Momentum Monday – While Gamestop Was Being Squeezed …And A Second Video About Robinhood, PFOF and Short Squeezes
Courtesy of Howard Lindzon
As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith.
Before I get into Momentum Monday, I asked some friends to join me for a Zoom to discuss Robinhood, Gamestop, WallStBets and the social swarming of stocks, payment for order flow and the behavioral science on display. Phil Pearlman, Todd Harrison, Blair Livingston, Rishi Khanna, Ben Hunt and Jack Newhouse all chipped in for a great discussion. You can watch it here on YouTube. I have embedded it below:
The WallStBets crowd will definitely be flexing their collective muscle for years to come. Have a look at their growth…
The hedge funds and professional traders now scan it like retail so the games they play will evolve. I’ll stick to my plans and not get distracted with my money.
Onwards…
As usual, Ivanhoff and I did our weekly tour of the markets for ‘Momentum Monday’. You can watch/listen to the episode here. I have embedded below:
I walk though it in the video, but I am just laying low this week to see how the markets digest the loud and wild moves in the heavily shorted stocks. The Nasdaq is in pullback mode but not so much that gets me interested.
I chatted with Ivanhoff about Robinhood which he uses along with Interactive Brokers. He explains why.
Here is Ivanhoff’s take on the markets:
The past few weeks have been one giant short squeeze and everything accelerated last week. The size of the squeezes has been unprecedented and they have led to liquidations in other areas of the market. All major market indexes closed the month below their 20-day moving averages for the first time since October of last year and are currently in a pullback mode.
What is currently quite fascinating is that we are in the midst of a new earnings season and no one is paying attention to earnings reports. All the attention is focused on stocks like GME, AMC, BB, NOK, and other highly shorted assets which are now negatively correlated to the major market indexes. The short squeeze bets have been so one-sided that they have led to liquidity crunch in some brokers.
There’s another concern on the market’s mind right now. All those new Covid mutations and new restrictions around Europe have inspired a new life in Covid-related stocks. Most vaccine stocks were on fire last week – NVAX, MRNA, BNTX, VXRT. Covid testing stocks also showed notable relative strength after HOLX and ABT crushed market estimates.
Back to Howie…
I am keeping an eye on the technology stock and financials pullback. This chart sums it up:
One sector that may be turning is Agricultural commodities relative to the S&P:
The markets have something for everyone again. It is not all tech, all the time.
Have a great week.
Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here.
