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Discussion in 'Futures Trading' started by Stockaholic, Apr 4, 2016.
Futures Trading: Indicies
(/ES, /YM, /NQ, /TF, /NKD, /VX)
Dow crosses 20000 for first time Wed.driven by reflation trade.Lifts #Asianmarkets today $NIKKEI $HSI $KOSPI $DJIA
S&P 500 at record high Thur. as Trump hints business, individual tax reforms. Financials gain 1.4%.
Taxreform hopes reignite Trumpflation trade. Drives Wallstreet to record highs Monday.
I don't mean to come across as an ass or anything, but please don't bump this thread unless you have something futures related that you want to discuss in here. Since this is the "indices" thread, that would be the /YM, /ES, /NQ and /TF specifically. Thank you.
Wallstreet means its indices, /ES, /NQ in particular. But ok, I understood, I'll post related questions to discuss henceforth. Tnx for your remark!
Dow breached the 21000 mark for the first time yesterday, S&P and Nasdaq hit record intraday highs post-Trump speech. Overall, the US markets are up more than 10% post elections driven mainly by anticipation of "phenomenal" tax reforms, fiscal boost and financial deregulation.
But is this rally sustainable? Consider this:
1) The S&P500 Shiller PE (Cyclically adjusted PE ratio - CAPE) is currently at 29.52, about 77% higher than the historical mean of 16.7. This level has been exceeded only a few times before - including the housing bubble of 2008, dot com mania of the 1999 and Great Depression of 1929, indicating that the current market is grossly overvalued
2) This puts immense pressure on the earnings to match up these high valuations. Agreed, earnings are expected to receive a boost from lower taxes from Trump tax reforms, but policy specifics remain elusive and execution could face congressional headwinds. Further, labor costs are expected to rise, given that the economy is at full employment. High labor costs combined with a rising dollar could eat into the tax aided rise in corporate earnings.
3) Again, the markets are banking on a rise in corporate earnings from tax cuts. Such govt. aided profits do not reflect innovation and efficiency and do not aid value creation in the long run.
Will it be a bumpy ride ahead?
been using and trading /ES:
1 minute charts
so far in two days, 71 ticks = $862.50 trading one lot ( small account )
not too shabby...lol
entrance + exit = about 5 - 10 minutes per trade ( or less )
Nicely done @OldFart!
Someone needs to tell @IchiFutures that Oldie is trading the spoos!
What is the difference between index futures and stock futures?
Sincerely regards, give me a chance to ask about what's the difference between indices and indices futures?
The Indice eg. The Nasdaq Composite is the index of 100 tech companies listed on the exchange.
The Futures Contract is https://www.investopedia.com/terms/f/futurescontract.asp explained in the link, but basically a derivative of the underlying asset, which is the Index of the 100 tech companies. You get the option to trade a price of the index in the future, there is some admin at the expiry but most brokers sort it for you now,
The Options are also a derivative of the underlying asset.
US100 is a CFD of the underlying contract, NDX, UsaTec, there are so many ways to trade something that follows the underlying asset. With futures, you get the benefits of having liquidity, which means tight spreads, low commissions. You can use order flow, volume profile, vwap etc. as there is a single exchange.
NQ liquidity just above, will be interesting to see if the ATH's can get flushed or whether this holds
index refers to the basket of stocks traded within an index. S&P500 has 500 stocks, DJIA has 30, Nasdaq has 100 constituent stocks.
Not sure any particular broker i trade with does a future contract for an individual stock, but you may have heard the index futures being referred to equity futures, which differentiates them from say the commodity futures. Commodity futures being the futures contracts of Gold, Orange Juice, Corn, Oil etc.
Futures are going to have several advantages over options in the sense that they would be often easier to value and understand, have greater margin utilization, and are often more liquid.