Quote from Lawrence Chan:
Yes. ES can move independently from the stock prices forever.
That's how Fed stepped in in 87 to stop the crash.
Once someone drive the index future to a direction that is so overpriced (or underpriced), tons of program buy/sell orders will kick in to "lock-in" the profit between the future contracts and the underlying stocks.
Remember one simple fact - 95% of the outstanding shares in stocks are valued by the change of hands of the remaining 5% shares traded day-in, day-out.
http://en.wikipedia.org/wiki/Law_of_one_price
remember because of BSC the fed is watching the investment houses very closely for now. This is far from over not to mention
"moral hazard" (will the scumbags be encouraged to steal again).
If you were long BSC above $10.00 you are pretty pissed off and probably consulting a lawyer or two. Vix at 23.10 down .15 on a bad jobs number???
