Watch the Gaps in the E-mini

I have often said that the S&P futures contract is "the tail that wags the dog known as the U.S. stock market." That is generally true, but sometimes it's more evident. Now is one of those times, so it behooves the short-term trader to keep close watch on the futures. For our purposes, I will highlight the March E-mini, as it's more widely followed and more widely traded than the larger S&P futures contract. 

Another one of my favorite sayings is that "one gap begets another." That's what we saw on Monday when the market sold off sharply, in the process filling last Friday's gap in the futures from 1492.25 to 1500.00 (there was no equivalent gap in the cash). Then on Tuesday morning (here's the part about one gap begetting another), the futures shot back up, in the process creating another gap in pretty much the same spot as the one from last Friday that had been filled on Monday. That new gap in the futures was 1493.50-1498.75. Again, if you were looking for a gap in the SPX (cash index), you wouldn't have found one, because it didn't occur in the cash, just the futures....818 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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