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Rocky Mtn Trader

Understanding the Auction Process

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I have read both the CBOT MP manual and Mind over Market. Here are a few questions I have relating to MP.

 

1) Why does the ES move up or down?

 

2) Doesn't the S&P move according to the movement of the 500 stocks in this market?

 

3) Why does the ES (S&P), the YM (Dow), and the ER (Russel) all move in rhythm with each other?

 

4) Doesn't the YM (Dow) and the ER (Russel) also move up or down accoding to the individual stocks represented in their markets?

 

5) Isn't the ES traded in an auction in the "pit"?.

 

6) Is the YM and the ER traded in an auction in the "pit"?

 

Can someone help answer these questions for me? When these get answered, I have more. I was going to list them all on this post, but I would like to have these answered first, then I can move on to the next set of questions.

 

I think that when all my questions get answered, it will help a lot of people understand really what is happening in the market.

 

Please, please, just answer the 6 questions I have above. Trust me...there will be more.

.

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1. More aggressive buyers or sellers

2. Yes

3. They are highly correlated

4. Yes

5. No, SP is pit traded, ES is electronic only

6. No, electronic only

 

 

I have read both the CBOT MP manual and Mind over Market. Here are a few questions I have relating to MP.

 

1) Why does the ES move up or down?

 

2) Doesn't the S&P move according to the movement of the 500 stocks in this market?

 

3) Why does the ES (S&P), the YM (Dow), and the ER (Russel) all move in rhythm with each other?

 

4) Doesn't the YM (Dow) and the ER (Russel) also move up or down accoding to the individual stocks represented in their markets?

 

5) Isn't the ES traded in an auction in the "pit"?.

 

6) Is the YM and the ER traded in an auction in the "pit"?

 

Can someone help answer these questions for me? When these get answered, I have more. I was going to list them all on this post, but I would like to have these answered first, then I can move on to the next set of questions.

 

I think that when all my questions get answered, it will help a lot of people understand really what is happening in the market.

 

Please, please, just answer the 6 questions I have above. Trust me...there will be more.

.

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I have read both the CBOT MP manual and Mind over Market. Here are a few questions I have relating to MP.

 

1) Why does the ES move up or down?

 

The market moves because it HAS to. Moving is how it seeks out and finds accepted value. How does it move though, well big money accumulates on the way down, then sells their shares (and shorts) at the top to people chasing news. Then rinse and repeat

 

2) Doesn't the S&P move according to the movement of the 500 stocks in this market?

 

In theory yes, though probably not ever perfectly to the tick. All the markets tend to have alot to do with each other in some way shape or form.

 

3) Why does the ES (S&P), the YM (Dow), and the ER (Russel) all move in rhythm with each other?

 

They are controlled by people with the same objective I suppose. See above answer, ALL markets are tied together whether inverse or in tandem relationships to another market.

4) Doesn't the YM (Dow) and the ER (Russel) also move up or down accoding to the individual stocks represented in their markets?

 

Futures contracts are based on movements of the underlying, though they do seem to differ in numbers to some extent. That could be since it's a future contract and not based on the here and now?

 

5) Isn't the ES traded in an auction in the "pit"?.

 

6) Is the YM and the ER traded in an auction in the "pit"?

 

Not sure what were you going for on 5 and 6. What's the thought about pit sessions?

 

As a whole, I think these questions are way too granular. Honestly, who cares why rice is more expensive in one store than another? Shop wherever you can get it cheaper. Trade a contract that fits your risk tolerance and personality. One that flows a way you can feel and understand best. Just understanding it's an auction is enough, then seek times where supply and demand are mis-balanced and take advantage of the emotional trading of others.

 

All JMHO :)

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thanks bh trade for your responses. First of all, I agree with your answers. Lets look at what they mean.

 

1) More aggressive buyers and sellers...ok.

 

2) The S&P moves according to the 500 stocks. So (in its most simple form) we could conclude that if 250 of these stocks were moving up more than the other 250 stocks were moving down...then the S&P 500 index would be moving up...right?

 

3) The ES, YM, and ER all move "basically" together because many of the stocks in these indexes are the same? I'm sure many of you experienced traders have watched the ES, YM, and ER at the same time. In fact, many of you watch them when you trade because often one will give you a signal that is slightly delayed from the others. Hence, helping with an entry or exit of a trade.

 

Here is an interesting point ! ! !...pull up any day, and compare the ES, YM, and ER. It is quite obvious that they don't move exactly the same, but in general, they move in a similar path. On any given day, there are these sudden spikes in the market...either up or down. Why do ALL these indexes have the same spike? When one of these markets drops radically, they all do. If an auction had anything to do with their movement, this would not be possible.

 

4) Your answer to #4 was that the YM and ER also move according to the individual stocks in their index.

 

5) If the S&P is traded in the pit, then how can you say that the S&P moves according to the 500 stocks? It can't be both ways can it?

 

6) If the ES, YM and ER are all electronically traded, then what does volume have to do with how these markets move. The ES trades 2.5 million contracts a day, the YM and ER only trade 250 thousand contracts a day. Again, what does volume have to do with the ES, YM and ER moving. It doesn't. The ES, YM and ER are going to move according to what the stocks in these indexes are doing. If there is more up movement in these stocks than down movement, these indexes go up.

 

I have been in an "auction market theory" live trading room in the last month to observe. I will not mention the site. While listening to the mediator explain auction market theory, we were watching the market footprint and volume at price as it was happening live. As he was explaining that the market auctions down when you have more selling than buying...the market started moving up. Let me tell you that there was a LOT more sellers than buyers on the screen, yet the market shot up.

 

Someone in the trading room asked the mediator why this was happening? He would not answer the question. I witnessed this happening regularly. After watching this "price auction at price", it has nothing to do with the market moving up or down.

 

This is my conclusion...please someone correct me if I am misinformed...

 

The S&P moves according to the individual stocks. The pit traders are doing nothing but buying and selling at different price levels. They have no bearing on moving the market. The S&P will move up or down on its own. The pit traders are doing what we do at home except they are "in the action". If these pit traders didnt trade for any given day, the S&P will still move in accordance with the stocks in their index....just like the YM and ER are doing at that moment.

 

If the pit traders could move the market, then the ES would NOT move the same as the YM and ER. Come on...this is common sense.

 

Another interesting point...Have you ever listened to the auction process in the pit? It is obvious as the auctioneer is calling out the auction. Have you ever listened to what happens when the market suddenly sells off, or shoots up? The auctioneer stops talking. There is no way the auctioneer could talk that fast...let alone for anyone to understand him and be able to make a trade. If the "pit" was moving the market according to the footprint of buyers and sellers at a given price, then the actual auction would not be able to move up and down that quickly. Yes, the market would move up or down, but it would take a little longer for the auctioneer to move things along.

 

Two new questions for you experts out there:

 

7) Are commodities, like soybeans, corn, gold, etc...traded by an auction?

 

8) Are any individual stocks in the ES, YM or ER indexes traded by an auction?

 

After I get the answers to these two questions, I'll make my next points.

 

By the way, I'm not discounting MP.

 

.

Edited by Rocky Mtn Trader

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Most of the price discovery process occurs in the Emini market and futures do lead the cash price during most time periods. This does not mean the futures can pin the cash market. There will be arbitragers to keep the auction process in balance. Google for 'index futures arbitrage' if you are interested in this subject.

 

The literature on the price behavior of stock index futures in relation to the underlying cash index has concentrated on two related issues: (1) the lead-lag relationship between the futures and cash prices, which also relates to the ability of futures to"predict" subsequent cash index prices, and (2) the pricing and rbitrage of stock index futures markets. Section I of this paper includes a summary of the research concerning these two issues. The studies on the lead-lag/price discovery relationship which uses intraday data provides consistent conclusions that futures do lead cash prices during most time periods. This lead effect of futures implies that the use of matched futures-cash prices may provide biased results for arbitrage studies.

 

showArticleImage?image=images%2Fpages%2Fdtc.97.tif.gif&doi=10.2307%2F3648197

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Thanks MC...

 

This thread is not meant to be an argument. I am simply asking questions and would like the experts on this site to answer them.

 

When you speak of volume...like in the ES...what volume are you talking about? People like you and I buying and selling contracts at different price levels?

 

I understand perceived value at different levels.

.

.

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1) More aggressive buyers and sellers...ok.

 

Its just more traders on one side expressing their opinion. The bigger the trader, the better the trader. Stack a few of them on one side and you have enough volume to trigger a chain reaction for other would be longs/shorts to enter and those who are losing money to cover/liquidate. Hence, further price movement. Just make sure you are on the same side as the well informed.

 

2) The S&P moves according to the 500 stocks. So (in its most simple form) we could conclude that if 250 of these stocks were moving up more than the other 250 stocks were moving down...then the S&P 500 index would be moving up...right?

 

I guess so... never paid any attention to the cash.

 

3) The ES, YM, and ER all move "basically" together because many of the stocks in these indexes are the same? I'm sure many of you experienced traders have watched the ES, YM, and ER at the same time. In fact, many of you watch them when you trade because often one will give you a signal that is slightly delayed from the others. Hence, helping with an entry or exit of a trade.

 

I tend to not look at other indices. I do look at the government bonds dependant on the market I trade. For the Nikkei, I watch the JGB. Just like I watch the big Nikkei for the mini Nikkei or TOPIX for the Nikkei\mini Nikkei. Youre right about one market giving leading signals. Today, I took a long on the JGB based on Nikkei resistance. etc....

 

Here is an interesting point ! ! !...pull up any day, and compare the ES, YM, and ER. It is quite obvious that they don't move exactly the same, but in general, they move in a similar path. On any given day, there are these sudden spikes in the market...either up or down. Why do ALL these indexes have the same spike? When one of these markets drops radically, they all do. If an auction had anything to do with their movement, this would not be possible.

 

All of them had the same spike... probably because ES caused the spike first. Have Russell dive 5 quick points.. I doubt the ES would catch up to it. Identify the strong leading indexes. Like TOPIX and Nikkei are closely correlated. On the other hand, the Nikkei doesnt give a rats ass about the KOSPI.

 

4) Your answer to #4 was that the YM and ER also move according to the individual stocks in their index.

 

I personally dont care what stocks move. It doesnt help me trade better.

 

5) If the S&P is traded in the pit, then how can you say that the S&P moves according to the 500 stocks? It can't be both ways can it?

 

If you want some insight, just observe the big heavy weight stocks. During the sub prime panic, traders were sensitive to financial stocks. I would assume big pit traders also looked at them to determine whether they are likely to short or long. Also, why do a group of stocks seem to move in tangent with the futures? Simple.. basket orders.

 

6) If the ES, YM and ER are all electronically traded, then what does volume have to do with how these markets move. The ES trades 2.5 million contracts a day, the YM and ER only trade 250 thousand contracts a day. Again, what does volume have to do with the ES, YM and ER moving. It doesn't. The ES, YM and ER are going to move according to what the stocks in these indexes are doing. If there is more up movement in these stocks than down movement, these indexes go up.

 

I have been in an "auction market theory" live trading room in the last month to observe. I will not mention the site. While listening to the mediator explain auction market theory, we were watching the market footprint and volume at price as it was happening live. As he was explaining that the market auctions down when you have more selling than buying...the market started moving up. Let me tell you that there was a LOT more sellers than buyers on the screen, yet the market shot up.

 

Someone in the trading room asked the mediator why this was happening? He would not answer the question. I witnessed this happening regularly. After watching this "price auction at price", it has nothing to do with the market moving up or down.

 

Youre only confusing yourself even deeper. How do you conclude a market auctions down? Lower prices? Lower value?

 

In my opinion, all you need to learn is price patterns (in terms of bundle of bars) and volume. You have selling at a certain level? Price will auction down until the selling is cut off and enough buyers step in to lift prices again. Which is why I can exploit short term price swings.... with longer term trading I have no clue what its going to do.

 

Two new questions for you experts out there:

 

7) Are commodities, like soybeans, corn, gold, etc...traded by an auction?

 

Everything is. They might as well call the markets > "Finanicial Auction" The only difference is the objective behind the trader. Is one speculating? Hedging? Investing? etc.... Many firms buy futures for actual physical delivery. We all have a different purpose to be involved in the markets.

 

8) Are any individual stocks in the ES, YM or ER indexes traded by an auction?

 

Everything is an auction. The purpose of the stock market is to sell inventory at a higher price. The only way insiders can do so is to auction it out.... price may auction higher on positive news since the public are naturally greedy. Price may auction lower on negative news since the public plays on small capital leading to weak hands and fear.

 

You take the two examples above... put yourself into the mind of an operator with one objective. Sell stock at a profit. So how do you go about doing this? Sell on rising prices... as higher prices will attract more buying. Its simple human pysch. Demand does not even have to be present... human greed is so easy to exploit, all you have to do is jack prices up high to lure in all the greedy public suckers. Its just how the game is played.

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I have been in an "auction market theory" live trading room in the last month to observe. I will not mention the site. While listening to the mediator explain auction market theory, we were watching the market footprint and volume at price as it was happening live. As he was explaining that the market auctions down when you have more selling than buying...the market started moving up. Let me tell you that there was a LOT more sellers than buyers on the screen, yet the market shot up.

 

Someone in the trading room asked the mediator why this was happening? He would not answer the question. I witnessed this happening regularly. After watching this "price auction at price", it has nothing to do with the market moving up or down.

 

Take a look at the chart. The two highlighted points... would you consider new highs as the markets auctioning higher? But wait... the markets reversed and auctioned lower. Why?

 

attachment.php?attachmentid=7105&stc=1&d=1213592601

 

You can see how the markets were sold into at these high prices. So who caused price to reach new highs for the day? The dumb money. Who took advantage of high prices and sold their inventory? The smart money.

 

Now.... my definition of auctioning higher can be seen through the chart below. Notice 6/16 is auctioning higher compared to 6/13 in terms of value area.

 

attachment.php?attachmentid=7104&stc=1&d=1213592601

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heres another ES trade from today using market correlation, volume and price analysis.

 

FTSE broke passed Previous day high to be rejected. ES lifted on good volume but had no follow through. The second highlighted circle on the ES chart was the confirmation. The FTSE and DAX was the leading indicator here.... I missed a short on the FTSE (did not get an ideal entry point) so I went to the ES instead.

 

attachment.php?attachmentid=7106&stc=1&d=1213603711

 

I use correlations like this to identify possible setups whether it be reversal or continuation (momentum). Especially more on the Nikkei.

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I think you raised a number of interesting questions there, Rocky. Most questions have already been answered, so I'll just add this:

 

2) The S&P moves according to the 500 stocks. So (in its most simple form) we could conclude that if 250 of these stocks were moving up more than the other 250 stocks were moving down...then the S&P 500 index would be moving up...right?

 

Although you said "in its most simple form", it's worth to note that the weight of each stock in the index is important. Especially if an index is only composed out of a small number of stocks, the rise of three big caps can easily outweigh the fall of a dozen smaller caps.

 

It's interesting to observe the correlation between several US indices, in particular the DJIA and the S&P considering the former is a price-weighted index. This means an absolute rise of 1$ in a 300$/share can be negated by a 1$ drop in a 5$/share; the S&P is a market-weighted index (recently changed to a float-weighted index, although this doesn't make as much difference).

 

What I'm trying to say is that the index does not move up or down just because the number of stocks that go up outweigh the number of stocks that go down. It's a bit more complicated than that :)

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Sell on rising prices... as higher prices will attract more buying. Its simple human pysch. Demand does not even have to be present... human greed is so easy to exploit, all you have to do is jack prices up high to lure in all the greedy public suckers. Its just how the game is played.[/color]

 

Wow. A lot to think about in only a couple of sentences there Soultrader. I decided to start up a new thread at once as my reply got more lengthy than I expected. See here:

http://www.traderslaboratory.com/forums/showpost.php?p=40123&postcount=1

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In my opinion, all you need to learn is price patterns (in terms of bundle of bars) and volume. You have selling at a certain level? Price will auction down until the selling is cut off and enough buyers step in to lift prices again. Which is why I can exploit short term price swings.... with longer term trading I have no clue what its going to do.[/color]

 

...put yourself into the mind of an operator with one objective. Sell stock at a profit. So how do you go about doing this? Sell on rising prices... as higher prices will attract more buying. Its simple human pysch. Demand does not even have to be present... human greed is so easy to exploit, all you have to do is jack prices up high to lure in all the greedy public suckers. Its just how the game is played.

 

Pure gold comments, especially the last part about human greed. :cool:

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Soul Trader, you trade the YM...correct? When you speak of volume in the YM, what volume are you speaking of? Is it the traders that are trading the YM?

 

I understand how profit works in the buying and selling structure of society.

 

If you are trading the YM, you are buying and selling price movements of the YM. The YM moves according to what the stocks in that index are doing.

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If you and every other person who trades the YM decides not to trade that day, the "volume" in the YM would essentially be zero. Right now the YM trades @250K contracts per day. I wouldn't say this is high volume by any means.

 

The YM is still going to move up and down regardless if no one trades that day.

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Soul Trader, you trade the YM...correct? When you speak of volume in the YM, what volume are you speaking of? Is it the traders that are trading the YM?

 

I understand how profit works in the buying and selling structure of society.

 

If you are trading the YM, you are buying and selling price movements of the YM. The YM moves according to what the stocks in that index are doing.

 

I think he mainly trades the nikkei and the ES now if I'm not mistaken.

 

If I'm trading the YM though I would trade the YM, not the 30 stocks that make up the underlying. I'm a simplistic type, I don't want to convolute the issue further. I've been there and done that my first year on the market with indicators and other trial n' error methods. :crap:

 

I do use UVOL compared to DVOL as an indicator for the overall health of the US markets. And since we've talked about how they move in tandem, what works in one should work in the others as well. It's no grail, but it helps me spot hidden selling like what James is pointing out on the charts below. I can see hidden selling on charts and this gives me an added level of comfort is all. I could trade fine without it I'm sure.

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If you and every other person who trades the YM decides not to trade that day, the "volume" in the YM would essentially be zero. Right now the YM trades @250K contracts per day. I wouldn't say this is high volume by any means.

 

The YM is still going to move up and down regardless if no one trades that day.

 

I think wise traders trade where the volume was seen. This puts you on the pro's coattails.

 

Pro money moves markets, they also leave footprints. Follow the trail of their money that they left behind in the retail herds hands. ;)

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An index is moving according to a combination of stocks. If one sector of that index is on an upsurge, then the index most likely will be affected by this upsurge.

 

I not saying that the markets don't move from human emotion. Of course they do. I also understand that the whole market in general in an auction process.

 

Human emotion has more to do with an individual stock moving. In the auction process of stocks, the "other timeframe" traders have a big impact on manipulating the movement of stocks...as told to us by M.O.M.

 

These "other timeframe" traders can affect how soybeans are trading, and the whole MP theory is directed toward that.

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An index is moving according to a combination of stocks. If one sector of that index is on an upsurge, then the index most likely will be affected by this upsurge.

 

I not saying that the markets don't move from human emotion. Of course they do. I also understand that the whole market in general in an auction process.

 

Human emotion has more to do with an individual stock moving. In the auction process of stocks, the "other timeframe" traders have a big impact on manipulating the movement of stocks...as told to us by M.O.M.

 

These "other timeframe" traders can affect how soybeans are trading, and the whole MP theory is directed toward that.

 

I don't fully agree...I think you're taking an overly simple approach as to what drives a broad index. There's more to it than an index moving JUST because of the stocks it's comprised of. Of course probably none of this discussion will help anyone profit from the markets, nor do I think about this stuff myself till now.

But...

 

I think things are so intertwined that emotion on the YM CAN and WILL effect the price of individual stocks making up the underlying DOW. Just the same, a sell off on a top performer in the DOW will trigger selling in other DOW tickers which will in turn pull that market lower. The YM being down will surely effect the ES as well as tickers in the S&P. So on and so forth. You could kill yourself thinking or debating the intricacies of the markets and how they are linked.

 

This is also why I like trading the indicies, futures on them or ETF's. They ARE the index rather than playing AAPL and wondering if the NAS will be cooperating with my position on AAPL.

 

Anyhow, I like to be simple on things...I don't care about the order of planets or magnetic pull anymore than I care about the why the market is going up. The market is way too big for me to understand as a whole, luckily you can profit from understanding a small slice and sticking to that piece of the pie though. :)

 

Good luck, I hope you get the answer you're looking for.

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I agree with what you said...the markets are all innertwinded. News in one sector effects the emotions of traders in another sector...hence moving that individual stock...hence effecting the movement of the index.

 

But it's these individual stocks in an index that makes the price of that index move up and down. If you are trading the YM for instance, the "volume" in trading the YM is not moving the market. The YM is generating its volume from people trading different price levels at time, while the index is moving as a whole.

 

The "other timeframe" traders are not moving the YM. The "other timeframe" traders are moving the individual stocks in the YM.

 

Yes...the pros are good at determining price at levels.

 

Yes...you do not need to know this when trading the YM. You can still trade and make profits.

 

I guess my point is that there is so much talk on this forum about volume at price on the ES, YM and ER. People who are trading these cash indexes are referencing volume as though they are trading individual stocks when volume actually has an impact at different price levels.

 

I am not talking about being able to trade these indexes and make money doing it.

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I agree with what you said...the markets are all innertwinded. News in one sector effects the emotions of traders in another sector...hence moving that individual stock...hence effecting the movement of the index.

 

But it's these individual stocks in an index that makes the price of that index move up and down. If you are trading the YM for instance, the "volume" in trading the YM is not moving the market. The YM is generating its volume from people trading different price levels at time, while the index is moving as a whole.

 

The "other timeframe" traders are not moving the YM. The "other timeframe" traders are moving the individual stocks in the YM.

 

Yes...the pros are good at determining price at levels.

 

Yes...you do not need to know this when trading the YM. You can still trade and make profits.

 

I guess my point is that there is so much talk on this forum about volume at price on the ES, YM and ER. People who are trading these cash indexes are referencing volume as though they are trading individual stocks when volume actually has an impact at different price levels.

 

I am not talking about being able to trade these indexes and make money doing it.

 

If I read into that right, I think you're talking of open interest on futures in comparison to the float on the stocks that make up the underlying index...yes?

 

That's the thing with volume on futures...there is no float really is there?

On stocks you can see when most the float has traded hands and it's easier to spot an imbalance. On futures you could have a showing of no demand only to have it blast up in your face.

 

There is the COT report or what not to show open interest on futures...has anyone used that successfully that cares to comment?

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I am not saying these things to offend anyone. I'm just making a point how people seem to think that the ES, ER, the YM reference volume the same as the stocks that make up the index and cause it to move in the first place.

 

No offense taken here, and I don't think others are offended either.

 

I know what your saying, but what if for arguments sake the 30 tickers on the DOW had 0 volume for a day. Does that mean that the YM is not allowed to trade or will have had 0 volume also? Futures may track an underlying index and in turn the underlying stocks...but it's a separate contract and trades as such, albeit somewhat harmoniously with the underlying issues.

 

Would there be many trading something where it's underlying had 0 volume, of course not but it could still have traded. The DJI on the other hand would have 0 volume because that's a raw index tracking those 30 stocks.

 

So I guess in another twist of convolution we need to separate futures, ETF's and raw indices? :doh: :o

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I dont think we need to seperate anything.

 

The YM and the ES move almost identically with some minor variations. These variations are obviously in the different stocks that make up these indexes.

 

Notice that the ES trades 2.5 million contracts per day, while the YM trades only 250k contracts per day. Yet they both move up the same and down "proportionatly" the same. Ie., the YM moves 50 points when the ES moves 5 points. This is a very general term.

 

The sheer volume of the ES would cause it to move differently if the

"trading volume" had anything to do with its movements.

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I dont think we need to seperate anything.

 

The YM and the ES move almost identically with some minor variations. These variations are obviously in the different stocks that make up these indexes.

 

Notice that the ES trades 2.5 million contracts per day, while the YM trades only 250k contracts per day. Yet they both move up the same and down "proportionatly" the same. Ie., the YM moves 50 points when the ES moves 5 points. This is a very general term.

 

The sheer volume of the ES would cause it to move differently if the

"trading volume" had anything to do with its movements.

 

Interesting point. That goes to further show that they are tied together. That was kind of what I was going for when talking about open interest. Everything moves in relative terms, to its own past moves given the same volume and/or in relation to other markets and how they move on their relative volume.

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    • Hello citizens of the U.S. The hundred year trade war has leaked over into a trading war. Your equity holdings are under attack by huge sovereign funds shorting relentlessly... running basically the opposite of  PPT operations.  As an American you are blessed to be totally responsible for your own assets - the govt won’t and can’t take care of you, your lame ass whuss ‘retail’ fund managers go catatonic  and can't / won’t help you, etc etc.... If you’re going to hold your positions, it’s on you to hedge your holdings.   Don’t blame Trump, don’t blame the system, don’t even blame the ‘enemies’ - ie don’t blame period.  Just occupy the freedom and responsibility you have and act.  The only mistake ‘Trump’ made so far was not to warn you more explicitly and remind you of your options to hedge weeks ago.   FWIW when Trump got elected... I also failed to explicitly remind you... just sayin’
    • Date: 7th April 2025.   Asian Markets Plunge as US-China Trade War Escalates; Wall Street Futures Signal Further Turmoil.   Global financial markets extended last week’s massive sell-off as tensions between the US and its major trading partners deepened, rattling investors and prompting sharp declines across equities, commodities, and currencies. The fallout from President Trump’s sweeping new tariff measures continued to spread, raising fears of a full-blown trade war and economic recession.   Asian stock markets plunged on Monday, extending a global market rout fueled by rising tensions between the US and China. The latest wave of aggressive tariffs and retaliatory measures has unnerved investors worldwide, triggering sharp sell-offs across the Asia-Pacific region.   Asian equities led the global rout on Monday, with dramatic losses seen across the region. Japan’s Nikkei 225 index tumbled more than 8% shortly after the open, while the broader Topix fell over 6.5%, recovering only slightly from steeper losses. In mainland China, the Shanghai Composite sank 6.7%, and the blue-chip CSI300 dropped 7.5% as markets reopened following a public holiday. Hong Kong’s Hang Seng Index opened more than 9% lower, reflecting deep concerns about escalating trade tensions.           South Korea’s Kospi dropped 4.8%, triggering a circuit breaker designed to curb panic selling. Taiwan’s Taiex index collapsed by nearly 10%, with major tech exporters like TSMC and Foxconn hitting circuit breaker limits after each fell close to 10%. Meanwhile, Australia’s ASX 200 shed as much as 6.3%, and New Zealand’s NZX 50 lost over 3.5%.   Despite the escalation, Beijing has adopted a measured tone. Chinese officials urged investors not to panic and assured markets that the country has the tools to mitigate economic shocks. At the same time, they left the door open for renewed trade talks, though no specific timeline has been set.   US Stock Futures Plunge Ahead of Monday Open   US stock futures pointed to another brutal day on Wall Street. Futures tied to the S&P 500 dropped over 3%, Nasdaq futures sank 4%, and Dow Jones futures lost 2.5%—equivalent to nearly 1,000 points. The Nasdaq Composite officially entered a bear market on Friday, down more than 20% from its recent highs, while the S&P 500 is nearing bear territory. The Dow closed last week in correction. Oil prices followed suit, with WTI crude dropping over 4% to $59.49 per barrel—its lowest since April 2021.   Wall Street closed last week in disarray, erasing more than $5 trillion in value amid fears of an all-out trade war. The Nasdaq Composite officially entered a bear market on Friday, sinking more than 20% from its recent peak. The S&P 500 is approaching bear territory, and the Dow Jones Industrial Average has slipped firmly into correction territory.   German Banks Hit Hard Amid Escalating Trade Tensions   German banking stocks were among the worst hit in Europe. Shares of Commerzbank and Deutsche Bank plunged between 9.5% and 10.3% during early Frankfurt trading, compounding Friday’s steep losses. Fears over a global trade war and looming recession are severely impacting the financial sector, particularly export-driven economies like Germany.   Eurozone Growth at Risk   Eurozone officials are bracing for economic fallout, with Greek central bank governor Yannis Stournaras warning that Trump’s tariff policy could reduce eurozone GDP by up to 1%. The EU is preparing retaliatory tariffs on $28 billion worth of American goods—ranging from steel and aluminium to consumer products like dental floss and luxury jewellery.   Starting Wednesday, the US is expected to impose 25% tariffs on key EU exports, with Brussels ready to respond with its own 20% levies on nearly all remaining American imports.   UK Faces £22 Billion Economic Blow   In the UK, fresh research from KPMG revealed that the British economy could shrink by £21.6 billion by 2027 due to US-imposed tariffs. The analysis points to a 0.8% dip in economic output over the next two years, undermining Chancellor Rachel Reeves’ growth agenda. The report also warned of additional fiscal pressure that may lead to future tax increases and public spending cuts.   Wall Street Braces for Recession   Goldman Sachs revised its US recession probability to 45% within the next year, citing tighter financial conditions and rising policy uncertainty. This marks a sharp jump from the 35% risk estimated just last month—and more than double January’s 20% projection. J.P. Morgan issued a bleaker outlook, now forecasting a 60% chance of recession both in the US and globally.   Global Leaders Respond as Trade Tensions Deepen   The dramatic market sell-off was triggered by China’s sweeping retaliation to a new round of US tariffs, which included a 34% levy on all American imports. Beijing’s state-run People’s Daily released a defiant statement, asserting that China has the tools and resilience to withstand economic pressure from Washington. ‘We’ve built up experience after years of trade conflict and are prepared with a full arsenal of countermeasures,’ it stated.   Around the world, policymakers are responding to the growing threat of a trade-led economic slowdown. Japanese Prime Minister Shigeru Ishiba announced plans to appeal directly to Washington and push for tariff relief, following the US administration’s decision to impose a blanket 24% tariff on Japanese imports. He aims to visit the US soon to present Japan’s case as a fair trade partner.   In Taiwan, President Lai Ching-te said his administration would work closely with Washington to remove trade barriers and increase purchases of American goods in an effort to reduce the bilateral trade deficit. The island's defence ministry has also submitted a new list of US military procurements to highlight its strategic partnership.   Economists and strategists are warning of deeper economic consequences. Ronald Temple, chief market strategist at Lazard, said the scale and speed of these tariffs could result in far more severe damage than previously anticipated. ‘This isn’t just a bilateral conflict anymore — more countries are likely to respond in the coming weeks,’ he noted.   Analysts at Barclays cautioned that smaller Asian economies, such as Singapore and South Korea, may face challenges in negotiating with Washington and are already adjusting their economic growth forecasts downward in response to the unfolding trade crisis.           Oil Prices Sink on Demand Concerns   Crude oil continued its sharp slide on Monday, driven by recession fears and weakened global demand. Brent fell 3.9% to $63.04 a barrel, while WTI plunged over 4% to $59.49—both benchmarks marking weekly losses exceeding 10%. Analysts say inflationary pressures and slowing economic activity may drag demand down, even though energy imports were excluded from the latest round of tariffs.   Vandana Hari of Vanda Insights noted, ‘The market is struggling to find a bottom. Until there’s a clear signal from Trump that calms recession fears, crude prices will remain under pressure.’   OPEC+ Adds Further Pressure with Output Hike   Bearish sentiment intensified after OPEC+ announced it would boost production by 411,000 barrels per day in May, far surpassing the expected 135,000 bpd. The alliance called on overproducing nations to submit compensation plans by April 15. Analysts fear this surprise move could undo years of supply discipline and weigh further on already fragile oil markets.   Global political risks also flared over the weekend. Iran rejected US proposals for direct nuclear negotiations and warned of potential military action. Meanwhile, Russia claimed fresh territorial gains in Ukraine’s Sumy region and ramped up attacks on surrounding areas—further darkening the outlook for markets.   Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Andria Pichidi HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • AMZN Amazon stock watch, good buying (+313%) toi hold onto the 173.32 support area at https://stockconsultant.com/?AMZN
    • META stock watch, local support and resistance areas at 507.48, 557.84 at https://stockconsultant.com/?META
    • TMUS T-Mobile stock, watch for a top of range breakout at https://stockconsultant.com/?TMUS
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