To predict the direction of the stock market, monitor stock futures and premarket prices, focusing on index futures during off-market hours. The Dow, S&P, and Nasdaq futures can provide insight for creating an Investment Action Plan for when the market opens.
Futures prices for indexes and individual stocks are determined by after-hours or premarket trading and may not reflect actual opening prices. Use index futures as an indicator of market direction, rather than a precise prediction of prices. Keep track of index futures on this page, along with information on individual stocks moving in extended-hours trading.
Stock futures are contracts based on indexes like the Dow, S&P 500, and Nasdaq 100, allowing investors to speculate on future index values. Institutional investors use index futures to secure future buying or selling prices based on market projections or to hedge against different scenarios. Futures for the Russell 2000 index are also commonly utilized.
Futures trading involves leverage, enabling investors to control index or stock shares without paying full price upfront. However, due to the complex nature of leveraged investments, investors should have a thorough understanding of leverage and its associated risks. Be sure to weigh the benefits and drawbacks before diving into futures trading.
