when daytrading the ES, does anyone use the SPY for key trading indication?

Discussion in 'Trading' started by increasenow, Nov 26, 2007.

  1. when daytrading the ES, does anyone use the SPY for key trading indication, data?...does it mean anything to you in your ES daytrading approach...OR...is observing the SPY virtually useless in daytrading the ES...I think it is significant considering the SPY is the cash market(now) and the ES is futures market (later/future)...any thoughts,ideas?
  2. There is no information to be gained. SPY, the underlying stocks and the mini and big SP500 contracts are being heavily arbitraged against eachother. They contain no information "about the future".
  3. thanks...so, what is the thing to 'study'...actual cash SPX (sp 500 numbers)?
  4. DerekD


    Thing to study is the futures.

    For long term or even swing trading, you would probably do well with studying the cash index.
  5. Futures often over/undershoot. It's a good idea to watch the SPX as well. If you have a buy or sell indication in the SPX, just execute* in the futures contract without regard to the present state of its premium.

    * this information is not for "scalping ticks"... which, BTW, is waaayyy too difficult for mortal man
  6. Yes.

    SPY is extremely useful in trading the Emini ES.

    I did it for many years profitably prior to moving over to ER2 and the most profitable ES traders I know still use SPY to help them with their trades with ES.

    However, SPY isn't the only thing useful in trading ES because there are other key markets just as useful but for different reasons.

  7. thanks Mark...exactly what I was thinking...here is my take...the SPY is WAY too important to overlook and 'blow off' when daytrading the ES...here is why...the SPY:
    #1-is the #1 traded ETF in daily volume
    #2-is the #1 traded stock in daily volume...so movement in the ES follows $$$ movement in the SPY...there is..."something there (in tracking the SPY movement)...interesting!
  8. Personally, I don't find much additional value in the SPY. It does have a a short term anticipatory "expression of sentiment" in its gyrations around the actual value of the underlying cash, much like the ES (after all, the SPY is also a derivative of cash)... but it's not enough to be of significant value.

    If I had to choose only one of SPX or SPY to keep an eye on intraday after the opening, it would definitely be SPX.

    However, I do keep the SPY charted on a daily basis to reveal gaps... which the SPX does not reveal properly because of the way it's reported at the opening.