Community,
Russell has just added a new Index, the “Russell Mircocap 2000”.
This Index will be made up of the smallest 1000 companies in the Russell 2000 plus the next smaller 1000 companies. Russell says that the companies Cap will range from about 55 Million to 500 Million. No OTC, Closed End Funds, Pink Sheets, or ETFs.
The fact that these companies are in an Index now, and like all other Indexes, mutual fund groups will start offering funds based on the Index, plus institutions will start simulating the Index.
I fell that all of the companies in the Index will probably have an increase in their average volume trend because of this. I also feel that most of the effect will be in the smaller 1000 companies since the top 1000 are already in an Index and already have higher volume. There is no way of knowing over what time frame this will take place.
Those of you that like to trade Micro Caps and want to try to take advantage of possible price increases due to any Index buying, can add this Buy Rule to your favorite Sim:
MktCap > 55 & MktCap < 500
Or if you want to concentrate in the smaller 1000 companies in the Index try this rule:
MktCap > 55 & MktCap < 175
175 million is approximately the market cap in the smallest company in the Russell 2000 Index.
Read more about the Russell Microcap 2000 Index here:
http://www.russell.com/us/indexes/us/reconstitution/microcap_adds.asp
Denny 