imo NQ, ES and YM switch roles between lagging and leading all the time. as far as fake-outs go, es clearly leads there.
I agree, I saw them switching roles. In a few sharp moves during the last couple of weeks, YM was the leader.
Brother Scientist, in that case I guess I won't reach the true "Elite" trader status until I've flipped a few lots of the ES -FastTrader
Yes, they do switch roles. You can never fully rely on these indexes as "leading indicators", but from a statistical point of view (that is, highest frequency in comparison), the NQ, as the speculative market, tends to lead all other markets. While you might not trade following this, you certainly shouldn't trade against it! Have a look at it during the daytime. And if you're so doubtful, maybe you should also look at different timeframes. Since this works for me with staggering frequency, looking at market correlation and using superior correlation indicators, particularly in conjunction with the cash of each index, it cannot be wrong. ~Scientist
Dear Fast_Trader, I think most ppl don't even know what ES stands for... Here some suggestions from the Acronym Dictionary: Acronym Definition ES Early Start ES Earth Sensor ES Earth Station ES Echo Sounding ES Economic Severity ES Edge of Shoulder (roadway term) ES Edge Switch ES EdgeSoft ES Edison Screw (type of cap on an electric light bulb) ES Edit Switch ES Edit-Strike ES Effective Size Es Einsteinium (element 99) ES El Salvador ES Electric Seats (automotive) ES Electrical Stimulation ES Electricité de Strasbourg (French energy provider; aka EdS) ES Electronic Shopping ES Electronic Storage ES Electronic Support ES Electronic Surveillance ES Elementary Stream ES Elevated Standards (Sony) ES Eligible for Separation ES Embedded Simulation ES Embryonic Stem ES Emergency Services ES Emergency Supply ES Emission Spectroscopy ES Emmitt Smith (NFL player) ES Employment Service ES Employment Statistics ES End Strength ES End System ES Enemy Status ES Engelmann Spruce (wood) ES Engineering Sample ES Engineering Specifications ES Engineering System ES English Shepherd (dog breed) ES Engrossed in Senate (bill passed and formally typed) ES Ensemble Studios (game company) ES Enterprise Solutions ES Enterprise Systems ES Equipment Scheduling ES Equipment Section ES Equipment Specialist ES Errored Second ES Escape ES España (Spanish: Spain) ES Español (Spanish) ES Espirito Santo (Brazil) ES Estimating Service (insurance) ES Estonia ES ETSI (European Telecommunications Standards Institute Standard) ES European Section ES Eurostar (Italian railways) ES Exceptional Survival ES Executive Sedan ES Executive Summary ... And many more ... ~Scientist
Which leads depends on the "cycle" the markets are in. The bluest of blue chips have underperformed the rest of the market pretty badly recently. However, if you go back to the time when the NASDAQ was ending it's dive off a cliff, that was a different story as to who lead whom. Today, technology is again "hot" and therefore you will often see it (especially semis/software/internet) lead the market. However, to blindly follow the NQ without understanding the current action and the ranges that are likely to entail is dangerous at best. I was at the Chicago Expo this week. There was a "contest" between a couple of Alaron spoos traders. We were all trading the ES and NQ live along with them. At one point early in the morning on Friday, the NQ went negative and the ES was postive. One of the traders had been trading the opening range heavily (and mostly shorting the ES the whole morning) had been getting hammered into a $4K loss. But he was pretty sure he was right as NQ had crosed the zero line in the negative direction, while the ES was still happily trading strongly positive. So he BOUGHT the NQ in equal numbers as he was short the ES. This is a "hedge" in that he had removed the market risk from the position, but was still positoned delta short since 1 ES has more value than 1 NQ. As the spoos headed down and it was becoming clear that the leadership of the NQ was taking over, he got out of HALF his long NQ and simply let ES catch up, then the other HALF soon thereafter. He turned a -$4k loss into a +$1600 win (I do not know what happened with the position, as the spoos then went vertical the rest of the day - LOL) nitro
Excellent post Brother Nitro! Which one is leader at any given timeframe is, of course a matter of cycle. I have a complete (and constantly updated) statistical evaluation of what which index tends to do at what time of the day, and how it tends to affect the other indexes. It is good to have a broad spectrum of statistical information and correlation indicators. Regarding the "hot" techs - I've got a few heavy techs I always have in my field of view (on small charts) - My -least- is generally MSFT and INTC, which very often are driving market forces and even often "lead" the indexes. However, they also follow them pretty closely, so again, objectivity is important. Issues such as SUNW, ORCL etc are definitely always good to have an eye on. Amazing story regarding those Alaron traders! I love this kind of stories. Anything else you've seen / learnt there? Tell me more! Just a couple of questions: Regarding their losses/wins - Any idea how much equity did they have / how much did they risk in % terms on each trade? Regarding their hedge - Why did they put in the same #of contracts as a hedge, rather than some degree of heavier position on the NQ (which is 60% smaller than the ES at least in terms of tick size)? Any explanation? I'm not all that versed yet with "hedge" trading, unless it's about hedging a position in the same issue, so any explanation is greatly appreciated. Yours Greatfully, ~Scientist Currently listening to: <i>Miles Davis - Amandla</i>