Leading and Lagging Indicators

INTC most of the time will lead their sector as well as much of the techs. Often the big daddy of the sector will lead its sector. Today CSCO was leading their sector nicely. Made for some pretty easy trading there. It does not always work out that way, but it is very easy to put a few charts on the screen and see if the big daddy of the sector is leading by very much it is leading. Like I said in an earlier post there is no one silver bullet here. But, most days there is one, you just have to find it.

I would not get too hung up on leading indicators. While they are a nice tool, they are only one of many. You can not build a house with just a hammer.
 
I agree in not getting to hung up on leading indicators. But everything that might give me an edge is interesting to me. Wathing a leader, like I watch the S&P and very much the TICK gives me plenty of room to react before major moves. It is not always working but it puts me on alert and gives me a good defense.

Marty Schwarts and Mark Cook was/is using this approach very succesfully.

Good Trading
 
If you follow the money, as in many things, you will see a valuable leading indicator. Since there is more money changing hands in the S&P futures pit (and eminis) than the rest of the overall market, it only makes sense to follow the Spoos. When there is premium to FV, the market will follow, when there is a discount to FV, the market will follow (downward). If you add the $$ involved in program trading, then you have an even stronger leading indicator.

When it comes to using certain issues (as INTC, mentioned above), be a bit careful...it can work because many traders jump to a "favorite stock" then jump aboard with or to hit on the down side. Because underlying factors (support, resistance, dividend yields, and institutional buying/selling) affect individual issues (as opposed to the entire market), the use of single stocks is not as reliable overall.

The S&P traders watch the bonds until they close at 3PM, and then you will see a bit of market "free-for-all" while the traders settle into the day ending pattern.
 
"If you add the $$ involved in program trading, then you have an even stronger leading indicator" ... are you saying the program trading kicks in with the difference between FV and the futures?
Thanks,

~EC
 
Originally posted by El Cazador
"If you add the $$ involved in program trading, then you have an even stronger leading indicator" ... are you saying the program trading kicks in with the difference between FV and the futures?
Thanks,

~EC
More...

Program trading kicks in when there is a price trigger set off on the futures, above or below FV for the current day. These numbers vary from (program)trading firm to trading firm based on their current cash situation (whether they are cash rich, looking for simple interest rate returns, or cash poor, looking for returns in excess of borrowing costs)...but in either case, they make for a good short term indicator.
 
So do you monitor the futures for a sudden jump and assume the programs are kicking in or is there a more reliable indicator of program trading activity? Thank you.

~EC
 
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