This may have been covered, but I was wondering what specific intraday indicators others are having success with. I see guys posting in chatrooms levels for the trin, the tick, tiki, prem, vix.x, etc. currently I keep things pretty simple.....5 minute charts of the naz and s&p futures along with watching the vix.x and trin from time to time. What i would like to use more is the prem or the spinx (the difference between the cash and the futures). I have this charted, but am not sure I am using it correctly. If anyone uses the prem, could you please post the correct interpretation. I know that watching it allows you to get an idea for when program trades might hit the market....but how exactly does that help you. The institutions buy futures but sell stocks? prehaps someone could elaborate on the prem and other could add their favorite indicator and how they use it. thanks all.
Put up a S&P futures (tick) chart. Right next to it put up a quote from the following equation: Spinx - Fair Value = Prem. This will give you an easy way to quickly see if you want to enter long (prem positive) or close long, enter short (prem negative). This is one of several factors that you should be looking at before making any trades. Hope this helps! Don
Don, When you say "tick" chart, what exactly are you refering to? Also, what charting software do you use to chart your formula? Thanks
We use First Alert (and our own excel spreadsheet) to display this stuff. A tick chart is just that ....a display of every "tick" as opposed to 1 minute or 5 minute charts. Don
Don, do you find prem more important than just the direction of the futures itself for entering long, closing long and entering short?
Don and Thug_Life, Thanks for answers. Btw T_L, very informative site. I had better start learning this aspect of trading as it appears that trading manually may soon be like competing against a calculator with a pad and pencil.
So if the prem is postive look for long and if negative look for shorts? When I look at what the prem did today: http://finance.lycos.com/home/livecharts/default.asp it basically bounced between a dollar fifty and zero. So if I take fair value from that website at 1.28, basically what you guys are saying is when the prem is above 1.28 look for longs and when it is below 1.28 look for shorts? Also lets take the program buy and sell ratio's listed on that programtrading.com website which were. Program buying at 2.18 and selling at 0.00. If prem went to 0.00 it always seemed to bounce back. So what happend. Institutions sell futures and buy stocks? Is that right? So if the prem got to zero....and a sell program is about to theoritically kick in, I would want to do what? That is where I am confused I think. I understand that if the futures have a postive bias or negative bias you want to assume that they "lead" and lean that way, but I am having a hard time understanding these buy and sell programs and how exactly to play them, or how being aware of them can make or save you some $$$ could someone elaborate further. thanks. avlanche
Put up a S&P futures (tick) chart. Right next to it put up a quote from the following equation: Spinx - Fair Value = Prem. This will give you an easy way to quickly see if you want to enter long (prem positive) or close long, enter short (prem negative). This is one of several factors that you should be looking at before making any trades. Hope this helps! Don Don, I thought the premium was spooz-spx cash? Also spinx is the latest futures contract I assume?
for this, I do the following: S&P Futures minus (S&P Cash + Fair Value) then, take that result minus Fair Value (in Real Time) it kinda gives you areas where the market could be in a buy/sell zone based on fair value. look at sites like www.programtrading.com