adiggs
Well-Known Member
Serious answer - if we take the Closing Cross order imbalance as our best estimate of how many shares the indexes still need, then I'd say they got most of the way home today. Roughly 18M shares still needed.
Now in one context, that could be an awful lot of share price movement. Tesla completed their recent stock sale for ~8M shares in one day, and there was a $50 move that day.
Does that mean we have a $100 price move up on Monday? I doubt anything that big, for two reasons:
1) The indexes can return with a Market Open order and get some amount of shares as part of the Opening Cross. Whether there will be enough sellers then is also an open question. (So we'll want to watch the Opening Cross as well, and see what the demand, and imbalance, land at).
2) The indexes don't HAVE to all buy first thing on Monday morning. They can choose to drag out that buying to some degree.
Countering #2 - the motivation for index funds IS NOT maximizing return. They don't have (much) discretion on their buying and selling. And for the people that manage the index funds, they are rewarded on minimizing tracking error, not on beating the index. I tend to think there will be a bias towards buying any remaining shortfall they have as quickly as possible.
Countering the counter might be a recognition that waiting a little longer, maybe even a day, will help them fill their remaining shortfall at a price as close as possible to whatever the opening price is on Monday.