how is it all the indices, equities & futures move in sync to one another if there are all made up of different stocks. also who controls the majority of volume in the market? institutional traders? there's so much to ponder about. someone please shed some light.
Not sure why they move in tandem, maybe because their all the same asset class and the market sentiment is that people are still weary? As for who makes up the majority its going to be hedge funds and mutual funds. Before all this cracking in the wall that happened as of the past couple of months, hedge funds use to control something like 80% of the volume, but only 20% of the money. Whereas mutual funds controlled something like 80% of the money and only 20% of the volume. Those %'s are probably rounded out, but I read it somewhere in like the Economist a year or so ago. Might have changed, but it gives you a general understanding. Same old lesson: Don't fight the trend.
It averages out because there are dozens of stocks in each index. If there was just one stock in each of the main indices then there would obviously be less correlation between everything.
There is a lot of pairs trading and spread trading to keep those indices and stocks "in sync", until something weird happens to blow out those algos.
Imagine a room of hamsters in separate cages. Each cage is a trading instrument. Each hamster has its own unique purpose. When the hamster starts to slow down or go too fast, losing his purpose in life, he is "realigned"
I do not ponder such questions as they do not enhance my bottom line. It is an important observation to have made though.