Volume Spike Investor

Pfizer Inc. (NYSE: PFE) is closing its long-standing acquisition of Wyeth (NYSE: WYE).  Because this is a cash and stock merger, it did create an event where S&P 500 Index-tracking mutual funds have had to start buying more shares to account for an increased weighting that Pfizer will have in the S&P (Ditto for Russell).  While the big volume came into play yesterday, today’s volume is looking to carry on some of the huge gains seen yesterday.  The trading volume on Wednesday was 136+ million shares versus an average day’s trading volume of about 47 million shares.  That also came to a 3.5% gain to close at $17.37.  At 2:08 PM today, shares are up 0.5% at $17.46 and we have already crossed over 51 million shares.

We have also seen elevated activity in the OCT-2009 $17.00 CALLS with 6,522 contracts traded versus an open interest of some 51,471 contracts.  A contact at the Standard & Poor’s Index Group last week told us that he generally sees one-third of the index buying in the days before an increase occurs, approximately one-third on the day and day after the addition or weighting gain occurs, and roughly one-third trickle in over the month after an addition or weighting change.

Based on our Real-Time 500 Largest Market Caps, we’d be looking for a change there tomorrow as well.

JON C. OGG