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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: Dennis who wrote (32490)	2/24/2000 12:36:00 AM
From: Gerald Walls	Respond to of 77400

Gerry, i was reading in IBD that something like today was probably caused by program trading....is there any evidence of this..... do you or anyone out there know how these programs kick in?? What's generally referred to as "program trading" is the arbitraging of a stock index future against that index. If the future overpriced versus the index then the shares in the index are bought and the future is shorted, and vice versa. The theoretical calculated "fair value" (this is what the announcers on CNBC are talking about each morning when they say the S&P Futures are x points above/below fair value) of the future is based on the value of the index, interest rates, time until the future expires, etc. Another big "automatic" mover of a stock is when it's added or dropped from a major index, or when the stock's weight in an index is changed. Effective at the close of Wednesday's trading Cisco's weight in the S&P-500 was increased. I've seen stories referring to this tonight, but I haven't been able to find anything telling me how much the weighting changed.