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Russell Rebalancing Triggers Volume Wave; Jim Cramer Sees Opportunity

“The artificial forces that drove the market lower seem to have disappeared,” Cramer said on his Mad Money program last night, setting up the potential for good buying opportunities ahead of today's Russel index rebalancing.

U.S. stocks could see the largest trading volume session of the year Friday as investors work through the final rebalancing of the $47 trillion FTSE Russell group of indices and its implications for meme stocks and SPAC deals.

FTSE Russell, which manages a host of indices including the U.S. small-cap focused Russell 2000 and the larger-company Russell 1000, typically performs the annual adjustment of its $47.7 trillion-valued constituents on the final Friday of June.

"We don’t know what’s going to happen, but it could be terrible like a similar rebalancing from last week," TheStreet's founder, Jim Cramer, said in his Real Money column Thursday. "We know that money will have to come out of a bunch of stocks to pay for the meme stocks, and could cause a decline."

"Yet, I think that this time the decline will be bought because the moment is benign and people want to put their spare dollars to work," he added.

Goldman Sachs estimates around 57 companies will enter the Russell 1000, where a market cap of $5.2 billion in required, when the changes are finalized at the close of trading today. Some potential additions include Snowflake  (SNOW) , Palantir  (PLTR) , DraftKings  (DKNG)  and CureVac  (CVAC) . Another 47 stocks will be demoted to the smaller Russell 2000, Goldman estimates.

Possible Russel 2000 additions include GameStop  (GME) , Novavax  (NVAX) , Rocket Companies  (RKT) , Nikola  (NKLA)  and Lordstown Motors  (RIDE) .

Meme-stock favorite AMC Entertainment  (AMC) , however, may not make the cut given that its market value was $4.3 billion when FTSE Russell set its 'rank day' estimates on May 7. AMC, however, had a market cap of $28.45 billion at the close of trading Thursday, giving it a strong case for late-hour inclusion into the larger Russell 1000.

The Russell 200 closed at 2,333.62 points last night following a 1.39% gain on the session, in a move that takes its year-to-date gain to around 18.17%, well ahead of the 13.6% advance for the broader S&P 500, which closed at a record high of 4,266.49 points.

The Russel 1000, meanwhile, closed at 2,405.42 points to lift its year-to-date gain to 13.4%.