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The Big Short/Gamma Squeeze Gets Bigger

1/14/21

Stocks – FB, ZM, LMND, GM

Macro – SPY, IWM

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Here’s my mid-day audio commentary from today, MIDDAY – A Short Squeeze Of Epic Portions

Well, it was another strong day for the most shorted index, oops, I meant the Russell 2000. The index rose by around 2%, continuing its insane move higher.

I tracked the most shorted stock index from Refinitiv every day on a spreadsheet I provide for RTM subscribers. When stocks like Bed Bath Beyond go up 19% on more than double the average volume, and that type of move is repeated in Cryoport (whatever that is), as Stitch Fix rises almost 14%, followed by a countless number of stocks up more than 5%, which happen to also be in the Russell 2000, it seems hard for the index not to rise. I don’t know how else to think about it.

I tend to think of this as a giant short squeeze in the Rusell 2000 because if this really is about stimulus hopes and dreams, then why would Mastercard and Visa not go up too? I would think that a stimulus would mean more spending, more spending, means payment processor go up. But Visa and Mastercard were crushed more than 3% each day; I happened to own both, so I noticed.

Notice any similarities?

S&P 500 (SPY)

Anyway…The S&P 500 reached Friday’s high, filling the gap and then reversing lower. It could indicate that lower prices come on Friday to finish the week off and a potential retest of 3,700 next week.

Lemonade (LMND)

Tomorrow could be an interesting day and all for Lemonade, especially when Citron does its live Twitter broadcast of why they think it could back to $100. It is certainly possible. Given the stock’s poor trading performance today, as I noted in this morning’s write-up and the deal’s pricing didn’t seem to go very well. (Subscriber content, get the first two-weeks free to try it out – Morning Note- Waiting On Volatitly To Break)

GM (GM)

After saying it will introduce a Corvette SUV, GM is going up again. That will be interesting. The stock is trading just below my target of $52.80 in the after hours, and so now I will have to think about what happens next, if at all. (Should be free to read – General Motors’ Stock May Be Ready To Surge Higher – from 1/7/21)

Zoom (ZM)

Zoom apparently did a good job pricing its deal, and it looks like it may want to fill that gap up around $475. I noted this yesterday in the midday commentary. (Subscriber content – first two weeks free to try – Midday – Waiting For Movement)

Facebook (FB)

Facebook is pretty close to my $242 target, and that is good enough for me. The stock is down about 11% or so since it first broke down, and I have had enough of looking at this one. It is possible for it to go to $230 and fill the gap, but for now, I don’t care what happens; I’m crossing it off my list and marking it a job well done!

Mike

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