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Technology Stocks : Gemstar Intl (GMST) -- Ignore unavailable to you. Want to Upgrade?

To: unclewest who wrote (1204)	12/24/1999 3:14:00 AM
From: pompsander	Read Replies (1) \| Respond to of 6516

Uncle and thread...this news could really cause some interesting trading next week. When the news about G* inclusion in the Nasdaq 100 hit the tape, of course the speculators got into the stock in a big way. Good for them, as a solid run up was very likely, and took place today. They will be looking for the best opportunity to maximize their quick profit. However, many money managers which mirror the Nasdaq 100, as well as the Trust itself, were planning on having a period of time in which to adjust portfolio weightings. In the case of the Trust, they would have been required to make appropriate sales and purchases by 4:00 on Jan. 5th. As January 3rd would have been a return to "normal" trading after y2k and holiday absences by many in the profession, the Trustees could have eased their way into the weighting over the next eight trading days, with an emphasis on the final three. (I don't know the number of shares required to be purchased by the Trust, but I am sure someone can do the math. Moving the inclusion date up to November 30th requires the Trust to rebalance much earlier - in a time period which has historically been illiquid for the reasons stated above. Add to this the fact that the speculators and market makers know this forced rebalancing must take place within a specified limited time period....Now, G* is not a huge relative position in the Trust, but it is meaningful to a stock which often trades only a little over a million shares a day. Whoa, Nellie. Could get volatile. Now, what about the money managers which emulate the Nasdaq 100? They could start their rebalancing now, and I am sure many have. However, there is an inclination to let the "fizz" work out of a stock like this and to buy when it backs off a little to fill the gap. What if because of the speculators holding on, the Trust moving in, the shortsellers getting out (should have all gotten out today, for Pete's sake)the private managers come to believe the stock will not retrace and fill the gap within the month of January? They still need to rebalance to look like the index, and, while there are hedging and futures strategies to work around this problem, there is very little time to get these positions formulated and placed at any price they will want to pay. If G* begins to run up in early January we could see some real scrambling by the money managers to get caught up. Fuel for the fire. The next four weeks are going to be a fascinating period to watch. I suspect we will have huge volume swings on given days and the spreads are going to be breathtaking. And, if the Company should announce any good news in the next four weeks...well......