SB,
Today's volume was only about twice the average 10 day volume. Most of those buying in cannot do so until it is added to the index on Monday.
Off the top of my head, I'd say there will be enormous buying pressure on Monday, because all the institutional investors which must hold the S&P must sell their UCM and buy PWER. PWER's average daily volume is about 2.4 million, and the float around 74 million, selling currently at about 75. By comparison with BRCM:
askresearch.com
It was announced in late June that BRCM would be added. That caused the gap up the next day on only double normal volume, from about 145 to 160. BRCM then proceeded to ramp up from here to just above 200, on twice normal volume per day or less. But the day the institutions actually bought was the day it was added, which was the last day in June. That day, BRCM traded about 38 million shares, or 7 times normal volume, and finished the day at about 220.
At the time it was added to the S&P BRCM had a float about 3 times the size of PWER's, had twice the daily volume, and was trading at about $120, but had reached 200 by the time it became effective. The market cap at that time for BRCM was roughly $46 billion, while the market cap for PWER is currently a little less than $5 billion. Since S&P weightings are market cap adjusted, you can estimate roughly how much buying pressure there will be.
So, at $200/share, if 38 million shares were bought, this represents $7.6 billion. But since PWER's market cap is about 11% that of BRCM's at the time, a ballpark estimate of the amount of buying would be 11% of $7.6 billion, or $836 million. Since the shares are trading now at about $75, this would represent 11 million shares which should be bought on Monday, or about twice the volume traded today, and five times normal volume.
Just eyeballing the numbers, and comparing with BRCM, added to the fact that PWER has been obviously deliberately driven down the past couple of weeks (now we know why!!), I'd say that PWER will move pretty strongly on Monday.
If anybody has a better handle on the actual numbers, I'd love to see them.
Regards,
Walkingshadow |
