A Major Index is Getting a New Look
A highly anticipated annual event is set to take place tomorrow, and one type of business could be the biggest beneficiary.
Market indexes are a useful tool for gauging the performance of the broader stock market, specific sectors, and a range of other types of assets.
By measuring the performance of a basket of securities, traders can use indexes as a benchmark against which to evaluate the performance of their investments and plan trading strategies.
While the S&P 500, Dow Jones Industrial Average, and NASDAQ Composite are the three most well-known indexes, there’s another very important index that’s getting a lot of attention this week.
The Russell 3000 Index is a market cap weighted index that tracks the performance of the 3,000 largest U.S. traded stocks.
Those 3,000 companies account for roughly 98% of U.S. incorporated equities.
And tomorrow, the Russell 3000 is going to undergo a major change – one that is likely to result huge price movements for certain stocks.
Find out who the biggest winners will be…
Where’s the money?
Every year, on the final Friday in June, the Russell 3000 undergoes a “rebalancing” – a shift in which companies comprise the index.
The rebalancing is an effort to accurately reflect the ever-changing U.S. market. This year, the Russell 3000 will add and remove nearly 300 companies.
And gaining inclusion in the Russell 3000 index can be a catalyst for big price movements for stocks. Not only is it a sign that a company is growing in value, but it also attracts some of the biggest money on Wall Street to the stock.
Many fund managers engage in a strategy called indexing – the practice of trying to replicate the performance of the broader market index by buying and holding the same stocks that make up the index.
That’s what helps to make the day on which the Russell 3000 rebalances one of the heaviest trade volume days of the years as investors scoop up the new additions.
And as I’ve said many times here before, more aggressive buying drives the price of anything upward.
Here are what I see as the biggest potential winners of this year’s rebalancing…
How do I get some?
Among the new companies ascending into the Russell 3000 in 2021, there are quite a few from one industry in particular.
And if you’ve been following along with Profit Pregame for a while now, this should come as no surprise to you.
I’ve been saying for months just how much I believe in the electric vehicle (EV) industry.
Global sales of electric vehicles have increased by 43% over the last year, and as more automakers begin producing EVs, innovation and infrastructure are bound to drastically improve in the coming years.
Of the 15 electric and autonomous vehicle stocks joining the Russell 3000 tomorrow, two have continually shown up on my proprietary scanners – known as S.C.A.N. – for heavy buying volume.
QuantumScape (QS) is an electric vehicle battery producer that makes long-lasting solid-state lithium batteries.
Fisker Inc. (FSR) is an EV automaker that is consistently mentioned as one of the top EV startups in the market.
I believe that inclusion in the Russell 3000 will create a surge for these stocks in the coming days.
Get in on the next profitable trend before it pops
With so many electric vehicle companies on the rise, there’s no shortage of lucrative trades in the burgeoning space.
Take, for example, the position I recently recommended to Project 303 subscribers.
Earlier this month, S.C.A.N. picked up on abnormally large order flow on QuantumScape (QS), which told me it was the perfect time to jump in.
And after just two days, those that took the trade had the opportunity to score a 86.6% profit!
That’s just one example of the many profitable trades we’ve closed in Project 303 this year. And there’s plenty more to come.
Want to have a chance to take part in the next trade identified by S.C.A.N.? Click here to learn more about Project 303.
In the Spotlight: Boeing faces an uphill battle abroad
After several highj-profil crashes involving its 737 Max jet, The Boeing Company (BA) has made strides in re-gaining approval for commercial flights in the U.S.
But things are going as smoothly overseas.
Hopes that Boeing would be able to regain regulatory approval in China, the world’s largest aircraft market.
Regulatory roadblocks, politics, and trade tensions are being blamed for the delay in getting the 737 Max back in the air in China. Those close to the situation say that a resolution could still be months away.
At the moment, BA stock price has held steady, but any further difficulties could lead to another dip, and a great buying position on a huge rebound stock.
I’ll be keeping a close eye on this story, and I’ll be back to provide updates as warranted.