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Retail Traders are Driving This Market, Risk is the Focus

#crypto #bitcoin #ether #stocks #SPAC #risk


Today’s retail investors appetite is for the market’s speculative freedom“– Paul Ebeling

The shares of GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) are surging. Interest in special purpose acquisition companies has reignited with Chamath Palihapitiya’s blank-check firms leading the way.

Bitcoin and Ether are up after last wk’s Fibo action.

Retail traders are driving the action, as they pump their bets on Twitter, Reddit’s WallStreetBets and Stocktwits chat rooms. Freedom! As shares of GameStop and AMC were among the most actively traded stocks Wednesday. “It looks retail driven to me.”

The S&P 500 is flat on the month, but shares of Reddit favos GameStop and AMC are soaring. Including Wednesday’s gains, GameStop is +40% in May while AMC has surged 95% over the same frame.

Those 2 stocks have been among the best performers in a basket of 37 the meme stocks this May. As a group, Wednesday’s 7.7% rally marked its best session since the retail focus took on the market in March.

With the retail investor movement’s momentum and both GME and AMC having high short interest, a big a short squeeze is a strong possibility at the end of this wk.

Shorts have seen mark-to-market losses of about $475-M MTD alone prior to the Wednesday’s spike.

SPAC’s, the speculative fervor may also be providing a boost for blank-check firms, which have accounted for nearly 50% of Y 2021’s record IPO volume.

Virgin Galactic Holdings Inc., a space tourism business that merged with one of Palihapitiya’s SPACs, has surged 22% this month after a decline earlier this year. Gains in the stock, popular with day traders, came after a last wk’s successful test flight.

Crypto’s Northside Fibo retrace

Bitcoin and its crypto side kicks took traders and investors on a wild trip this month. As Bitcoin fell as much as 54% from its February highs, over 700,000 highly leveraged traders had their accounts liquidated in a 24 hr frame. But, lots of crypto fans of the asset class used the dip as a buying opportunity.

Wednesday, Bitcoin hung around the 40,000 mark, it has retraced 30% since that low a wk ago. Ether, the 2nd-largest cryptocurrency retraced 58% since its May low of 1,732.

Wednesday, the benchmark US stock market indexes finished at: DJIA +10.59 at 34323.05, NAS Comp +80.82 at 13738.02, S&P 500 +7.86 at 4195.99

Volume: trade on the NYSE came in at 935-M/shares exchanged

HeffX-LTN’s overall technical outlook for the major US stock market indexes is still Bullish with a Very Bullish bias in here.

  • Russell 2000 +13.9% YTD
  • DJIA +12.1% YTD
  • S&P 500 +11.7% YTD
  • NAS Comp +6.6% YTD

Looking Ahead: Investors will receive Durable Goods Orders for April, the wkly Initial and Continuing Claims report, the 2nd estimate for Q-1 GDP, and Pending Home Sales for April Thursday.

Have a healthy day, Keep the Faith!

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Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.