I was wondering if any one of the Naz 100 stocks historically follows the futures better than others? Is there any research on this? Any ideas? Thanks, Kempo
From what I understand, it depends on two things among others: 1. The 'Weight' a stock has in the NAZ100 index, you can get this info from nasdaq.com 2. The higher the price, the better it follows the futs.
I've heard this idea brought up several times, but I never fully understood it. How exactly do these stocks follow the futures? I mean, do you look for technical patterns on futures charts? Does this 'following' last just a few seconds? Minutes? Do you need a voice feed of the pit to benefit from following the futures?
Since the Naz 100 is a weighted composite of 100 stocks - Wouldn't the stocks with the higher weighting be more likely to lead and not follow the futures? Then, wouldn't the lower weighted (lower mkt cap?)stocks be the ones more likely to follow? And if they do follow, how long before they start to follow? This is why I was wondering if anyone knew or if there were any research as to which stocks follow the futs better. Kempo
Well, the answer is one word - ARBITRAGE (excuse my spelling if wrong). If there is a fast pop on the futs, the arbitrage people will try to sell the futures and buy stocks, and works the same way on the downside. Since it requires less shares of a higher priced stock to kinda of match the value of a futures contract, those will follow better than the lower priced stocks. If you observe the market for a while, you will see the lag is between a few seconds to a few minutes, depending on the way a particular stock moves.
dozu- Thanks! Question! Let's say that I like to enter a trade on pullbacks to 15pd. moving averages (pick your time frame)and look for a reversal. So--the naz e-mini's pullback to their 15min, 15pd MA. So, now I should enter my stock at that point? Or do you somehow calculate the delay and then enter? Thanks, Kempo P.S. - just trying to learn how to use the futs as a tool
Honestly, I don't use futs as much as a lot of scalpers do. I follow a basket of stocks and look and the futs to make sure I don't trade the wrong side of the market, so if futs are in rally mode, I try to long the strong ones in my basket. To answer your question, it depends on your trading style, I saw somebody shared his JNPR scalping experience following the futs. If I see futs bounce off MA, I would scan through my watch list and look for stocks that are strong for the day (above 8 period moving average on daily, 60min and 15min charts, above opening price) and have minimum risk profile (i.e., I can set a tight meaningful stop) and go long.
Here is the conclusion The gap between future & stock: 2 SEC The successfull synchronization rate: 70%