QQQ Additions

Discussion in 'Trading' started by thetraderprofit, Dec 15, 2002.

  1. Did anybody buy a basket of proposed QQQ additions prior to the announcement?

    I'm wondering how this strategy has performed in prior years. I've heard good things about doing this.
  2. m22au


    It doesn't work too well because (1) people can work out the additions for themself fairly easily and (2) the index fund buying is not as great as it is for the S&P indices.

  3. doublea


  4. bobcathy1

    bobcathy1 Guest

    The strategy works this way.

    You short what is being deleted on the day they announce it.
    And buy what is being added the same day.

    The day it takes effect, cover the shorts and sell the longs.
  5. No way, the only people that think it is still played that way are maybe the commentators on CNBC.

    There is no edge if you do that because one it's the qqq's not the spoos, and secondly the qqq's rebalancing are much much easier to figure out than the s&p replacements which are are more subjective.

    To do it right you have to buy and short the "proposed" list sometime prior to the day they announce it. Then you usually try to take profits after the announcment or when it actually takes effect although most of the time there is little to make between the announcement and the actual date the additions and subtractions are done.

    Also, almost every big brokerage house/market maker has had internal "proposed" lists floating around for 2-3 weeks and you had better belive they have already positioned themselves sof that if the stock gaps up or down the day of the announcment they are in a position to buy or sell that gap.

    SB for example had this list out about a full week ago as I saw it on Monday and others did as well. ( I haven't broken it down, but glacing at it, it looks like they got most of the them right)

    If you want to see how the stragegy would work if properly implemented, I would bet that if you bought and shorted the proposed list below on say Monday's close and then close the positions on the open following the announcement day (not the day it takes effect but the actuall announcement day) you will do better than the other way where there is very little edge at all these days I would think.


    The most likely additions according to Salomon Smith Barney are the following:

    Career Education (CECO:Nasdaq)
    CH Robinson (CHRW:Nasdaq)
    Dentsply (XRAY: Nasdaq)
    Dreyer's Grand Ice Cream (DRYR:Nasdaq)
    Expeditors (EXPD: Nasdaq)
    Fast (FAST: Nasdaq)
    First Health Group (FHCC:Nasdaq)
    Garmin (GRMN:Nasdaq)
    Gentex (GNTX: Nasdaq)
    Henry Schein (HSIC: Nasdaq)
    Lamar Advertising (LAMR:Nasdaq)
    Patterson Dental (PDCO:Nasdaq)
    Patterson-UTI Energy (PTEN:Nasdaq)
    Petsmart (PETM:Nasdaq)
    Pixar (PIXR:Nasdaq)
    Ross Stores (ROST:Nasdaq)
    Whole Foods Market (WFMI:Nasdaq)

    The most likely deletions are:
    Abgenix (ABGX:Nasdaq)
    ADC Telecommuniciations (ADCT:Nasdaq)
    Andrx (ADRX:Nasdaq)
    Applied Micro (AMCC:Nasdaq)
    Atmal (ATML:Nasdaq)
    Charter Communications (CHTR:Nasdaq)
    Conexant (CNXT:Nasdaq)
    i2 Technologies (ITWO:Nasdaq)
    ImClone Systems (IMCL:Nasdaq)
    Integrated Device Tech (IDTI:Nasdaq)
    PMC-Sierra (PMCS:Nasdaq)
    Protein Design (PDLI:Nasdaq)
    Rational Software (RATL:Nasdaq)
    RF MicroDevices (RFMD: Nasdaq)
    Sanmina (SANM:Nasdaq)
    Sepracor (SEPR:Nasdaq)
    Vitesse Semiconductor (VTSS:Nasdaq)
  6. I take the opposite approach to this in selling the additions moc and buying the deletions moc. Its a reverse psychology trade I usually do from the airport or occasionally bus station depending on how well I've done for the month. Good luck on this strategy. You may consider taking that trading bootcamp I've heard so much about, they are supposed to have a class act.
    Inmate 451
  7. bobcathy1

    bobcathy1 Guest

    Truthfully I do not do either.
    I was just telling someone how the 'theory' works.
    I find I do not make any money at it usually because everyone has beaten me to it!
    I stick to QQQ and NS and am very happy!
  8. I took home some PETM with the average price of 19.83. It's trading 20.10 after hours. I will take my profits at the open if it stays there and short this mother at the closed of the 20th.


    p.s Any of you index players out there, if you were aggressive enough with the PDCO additon on Friday by shorting it near the close, it was a nice score.
  9. Inmate,

    Are you in a Boot Camp facility?

    I'm not cetain just what you've said---Is it a class act or an acting class?? Perhaps the reason for your recent attachment to this thread has something to do with "openings" other than the market's. I've heard it gets lonely in there, and an otherwise straight guy might develop an attachment....................

    "Champagne for my good friends and pain for my sham friends"
  10. nitro



    The perfect airport trade...

    nitro :D
    #10     Dec 15, 2002