What leads the U.S. Markets? Futures? Stocks?

A

Aranha

VERY IMPORTANT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Dear Friends,

I have seen many people saying that the S&P 500 Future PIT (Open Outcry) rules the market. That it acts as a leader and everyone follows it's steps (e-minis, stocks...etc). Others say that is the S&P E-Minis that rules, because they have more liquidity and volume. Then another guy say that it is the NDX, because MSFT has 10% of the weight...and therefore is the NDX that rules over all INDEXES.... but another guy says that MICROSOFT (MSFT) is the one because is has greater volume than the other stocks.... Others think that are the QQQ....other the SPY......and on and on.....

As we can see, it's very hard to know who is right and who is less right, and mostly ...to know the correct answer!...And I think that this is an important thing to all of us: To know who dictates the markets....

EACH ONE OF YOU WHO READS THIS THREAD, PLEASE SHARE WITH US YOUR OPINION. I THINK IT WILL BENEFIT EVERYONE!

So, in your opinion, who rules the market?
-Stocks? (ex: MSFT, INTC...etc)
-Futures? (ex: ES, NASDAQ FUTURE, S&P BARRA, MIDCAPS...etc)
-E-minis (NASDAQ, S&P)?
-Stocks INDEX (ex: NASDAQ 100 NDX, DOW JONES INDU, SPX...etc)
-BONDS/COMMODITIES/CURRENCY/OTHER INDEXES/OTHER SECURITY...etc

if possible, also tell why....

Thanx for reading...

I hope to be usefull to everyone.

Best Regards

ARANHA
 
While at different times each of them can appear to be leading indicators, no one- no index, no futures contract or group of futures traders, no individual stock, nothing rules the Market. The Market rules itself and will do what it will do. IMHO.
 
yep !
leadership is always changing but I think it exists.
However, since it is always changing, it is pointless to focus on that. With technical analysis you can trade a market in isolation and that's what you should do imo.

neo
 
aranha,

good question, unfortunately there is not a simple answer. It used to be the bonds lead the S&P's, many people traded by watching the bonds. seemed to stop working with influx of daytraders. for a while the futures lead the stock market due to influence of program trading. there is still a lot of that but it doesn't dominate like it once did, perhaps because there is more intraday volatility now and program trading spikes are not as significant.
 
Think about it for a minute. It is impossible for anything to lead the market for any length of time. If something led the market even for a few days, somebody would spot it, word would get around, everybody would jump on and the advantage would disappear. Actually there is one leading indicator but there's no way I'm tellin'. :)
 
I agree with Nicodemus. All of the factors mentioned must ultimately blend together or it will be spotted by someone and taken advantage of. For example the S&P futures premium constantly fluctuates as the futures and cash try to get into balance. There are big traders (i.e.- hedge funds, etc.), that play off of this every day by very quickly shorting the futures & going long the cash or vice-versa.

It's kind of like catching a bad bid/offer by a specialist, market maker, or fellow trader. Sometimes somebody just misprices and sure as sh**, someone else pounces on that opportunity. In that way, the markets are efficient! :D
 
Read into the quote " It is a market" a place where buyers and sellers meet. There isn't a leading indicator as all of the vehicles are used for buyers and sellers to meet.

rtharp
 
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