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MSCI's indexing decision disappoints traders

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Crude has broken out of its recent trading range, and oil stocks are trading higher. They are being helped by the move lower in the dollar in the last couple weeks, and there seems to be a refocus on demand, which appears to be improving.

With that said, energy stocks are certainly not on fire; the main ETF, the Energy Select SPDR Fund,has been on a slow descent for a month. This was at multi-year lows in January. Long-only funds were aggressive buyers, but when those buyers dried up, energy stocks faded. The good news is many feel it's going higher.

Elsewhere:

1) Chinese stocks are trading fractionally positive this morning, including Chinese ETFs that trade in the U.S. MSCI's decision to put off including mainland China in its indexing scheme was a disappointment to many investors. Volumes in the few ETFs that own mainland China (A-shares) had been high in the previous days in anticipation that such a move would be made.

Read MoreMSCI move to give China stocks a $400B boost

The decision, while disappointing, was not irrational. MSCI specifically said they need more clarity on three issues.

  1. Quota allocation process: Foreign investors still can't buy as much mainland of China (A-shares) as they want to; there is a quota system. MSCI wants assurances that large clients will have access to buy sufficient shares that will cover their needs. It wants "a more streamlined, transparent and predictable quota allocation process."
  2. Capital mobility restrictions: There are still restrictions on capital movement and limits on the amount of money that can be repatriated. The Shanghai-Hong Kong Stock Connect has been very successful, but there are daily limits imposed on trading activity, and MSCI would like to see those limits lifted to reduce trading uncertainty.
  3. Beneficial ownership: In a separate account, there is a custodian that invests stocks on behalf of an investor. MSCI needs clarity from the Chinese that those securities are held on behalf of the investor. In other words,it wants clear title to ownership.

Because Chinese security officials want this to happen, it is likely these issues will be resolved soon and MSCI will include China A-shares this year. The key will be the opening of the Shenzhen-Hong Kong stock link, which will likely be announced in the next two to three weeks and likely become operational in August. Once that happens, much of the concern about access to the market will lessen.

2) Newmont Mining priced a 29 million secondary offering at an implied price of roughly $23.52, another secondary in a strong year. That's about a 6-percent addition to the more than 500 million shares already out there.

This is another big year for secondary stock offerings. Why are secondaries so big? Because companies think their assets are cheap. Many are buying to acquire assets.

Read MoreRough start for IPOs after offering hiatus

In the case of Newmont, the company is acquiring mines from Anglo Ashanti. You'll see more of this with energy companies as well, with lots of assets bought by companies using secondaries.

Stock Offerings YTD Secondaries

YTD: 465

2014: 439

This, while IPOs are lagging. David Menlo at IPOfinancial.com thinks the bar has been raised for companies going public, particularly with so many companies raising private capital before they go public.

IPOs (Source: IPOfinancial.com)

YTD: 71

2014: 119

Bottom line: more secondaries, fewer IPOs.

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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