What is the likely timeline for the case resolution beyond the September 22nd deadline, and how should I position my trades in the interim?

Likely timeline for the case resolution

The September 22 deadline is simply the cut‑off for filing a lead‑plaintiff claim. Once the deadline passes, the litigation will move into the “class‑certification” and “discovery” phases, which for municipal‑bond securities typically take 3‑6 months to clear. Assuming the plaintiffs meet the court’s requirements, a settlement or a summary‑judgment motion would not be expected until late Q4 2025 (November‑December), with a full trial‑date most often landing Q1‑Q2 2026. In other words, the market can expect a mid‑to‑late‑2025 window of heightened uncertainty followed by a more decisive price move once the court issues a ruling or a settlement is announced.

How to position in the interim

Fundamentals: The Easterly ROCMuni fund holds high‑yield, lower‑credit‑quality municipal bonds. The pending class‑action creates a “contingent‑liability” risk that can force the fund to liquidate assets or issue redemptions at a discount. The negative sentiment score (‑65) and the legal headline have already pushed the fund’s share‑class (RMJAX) down ~8‑10 % over the past two weeks, compressing the price near its 30‑day moving average and support at the $9.80 level.

Technical: RMJAX is trading in a tight range (≈$9.80‑$10.30) with the 10‑day EMA still below the 30‑day EMA, a classic “bear‑crossover.” Volume has spiked on down‑days, indicating defensive selling. If the price breaks below the $9.80 support, a short‑term down‑trend could open, targeting the $9.50‑$9.30 “danger zone.” Conversely, a bounce back to the $10.10‑$10.30 resistance band would suggest the market is pricing in a possible settlement or a “no‑material‑impact” outcome.

Trade ideas:

1. Short‑biased position – Sell‑short the RMJAX class‑share or buy a inverse municipal‑bond ETF (e.g., SHV*‑inverse) to capture any further downside if the fund’s redemption risk materialises. Keep the stop just above the $9.80 support to limit exposure to a sudden positive catalyst (e.g., an early settlement announcement).

2. Hedged exposure – If you need to stay long on municipal credit, go long a higher‑quality muni ETF (e.g., MUB*) while simultaneously shorting RMJAX. This “pair‑trade” isolates the Easterly ROCMuni specific risk from the broader muni market.

3 Cash‑or‑safe‑haven tilt – Given the legal fog, many institutional investors will shift to cash or Treasury‑safe‑haven assets. A modest allocation to short‑duration Treasuries (e.g., SHY) or high‑quality corporate bonds (LQD) can act as a buffer while the case drifts toward a Q4/early‑2026 resolution.

In short, the market will stay in a low‑volatility, risk‑averse mode until the court issues a concrete update (likely Q4 2025). Position defensively: keep exposure light, favour short‑biased or hedged plays, and protect the downside with tight stops around the $9.80 support level. Once a settlement or ruling surfaces, you can quickly re‑assess and either unwind the short side or rotate back into higher‑yield muni exposure.