V. 20:8 (27): Q&A by Don Bright

Q&A by Don Bright

LEADING INDICATORS

Every trader I have asked tells me to look at the leading indicators before trading. A friend told me he watches Intel [INTC] to see the direction of the overall market. Is this a good indicator? What do your traders use? — edgetrader

If you follow the money, as in many things, you will see a valuable leading indicator. Since there is more money changing hands in the Standard & Poor’s futures pit (and e-minis) than the rest of the overall market, it only makes sense to follow the SPOOs (S&P 500). When there is premium to FV (fair value), the market will follow; when there is a discount to FV, the market will follow (downward). If you add the money involved in program trading, then you have an even stronger leading indicator.

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