FX168 Financial News (North America) - Last Friday (September 20) was supposed to be a good day for Apple. The iPhone maker will be a big winner in the quarterly adjustments of major stock indexes. This was the case during most trading sessions — until about 10 minutes before the close.

(Source: Bloomberg)

Apple's stock price fell more than 2% from an intraday high and was still in the red at the close. This unexpected reversal made market observers speculate who or what caused the reversal.

Closing orders (orders instructing a broker to buy or sell shares at the closing price of the trading day) showed an abnormally large imbalance at the time, indicating a net sale volume of 30 million shares. That's more than half of Apple's average daily trading volume for the first three months.

This massive sell-off pressure is surprising, because after Warren Buffett (Warren Buffett) sold a large number of Apple shares in the second quarter, funds tracking major stock benchmarks are expected to buy the stock in a big way on Friday. This means that the company's weight in many metrics will increase significantly.

There is a theory that some actively managed funds may use this predictable liquidity to reduce their holdings.

Matt Maley (Matt Maley), chief market strategist at Miller Tabak + Co., said, “Maybe some investors want to use the rebalancing opportunity to sell a large number of stocks. They know that a lot of purchasing power is about to enter the market, so they know this is a good time for them to sell a large number of shares without causing the stock price to drop too much.”

Although Apple closed down 0.3% on Friday, the overall stock price for the week rose 2.6%. On Monday (September 23), the stock fell 1% for a while, then the decline was reduced.

(Source: Google)

Another possibility is that arbitrators may have snapped up Apple shares before the rebalancing event, which Piper Sandler & Co. estimates that will generate $35 billion in passive fund demand. Prior to Friday, Apple shares rose for three consecutive trading days, rising nearly 6% during this period.

Although the market is becoming more crowded, buying stocks with rising influence in major indices and selling stocks with declining influence has always been a reliable strategy for many in the hedge fund community.

Mohit Bajaj, head of ETFs at Wallachbeth Capital, said: “Arbitrators try to prepare ahead of the various index events because they think there will be fluctuations at the end of the rebalancing day. Even though it's getting harder, this will still happen.”