The “cash market” is the same as the SPX inasmuch as the SPX represents the index for the S&P500. You can’t actually buy the SPX because it’s an index. The SPX will usually trade a few points above the ES because of a concept called “cost of carry.” This, in simple terms, is what it would cost you to borrow the money to buy the same value in the stocks underlying the SPX to give you the same return as holding the future (i.e. the ES). The difference in points between the ES and the SPX will be greatest when a new contract is launch (i.e. when the contract is furtherest from expiration) and each day the difference will reduce in a linear fashion to the expiration date when the difference will become zero. This linear change in difference assumes that interest rates (which determine the cost of carry) do not change during this period.
$SPX is considered the cash basis (spot market) of the S&P 500 Index.
ES as a futures contract is derived from it’s spot market ($SPX).
The difference between the futures market price (ES) and the cash basis ($SPX) is called the premium ($PREM). If you watch the $PREM in real-time during the regular trading hours you will see it jump around throughout the session.
Fair Value is the theoretical price of the futures contract based on the formula day trading mentioned (minus dividends paid in the calculation). At Fair Value, the futures market (ES) is considered fairly priced to the spot market ($SPX). As $PREM drifts around during the day, pricing of the futures contract is in effect drifing away from and returning back to theoretical fair value. The expansion phases away from fair value are met with arbitrage related buying and selling designed to exploit the temporary imbalance between the cash market and the futures contract.
Buy programs occur when the futures market is over-valued relative to the stock market and consists of the index futures being sold and the stocks in the index being bought. Sell programs, the opposite case, occur when the futures market is under-valued relative to the stock market and consists of the index futures being bought and the stocks in the index being sold. Over-valued and under-valued conditions arise because trading in the futures and equities markets occurs independently. The key to determining these over or under-valued conditions is the arithmetic difference between the futures and the spot index (which is known as the premium).