Which is it? I say the question is no question at all. During regular trading hours, cash indexes drive the futures markets, plain and simple. The broad market leads, the ES follows, end-of-story. Someone, please show me the error in my logic. Here's my reasoning: Now, I know many have observed that futures lead the cash indexes; that's not in dispute. What IS in dispute is whether or not that is a causal relationship. If I went out and bought an iPod about three years ago, did I influence the other millions of people to go out and buy one as well? Or is it more likely that the iPod is a very valuable, utilitarian consumer product, destined to become popular on it's own merits, and I was merely one of the first to recognize that and hop aboard the train early. This is my main point of contention with those who say that futures lead stocks. I maintain that, due to the sheer amount of volume, the stocks MUST lead the futures. There is no other way it can be. Those who view it as a push-and-pull type relationship -- where sometimes one leads, and at other times the other one does -- are, in my view, wrong. Now, this is not to say that futures don't have room to play around the cash value price; they absolutely do. But whenever they get too far out of line (with the fair value), the buying / selling programs hit the market and bring them back to fair value in short order. If the volume buying and selling of stocks causes the stock prices to rise and fall, it becomes pretty easy to see how the cash index can lead the futures. If the stocks that cumulatively make up the cash index drive the index ( i.e. the broad market) higher, the futures have no choice but to follow (buy and sell programs will see to that). But, someone, please, pray tell, how can the opposite happen? Let me put the question this way, and it's basically a two-parter: 1.) If the futures DO lead the stocks, how can stocks possibly lead the futures? (Circular "chicken-or-the-egg-argument" logic) 2.) How can the relatively small number of traders buying in the ES influence the hundreds (if not thousands) of market making specialities in S&P large-cap stocks to automatically buy as well, in order to bring the cash index in line with the futures? In my experience, the opposite is the fact: Any excessive exuberance in the futures will soon be quashed and the futures will come back to a more reasonable level. The futures MUST hover around the cash index, not the other way around. It's practically the definition of a cash index. Comments?