The Two Forces on Stock E

Index fund X holds five stocks: a, b, c, d, e. The crowd is dumping X and selling a–d, but buying e directly. Drag the sliders to see how E gets pulled in two directions at once — and which force wins.

Inputs

Selling pressure on X (the whole fund) 60%
Drives X below its NAV → triggers redemptions → the whole basket (incl. E) gets sold.
Direct buying of E 50%
Buyers hitting E's own order book directly — pure upward demand on E.
E's weight in the fund 20%
Bigger weight → more of E sits in each redeemed basket → stronger drag.
Scenarios

Net effect on E

$100.00
±0.0%
↑ Direct demand pushes E up +0.0
↓ Basket redemption drags E down -0.0

How the down-force reaches E — the redemption chain

1
Everyone sells X → X's market price falls below its NAV (the basket value). A discount opens.
2
Authorized Participants spot the gap: they buy the cheap X shares and redeem them with the fund.
3
The fund hands back the entire basket — a, b, c, d, AND e — by weight. You don't get to pick.
4
The AP sells the whole basket to bank the arbitrage spread — including selling E, even though the crowd loves E.

Redemption chain idle — X is near its NAV, nothing leaks to the basket.

Pressure on each constituent

Net selling (price down) Net buying (price up) Stock E — the contested one

The insight: a, b, c, d only feel selling — from both the crowd and the basket redemption, pointing the same way. E is unique: direct buyers push it up while the basket redemption drags it down. E's price ≈ its own demand − its share of the basket being dumped. In normal conditions direct demand wins and E rises (just less than it would alone); only in an extreme X selloff does the basket drag flip E negative.