Many discussions (an understatement) about this topic here at EliteTrader.com in the past. In-depth discussions, arguments, debates et cetera. http://www.elitetrader.com/vb/search.php?s= It's simple, they all take turns in leading the other through out each trading day. However, if your a price action only trader (no indicators) that's doing a lot of intermarket analysis while trying to figure out what needs to occur in the market for one to lead the other... You may as well start debating about when does the DAX lead the market, when does FTSE100 lead the market, when does NQ lead the market, when does ES lead the market, when doest Oil lead the market, when does Gold lead the market and so on. My point with the above...if your going to focus your trading methodology on what YM or vice versa... You need to be watching all the markets (DAX, FTSE100, ES, NQ, ER2, Oil, Gold et cetera). Heck, I know a profitable YM trader that gets his clues about trades from EuroFX EC and it has nothing to do with price correlations. There is no one leader regardless if your a scalper, day trader, swing trader or position trader. Several times a week or during each trading day there is someone (particular trading instrument) that is getting the attention and the other gathers around it to follow its cue. It may last a few seconds, minutes, days or weeks. Who will be the leader during the next trading session is a good guess. Then again, why does it matter? Mark
With all due respect Mark, it isn't nearly as complicated as it sounds in your post above. ((YM07H - INDU) - X) Where 'X' is the offset between the two. One can determine the offset by heading over to indexarb.com or by going 'old school' and doing it yourself (its only subtraction after all) during periods of market calm. I have the current offset at 36 (but this could change come Monday morning). For those using Qcharts, simply throw the above formula into a Quotesheet and then chart it (Histogram). -2 to +2 falls under the category of 'noise' and should not be taken as a 'signal' of any sort. Anything outside the Neutral Zone and you have either the futs leading the cash or the futs 'coming back' to the cash. Jack Hershey describes this phenomenon as "Stretch / Squeeze" or STR / SQU in many of his posts. I'm confident the ET Search Function can provide a significant amount of material from Jack about the phenomenon. Good trading to you. - Spydertrader
I think we are talking about something different or have a difference of opinion of what the question is about. Also, isn't Hershey into intermarket analysis? Maybe I'm getting him confused with someone else. In addition, what I'm discussing is fairly simple that anyone that has the time to monitor a bunch of different markets (side by side charts for a few months) that have a intermarket relationship will probably figure it out on there own if they are into correlations of who leads what and when. My point, there are days when the DAX leads the market. There are days when Oil leads the market. There are days when something else is leading the market. Thus, if someone wants to know what really is leading YM or when YM is leading the market... Don't confine yourself to using the cash as your sole source for determining the leader when in fact other markets are leading. Mark
This very well may be the case. I thought the OP needed a way to determine the relationship between the YM and the cash market. STR / SQU does just that. As to which markets lead / lag another, I'll save that discussion for another time, but as you point out, it isn't that difficult to calculate. Good trading to you. - Spydertrader
Mark, As you ask, does it matter? No, it doesn't although it is an interesting subject. To restate the original question, with reference to movements on the cash DOW, which future best mimics its moves (leads or lags, doesnât matter) â Dow, S&P or NASDAQ futures? Or perhaps as Spydertrader put it, the ârelationship between the YM and the cash marketâ. (I do have a tendency to complicate simple things.) Spydertratder, What is STR/SQU? Iâm guessing it's a reference to the material youâve already cited (not read yet). Grant.
Bearbelly, As in "Basis" or future discount/premium to cash? In the meantime I've done a search and this has provided leads. Grant.
I contend that anyone who needs another market to trade any of the emini markets does not have a system that gives an edge, much less is robust......I trade solely the NQ....only....I never look at or listen to external information...If fomc blows out my system entry I simply lose the same amount I lose any other time within 1 or 2 pts....concern about other stuff creates mind bias..mind bias creates account drawdown, more often than not....I have a multi year developed mechanical system...market cannot do but 2 things....chop and run....think about it, why do I need anything to tell me what is happening when within 36 inches of my eyes it is showing me if it is chop or run and what is highest probability going to happen....mind doesn't get the opportunity to trip me up very often, and if I have conflicting signals, I simply wait for next signal.......Mark, you have been around for a long time and I believe you to be one of the few who are for real...with class..thanks for the enjoyable posts........george
excellent post george! I couldn't agree more. Too many thing in your hands tends to mess with your judgment . I've been there, that's why I can relate with your comments. Regards