YM & $DJI, Chicken & The Egg?

E

ess1096

I have been daytrading the YM lately with decent success. I'd like to ask a question to traders who have been trading YM for a while.
I have been keeping a chart of $DJI open and marking support & resistance on it. I wait for S/R to fail on $DJI before pulling the trigger on YM. I notice that sometimes support/resistance will fail on YM, however slightly, while $DJI holds.
So my question is, in your opinion does the dog wag the tail or is it the other way around. Which one leads the other?
Thanks for your opinion.
 
check out this link.I believe it will help..click here http://www.elitetrader.com/vb/showthread.php?threadid=103865

Quote from ess1096:

I have been daytrading the YM lately with decent success. I'd like to ask a question to traders who have been trading YM for a while.
I have been keeping a chart of $DJI open and marking support & resistance on it. I wait for S/R to fail on $DJI before pulling the trigger on YM. I notice that sometimes support/resistance will fail on YM, however slightly, while $DJI holds.
So my question is, in your opinion does the dog wag the tail or is it the other way around. Which one leads the other?
Thanks for your opinion.
More...
 
the futures are a speculative and hedging instrument based on the underlying 30 dow stocks (price weighted as per formula)

the purpose of the futures is the above reasons

except in rare circ's, the futes will stay within the fair value bracket, or riskless arbitrage ensues

GIVEN that, it is MUCH easier to take a spec position or dump one, etc. via futures than via the underlying stocks

hence... the YM TENDS to slightly LEAD the underlyings.

not always, but more often than not

in cases of extreme panic, which we haven't really seen in a while, the YM (and ES and pit contracts) can more significantly lead the cash
 
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