The only thing es has to follow is its underlying s&p 500 the index, maybe this is why es can be so trendy sometimes.
Es follows spx
- Thread starter hurricane_sh
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Index follows the general trend of the stocks listed in his index. Index's price derives from its constituents.
not really. That is why when it comes to index analysis one of the recommendation is to take a look at the Breadth data to know what index's listed stocks are doing - where do they move, where are they traded, on what volume they are traded and etc.
This is the silliest thread title ever... it's like saying "green is not red" or "rain falls and doesn't go up".
Off course ES follows SPX or SPX follows ES... because they're the same... future and underlying... if one wouldn't follow the other you can do some serious stuff...
Future = index derivative; Index = underlying stocks... duh
In a sense, there's a little more to it than that: the two are separate instruments, after all: price changes in the S&P are caused by imbalances between buying pressure and selling pressure of the S&P, and price changes in ES are caused by imbalances between buying pressure and selling pressure of ES.
Exactly so - and the fact that people (HFT's) are regularly and automatedly (if that's even a word) doing so is actually part of the reason for the two instruments being (from the independent/retail trader's perspective) almost 100% correlated.
So I'd say it's only a "fairly silly" thread title, myself, not "the silliest ever".
So I'd say it's only a "fairly silly" thread title, myself, not "the silliest ever".
All right, I'll back down to fairly silly
It may sound silly, but this is my most important conclusion after watching es chart for months.
es follows spx, but spx doesn't follow es. Think about it, if spx movs, es must follow it, but if es moves due to imbalance of buy and sell, spx may not follow.
I find it really amazing that es can be so trendy, despite any technical signals.
es follows spx, but spx doesn't follow es. Think about it, if spx movs, es must follow it, but if es moves due to imbalance of buy and sell, spx may not follow.
I find it really amazing that es can be so trendy, despite any technical signals.
According to the specification the ES have to follow S&P 500 index:
http://www.cmegroup.com/trading/equity-index/us-index/e-mini-sandp500_contract_specifications.html
There is supply/demand on the ES which may affect ES slightly and push it in the different to S&P 500 direction. Yet, at the end it has to go back and it has to follow its benchmark index. During the overnight trading when indexes are not traded, the ES price movement are based on the supply/demand of ES. Still, ES traders look on the S&P 500 stocks and based on after market closes and overnight events they base their overnight ES trading on expectation of the next day S&P 500 movement.
http://www.cmegroup.com/trading/equity-index/us-index/e-mini-sandp500_contract_specifications.html
There is supply/demand on the ES which may affect ES slightly and push it in the different to S&P 500 direction. Yet, at the end it has to go back and it has to follow its benchmark index. During the overnight trading when indexes are not traded, the ES price movement are based on the supply/demand of ES. Still, ES traders look on the S&P 500 stocks and based on after market closes and overnight events they base their overnight ES trading on expectation of the next day S&P 500 movement.