EJ THe E-mini futures are the electronic mini version of the S&P 500 futures contract. They are 1/5 the size of the full size Pit contract. This market has tremendous liquidity, and has grown immensely in popularity in the last 5-7 yrs.
Taking a short position there would be akin to just shorting the general stock market. I use these contracts, and just do 5 of them for every one big contract that I would trade. For example, if I wanted to short 5 big ones, I take 25 mini’s. The reason I do that is that the fills are much better, there is virtually no slippage on stops. The average Joe is better off shorting the SPY’s if they think stocks overall will drop. With futures you will have to keep rolling your postion over to the current lead month if you hold the position for awhile. The SPY’s are a stock proxy, and as a result have no contract length, hence no need to roll the positions constantly.
Any of the big brokers E-Trade, Ameritrade, Schwab, etcc allow you to short stocks. Some have slightly different paramaters for margin, so you need to check that. For the E-Mini’s you are going to have to go to a futures house. THe big ones are Lind-Waldock, Edf Mann, Alaron, Tradestation, and Interactive Brokers(crooks). Tradestation is pretty cheap, and the service is good. Interactive Brokers are notorious for system outages that hose clients. The first 3 have higher commissions.
Read poways post on the housing futures, she has a quote from me in that. Also, the homebuilders may be good shorts, but their ratios are very attractive. At some point the big boys are going to start buying these. As a result, you might get a bounce in them in the fall, when the overall market rally takes place. We have dropping long rates here all of the sudden, so a stock rally is likely in the fall, unless the bonds fall out of bed here. That does not seem likely at this time of the year. Seasonally, they typically rally ( rates drop) at this time of the year.
Shorting them here is a momentum play, which can pay off but is more risky. Kind of like buying real estate in 2003. It went on for a bit, but then the music stopped. The other post on the ratios was dead on.
