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Thread: My theory...

  1. #1
    Demian is offline
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    My theory...

    My theory....

    I think the heavy volume today was rebalancing due to SIRI being replaced on the Nasdaq 100 combined with short covering. If there wouldn't have been short covering today, the stock would have gone a lot lower. Now that the rebalancing is over, the heavy volume could indicate that the stock has bottomed and will reverse up from here. Tons of shorts left to cover without any more forced selling.
    Last edited by Demian; 12-20-2008 at 06:45 AM.

  2. #2
    trippingthespeculatingpos is offline
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    i am thinking the same, like i said before level three got taken off the list as well and there stock did the exact same thing at the exact same time as sirius, coincidence, I THINK NOT!

  3. #3
    Siriusowner is offline
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    Quote Originally Posted by Demian View Post
    My theory....

    I think the heavy volume today was rebalancing due to SIRI being replaced on the Nasdaq 100 combined with short covering. If there wouldn't have been short covering today, the stock would have gone a lot lower. Now that the rebalancing is over, the heavy volume could indicate that the stock has bottomed and will reverse up from here. Tons of shorts left to cover without any more forced selling.
    Did the short interest change ? How many days to cover now ?

  4. #4
    Demian is offline
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    Quote Originally Posted by Siriusowner View Post
    Did the short interest change ? How many days to cover now ?
    All of the short interest indicators are lagging indicators so you can only guess what the current short interest is. With the kind of volume there was on friday, you can only speculate where the shares were shifting around to. My theory is that there were some shorts with some large short positions planning to cover on the anticipated heavy volume of the Nasdaq rebalancing on friday. There was kind of a game of chicken right up to the close that extended into AH.....

  5. #5
    HD303 is offline
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    Demian, are you sure the selling had to be done by last Friday? This link says QQQQ has until the 24th to sell off and reconstitute: http://www.indexuniverse.com/section...rebalance.html.

    While the index always has 100 stocks, the trust running QQQQ has to add and delete names through a bidding process with market participants. These so-called rebalancing trades are due to take place in a five-business-day period, starting Dec. 18 and lasting through Dec. 24.
    So is that just QQQQ, or does every fund that follows the index have the same amount of time?

  6. #6
    Demian is offline
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    Quote Originally Posted by HD303 View Post
    Demian, are you sure the selling had to be done by last Friday? This link says QQQQ has until the 24th to sell off and reconstitute: http://www.indexuniverse.com/section...rebalance.html.

    While the index always has 100 stocks, the trust running QQQQ has to add and delete names through a bidding process with market participants. These so-called rebalancing trades are due to take place in a five-business-day period, starting Dec. 18 and lasting through Dec. 24.
    So is that just QQQQ, or does every fund that follows the index have the same amount of time?
    While it may be true that different funds have different timelines (I'm not familiar with all of the specifics), my experience in watching index rebalancing always seems to show one day events with heavy volume on the date of the actual rebalancing - usually near the close.

    I have watched stocks when they are added to an index spike right at the close and then tank in the final seconds of trading and I have watched stocks get removed that tanked hard right at the close and then recovered back hard quickly. It seems that there are always games of chicken going on with traders wanting to take advantage of the forced selling and buying....
    Last edited by Demian; 12-21-2008 at 03:29 AM.

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