over seas markets as indicators

[respro]

So I'm checking out marketwatch looking at the Asian markets and I see where they are. European markets will open later and i'll look at those. Since we are in a global market, do these markets serve as indicators of the next days US markets much like our market futures?
Thanks, Respro

 

[Sensei]

I always watch the overseas markets too, mainly because they're open when I'm awake. My observations are the following:

• Nikkei is the only Asian index worth watching, and it pretty much mirrors whatever the U.S. market did in it's previous trading day.
• Europe (I mainly follow the DAX) and our futures match fairly closely. Europe will sometimes make a bold move on its own, but will really seek confirmation from our market. Many's the day I've watched the DAX soar through it's first 4 or 5 hours, only to get a serious beatdown in the last hours if our market heads south at the open.
• Really, the overseas markets only have spectator value, and with our IFT trade limitations can't be used in any practical way to predict the direction of our funds.

JMHO.

 

[Bullitt]

Good answer Sensei, I second your opinion.

Unless you can't sleep at night or you work midnights, the overnight futures are nothing. There is little correlation with futures pre-market prices and regular market hours.