Replies to post #35834 on Tesla Inc (TSLA)

[la-tsla-fan]

TTTR

Based on your post I did a Google search for "When can index funds buy TSLA".

The lines closest to what you are saying are as follows:

"Index funds that track the S&P aren’t buying Tesla stock just yet. They don’t purchase funds far in advance of Tesla’s addition. An index fund’s job is only to track the S&P 500 as closely as it can. Index funds are active a few days surrounding official index additions and deletions."

This paragraph occurs in
https://www.barrons.com/articles/tesla-stock-will-be-added-to-s-p-500-all-at-once-expect-volatility-tomorrow-51606783996

So, in essence, you are correct; however, there is no such restriction that I could find.

Now, let us see the impact. Market makers in TSLA stock know that a huge demand will accrue from the index funds probably starting on Dec 14 and continuing through Dec 18. So they have been busy accumulating shares. I think that is what has caused the recent spikes in stock price. The couple of declines, like today's, are explained by the MMs dumping some of their stock so they can accumulate more at a lower price (pure price manipulation). If I am correct in assuming that the MMs have a good fix on potential demand, the Dec 18 deadline will be a non-event. It will have little impact on stock price. We'll have choppy trading all week in full control of the MMs, as they satisfy the huge demand for shares.

The so-called "active benchmark" funds have zero time pressure. Since they use the S&P500 as a point for comparison, they are free to add or not add TSLA. And if they choose to add it, the timing is entirely up to them.

If you look at the differences in average trading volume in TSLA, before and after the S&P announcement, you will notice that the predicted demand from the index funds has been traded many times over.