Fiction trading

In face of increased market volatility, the S&P500 future has been a very poor indicator of the S&P500 cash open. Today, the S&P500 traded as low as 825 during early European trading hours. And at the same time the Nasdaq-100 future registered a 1136,75 low. However, as U.S. cash markets opened, the S&P and the Nasdaq future never traded below 852 and 1172,75. Check out today's intraday charts:

This situation has become common this year. And it is already leading to criticism among U.S. traders and portfolio managers. The reason behind these huge swings is the lack of liquidity in both the S&P500 and the Nasdaq-100 futures during non U.S. trading hours. Which is particularly problematic given that world markets take the S&P500 and the Nasdaq-100 futures as a gauge of where the cash markets will open.

There are two ways to solve this issue. First, abolishing overnight GLOBEX trading and establishing trading hours similar to those of the Eurostoxx 50 and Nikkei 225 futures (both open only one hour before the opening of their respective cash markets). Second, demanding that the Chicago Mercantile Exchange, where these instruments are traded, go hire more "market makers" to allow for better liquidity during non U.S. trading hours. I prefer the first option.