Please explain

Discussion in 'Trading' started by tradebanzai, Nov 29, 2006.

  1. Yesterday I've read in Marketwatch such a phraze: "The selling was driven by the impending expiration of futures contracts". Does it mean futures on indexes?
    Can someone please help to understand cause-and-effect relation?

    And more generally, how does action in futures on indexes influence stocks? I thought futures market is separate (of course to reasonable extent cause everything is related on the market). If someone is selling S&P futures, how can this fact affect the stock market?

    And the other question is how is the future's price being formed? Lets say lots of people are selling S&P futures. Logically the price should go down. But if S&P index is moving up, the price should go up. So is this market absolutely follows the principal index?

    I would really appreciate any thoughts since this is really my weak side.