Using the $PREM

[johntherevelato]

I've been studying the Rally Scan Strategy in the esignal university page:

http://www.esignalcentral.com/learning/likepro/strategy/rallyscan.asp

It refers several times to the $PREM value as being a very important indicator for trading signals.

However, when I went to the website that purported to give information that will lead to 'great trading opportunities', it requires large sums of money to access the data.

Can someone please clarify for me if this is just an elaborate scam seeking to make suckers of unsuspecting private investors (not that I've fallen for it yet).

[DuaneG]

johntherevelato,

I'm not sure what you mean in regards to..

it requires large sums of money to access the data.

Are you referring to the $PREM specifically or the summation of the various services outlined in the article you posted. Please let us know and we'll be happy to discuss the various outlined fees. Please also note, that these services are simply recommended per the confines of the article.

[MR]

When I first started trading futures contracts back in 1988, one of the things I learned was this PREM thing you asked about. We use to watch it because when the spread difference between the futures contract and the cash got too far away you could often see computer buy or sell programs kick in for that day. Most seasoned SP type traders have some general knowledge about PREM. It is a common knowledge thing.

One idea, do different kinds of Google searches on the subject. Find free stuff first. If you still wish to explore the subject matter, sometimes you might have to pay to learn.

Below is free information on the subject--

"$PREM = S&P futures price minus the S&P 500 Index. The resulting difference is an indication of the degree of bullishness of the market because buyers of S&P futures contracts bid prices up faster than S&P cash can follow. This creates an arbitrage opportunity in which traders sell S&P 500 futures and buy S&P 500 stocks (or stocks in general), thus creating a rally. The relative magnitude of the $PREM value differs depending on the cycle of futures contracts. Every 3 months, it adjusts in conjunction with the establishing of new futures contracts so that it equals approximately 2,500 and then decreases over the next 3 months to approximately 300.

Fair Value (FV), simply stated, is the value of the S&P 500 plus the interest I pay my broker to buy the stocks minus all of the dividend checks I get. Understanding how $PREM and Fair Value (FV) fluctuate can help you answer the question, "When is program buying or program selling coming today and how hard will it hit the stock market?"

Originally posted by johntherevelato
I've been studying the Rally Scan Strategy in the esignal university page:

http://www.esignalcentral.com/learning/likepro/strategy/rallyscan.asp

It refers several times to the $PREM value as being a very important indicator for trading signals.

However, when I went to the website that purported to give information that will lead to 'great trading opportunities', it requires large sums of money to access the data.

Can someone please clarify for me if this is just an elaborate scam seeking to make suckers of unsuspecting private investors (not that I've fallen for it yet).