Friday marks the last day of the third quarter – a day when money managers are said to dress up their portfolios by buying winners and selling their losers. How do you ride these pigs with lipstick?
On the last day of the quarter, underperforming names tend to get exaggerated selling and outperforming names often see exaggerated buying. Jon Najaran, brother of Pete and contributor and friend of Fast Money, says this phenomenon of so-called “window dressing” tends not to have much of an impact on the broad stock market if you look to history.
The market has been up on the last day of the quarter only one of the last 12 times. There’s a misconception that people mark things up on this day, Jon said. Most money managers watch their investments and have a good idea of what’s happening on a day-to-day basis.
When you see stocks with motivated buyers and unnaturally few sellers, you want to be on the other side of that trade, Jeff Macke says. The last day of the quarter is an opportunity to get long sectors that people don’t want, he says. Macy’s (M), for example, could get cheaper tomorrow because no one wants to own retail going into the fourth quarter. Play the other side of that momentum, Jeff advises.
Guy Adami says, as the antithesis of the Macy’s trade, gold and oil both could get marked up “big time” on Friday.
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Trader disclosure: On Sept. 26, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Najarian Owns (DISH), (NAT), (UA); Finerman's Firm Owns (BEAS), (NYX), (NMX), (PSS), (WMT), (TXI); Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm Owns (MSFT) Options