Futures – Can They Predict the Market?

Anything that can help us figure out which way the market is going to head is a good thing right?  YES.  And I use as many indicators as possible to give me helpful information, avoiding deep analytics as often as I can.  I’m sure you all know or have observed, the market seems to make some of it’s most significant moves at the open and the close of the trading day.  It has been said that the open of the market is determined by the amateurs and the close of the market is determined by the professional traders, and whether you subscribe to either of those ideas, the truth is, the market does move more at the open and at the close, for whatever reason.

Many traders, myself included look at the market and determine trades after the market has closed for the day and place trades before the market opens, hoping to catch that dip or rise that ofter happens at the opening bell.  What if there were an indicator that could tell you what direction the market might open on any given day?  What if that indicator were readily available?  Guess what, it exists and is readily available and its called futures.

I primarily trade the Nasdaq 100 Index (NDX) and the S&p 500 Index (SPX).  There are futures indexes for both the NDX and SPX, and I’m sure many more.  I watch the overnight futures almost everyday to give me some clues as to where the market is headed.  Specifically I monitor the following:

/NQ is the symbol for the E-mini Nasdaq 100 Index Future ETH

/ES is the symbol for the E-mini S&P 500 Index Future ETH

So what are these futures and where are they traded?  As you probably know, there are financial markets open all over the world at any given time, so when our US markets close, there are markets overseas the continue to trade.  With our global economy, what happens in other financial markets effects our economy and our markets.  In addition, people place orders when the markets are closed that get queued up for execution at the opening bell.  All these things and I’m sure a number of other factors effect the value of these futures.  So I monitor these mini futures as another small indicator of market performance.  One more tool to add to the tool belt.