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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures
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To: Mary A Young who wrote (5058)10/1/1998 2:22:00 PM
From: Patrick Slevin  Read Replies (1) of 44573
 
PREM.

Got it. I don't know if I have the energy to answer it, nor do I know if I can to your satisfaction but I'll give it a shot.

The way I was taught, PREM often leads the Contract by as much as 5 minutes. That is, if mist of the recent activity sees PREM never cresting much above 8, to pick a number, and then there is a sudden sustained move up in PREM, establishing higher points than 8, then the logic is that the pits are starting to price the contract up and there is likely to be a upspike. This spike may be hard to catch and may only last a few moments or may sustain for several minutes or even continue for much longer time frames. But combined with other indications, I generally glance at the PREM just before establishing a position for the purpose of trying to get in at what I think is the best possible point.

Now, when I started typing this, the PREM had just reversed a downtrend which started just after 1 Eastern. The trend reversed at 1:55, hesitated and spiked at 2:05.

At 2:00 the futures were trading back and forth between 996 and 998 and at 2:05 they were at 997 even.

At 2:10 they hit 1005. Someone looking for a quick scalp like that may find it advantageous to keep an eye on the PREM.

Scott and I think Electric look at it from a more long term view, I guess. And certainly it's a good idea to keep an eye on it as the day goes on, but I have no idea how to use it for anything except as a clue for probable near-term direction.
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