If I look at Dow Jones Futures, we made a higher low and held nicely.... but on the dow index, we made an equal low from February lows. Why is there this discrepancy? And if I were to analyze the charts, which chart would I trust?
Isn't it because the futures "payout" one way or the other won't happen for some time, so the price of the "spot" moves different (generally faster) than the futures?
The future is usually higher than the spot, and does not always mirror the spot. Remember, it is the future. Man.
This is probably worth considering also. https://www.investopedia.com/ask/an...dity-spot-prices-different-futures-prices.asp
so if one were to analyze a chart to forecast future prices, which chart would one be paying attention to?
Uhm... I think you're pointing to the fact that the futures trade also during the night, which meant the low in the futures was about hrs before the stock market opened... ? EDIT. sorry, you were talking about lows a few months ago... but it's likely still the same issue. Futures trade 23 hrs a day, stock market only 6.5 hrs. Which means in the middle of the night, during Asian/European session, the futures can go up or down significantly, which wouldn't show up on the Index levels. Which chart to take? Depends I guess... I'd take the futures, since you get a better world-view. But on longer dated charts you will run into problems, since futures are only liquid for the next 3 months. And, trading volumes are a lot bigger during normal trading hours.
The futures price of an index is directly and completely tied to the spot taking into account dividends and interest. It has absolutely nothing to do with what anyone thinks the index will be at in the future. Anything other than than represents a risk free arb opportunity which would be instantly arbed away. Can't recommend a finance 101 MOOC enough, there is a lot in finance that's non-obvious like this (it's certainly reasonable one would think "futures" represent a guess on future prices when you first learn what they are, it's in the name for Pete's sake!) but not too hard to learn and certainly much easier to learn than to reinvent the wheel and derive or figure it out the hard/expensive way yourself!