closed, then fair value is determined. At the open of the cash market, arbiteurs "correct" the discrepancy by buying or selling the s&p stocks.
 
Quote from GCSICLRBC:


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What guides ES after hours?

In my opinion, how the chart looks. Absent 'event driven' moves the market is a piece of art based on what "makes sense" visually.
More...

The problem with this view is just that it is plainly US-centristic and it ignores that we are living in a completely globalized market.
(Which is btw one of the reasons why ES is kept active and tradable also in the after hours)

You may just want to have a look at e.g. DAX - when it goes down, ES (again "after hours") goes down, when it spikes, ES spikes. ES does not move to make the chart look better, whatever that might mean. Which index leads can easily be seen by taking a look at Eurex (European futures exchange) daily volume numbers.

This whole thing is due to the fact, that the US economy reacts to global news. "Events" are not just happening in the US.

As soon as you understand the thing the right way around it opens trading possibilities.
 
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