What is the relationship between E-mini SPX futures and the SPX index. Besides the obvious, one is cash the other is a futures product. How does buying/selling in one product influence the other. If someone sells 1000 contracts of E-mini futures how does that affect the S&P500 Index?? The trade he made should only affect the futures market. The seller isn’t technically selling shares in each individual stock within the SP500, so how does the cash market adjust to the sell order within the futures market??
In general futures are contract which are marked to market everyday and are settled against the cash/underlying price at a future delivery date.
For the SPX, I think there are only deliveries in Mar, Jun, Sep and Dec. In theory, one can calculate the implied future price using the short rates and the spot price. One thing to note is that there is a convexity between forwards and futures as the future margin calls are done on a daily basis, while the forward does not exchange cash until delivery.
So basically, even though one does mot know what will be the price at delivery date, you can imply a non arbitrage price from the spot and short rates. This is what forces the spot and future to move somewhat in the same direction. Like with any product which can be replicated, if the price deviates by more than the bid-ask + slippage from the theoretical price, one will try to arbitrage the difference.
I bumped into this interesting link which mentions the dividends adjustment.