After what looked like a potential major breakout here on the VIX yesterday, we are now left with yet again another failed breakout and yet again another supply/ resistance level at 14.36. Bulls need to close over 4950 to break this range and target a much larger breakout to 5000 into next week. We could easily be looking at a 4.9% breakout (from yesterdays low) over the next about 20 days. This would put SPY at about $506-$507 by February 20th. We had similar huge red days on November 9th, December 6th and December 20th. All three of these days ended up being reloading zones for bulls and led to massive breakouts.
But the broader concern comes when what are known as retail investors — amateurs buying stocks for their own personal gain — become overly exuberant and inflate stock prices, sometimes by taking out loans to buy shares. Warren Buffett never mentions this but he is one of the first hedge fund managers who unlocked the secrets of successful stock market investing. He launched his hedge fund in 1956 with $105,100 in seed capital. Back then they weren’t called hedge funds, they were called “partnerships”. Warren Buffett took 25% of all returns in excess of 6 percent.
If that doesn’t happen and the stock price rises, short sellers are forced to cover their positions or buy more stocks — to minimize their losses. WallStreetBets, “r/wallstreetbets,” a forum or “subreddit” on the popular website Reddit, is a social platform and discussion group that chats about speculative investing. The group, born in January 2012, communicates using lots of memes, videos, inside jokes and terminology. Its wide membership of 900,000 flaunts a very specific (sometimes profanity-laced) culture and uses terms like “degenerate” to refer to its members. She is not among a growing number of portfolio managers who think we will see a recession in the next six months. Like everyone else, she is paying close attention to economic data.
Due to the regulated nature of these properties, only about 8-10% of the units can be disposed of each year. At the end of the 2021 calendar year, the company owned a portfolio of 7,100 PRS units that were 95.0% leased with two-thirds of the value in the greater London area and the remaining one-third in the other UK regions. Others rally investors to the cause by posing the GameStop trade as an antiestablishment movement, a middle finger to an industry that underestimates Redditors’ influence. They proclaim that, with fee-free trading platforms, easily accessible margin, and enough allies, they can beat the funds that have dominated Wall Street for so long. Reddit’s structure and the democratic nature of users picking the most popular content differs wildly from Wall Street’s research reports and market analysis.
- There’s no evidence that any of this is illegal, although Nasdaq CEO Adena Friedman has said stock exchanges and regulators need to pay attention to the potential for schemes fueled by social media.
- S&P 500 Index generated an average annual compounded return of only 9.2% during the same 10-year period.
- Members have spent the past three weeks bidding up the video game retailer GameStop, and the results have been spectacular.
- One interesting trend I am noting here on the VIX is that since the mid December low on the VIX we have steadily been making lower lows on double bottoms.
Trolling, insults, or harassment, especially in posts requesting advice, will be removed. Feel free to suggest Robinhood as a broker in comments, but do not share referral links in any way. Context and effort must be provided; empty posts or empty posts with links will be automatically removed. Zuckerberg, along with the top executives at TikTok, X (formerly Twitter), Snap and Discord, faced tough questioning from lawmakers on Wednesday.
Tesla, for example, would need 1,600 years of profits to justify its current price-to-earnings ratio, according to a calculation this month. Often, a short squeeze ends in a price’s falling back to where it was before the drama started. In 2008, when Volkswagen was in the middle of a trader tug-of-war, it briefly became the stock market’s most valued company, but its price settled down eventually. And at least on paper, ordinary investors are making money even if they’re not paying attention. BlackRock, which operates mutual funds, may have made billions of dollars from the rise in GameStop shares alone.
Stock Movers of the Day
With the Federal Reserve aggressively hiking interest rates to fight high inflation, the economic landscape has changed dramatically. There’s also financial gain to be had for those pursuing internet notoriety. Reddit users can award posts and comments with various virtual medals, many of which can be gifted only through the use of real-world currency. Members have spent the past three weeks bidding up the video game retailer GameStop, and the results have been spectacular. Shares have skyrocketed more than 1,200% since Wall Street Bets first piled in January 11.
Mike Novogratz, an investor and former hedge fund manager, said the internet activity is the result of frustration that everyday investors are often locked out of lucrative opportunities, such as initial public stock offerings. As a group, the WallStreetBets group caused a handful of companies’ stocks to spike, including GameStop, and made the case for the stock as a value investment — that it was more valuable than the stock price indicated. Hedge funds started to sell the stock short, betting it would go down.
A subreddit to help you keep up to date with what’s going on with reddit and other stuff. Meanwhile, in old and unsurprising news, it’s also not healthy for an economy to be bound to the fate of a few, giant corporate monoliths. Still, the student admitted that a lot of his trading ideas are “very impulsive,” and “a lot of what people do is basically gambling.”
GameStop? Reddit? Explaining what’s happening in the stock market
The company filed its initial IPO paperwork with the Securities and Exchange Commission last month. In this segment of Backstage Pass, recorded on Dec. 17, 2021, Fool contributors Toby Bordelon, Jason Hall, and Rachel Warren discuss. Please search before posting to help us cut down on repetitive posts. avatrade broker If you are new to the markets, click here or see our resources in the sidebar. Additionally, see our quick guide on how to ask good questions and share quality content. The first signal came on January 5, when a readout of a Fed meeting that took place at the end of last year was released.
We know that Reddit primarily generates its revenue through advertising. There is some belief that WSB signals the arrival of a powerful new force as large numbers of retail investors find influence by acting in concert https://traderoom.info/ or following one another into a big trade. That may serve as a check or balance on other large forces, such as hedge funds, which are used to throwing their weight around without ordinary investors affecting a price.
They earned a boatload of money, acted out on their disdain of traditional financial traders, and gamed the system in their favor. “I can now write my mom a check and put my sister through lymes treatment,” The Guardian reports one saying. Right now, the speculation activity is only around a few companies, which isn’t that uncommon.
Sneering memes can pull in a few dollars’ worth of awards. The week’s most popular Wall Street Bets post — bragging about an alleged 992% return on GameStop options — received a cool $765 worth of awards, according to an online program that estimates the real-world value of Reddit points. Understanding the dominance of Big Tech on the S&P 500 is important for understanding the signal the index is sending about the market, companies and the economy. A rising S&P 500 is usually seen as a good thing, but when an index is led higher by just a small number of companies, it can mask turbulence beneath the surface. In other words, the index can rise even when a majority of companies fall.
Plus, the United States has said that it will not resume high production levels at any point in 2021. Instead, companies will work to save up a rainy day fund for further chaos in the market. Thankfully, the week is almost over and the weekend is so close. Before we get there though, we have one more day of trading. GameStop shares would go from trading at around $43 (already significantly more than it traded at at the beginning of the year) to as much as $380, becoming one of the most traded stocks on the market along the way. This is where things get a little complicated and a bit more unclear.
The company has held back from pulling the IPO trigger in the past until it came closer to profitability. Bouts of market volatility that shut down the IPO market for much of the last two years also contributed to it delaying its plans. Ohanian has also made seed investments in other Silicon Valley darlings, such as Instacart, HR management company Zenefits, real estate firm Opendoor and autonomous car company Cruise.