I rarely remark on the “markets” but will now as things have gotten so extreme.
The group of wild-men punters known as r/WallStreetBets (WSB) have turned their attention to silver, which experienced a surge over the weekend.
r/WallStreetBets reports the Reddit group has been hit by a “large amount” of bot activity.
“Just bought my first silver futures contract! The establishment will pay! Hold the line! 💎 🙌 ”
-Aiden (11 years old) pic.twitter.com/enuOXWmUb3
— Ramp Capital (@RampCapitalLLC) January 31, 2021
I don’t consider silver bubbly as yet, but the narrative that there is short squeeze potential is patently false. The CoT managed money category reveals that hedge funds are solid long, with quite low short positions of only 23,113. Yes, there is some room to go further long, and that’s probably what’s happening.
However, going into overnight Tuesday trading, silver has been slammed back lower as CME raised silver margin requirements by 18%. This type of move is routine and I have seen it myself trading precious metals for over 25 years. Somehow WSB thought they would be spared the treatment?
r/WallStreetBets now has up to 7 million punters on their site. Beavis and Butthead’s core trade Gamestop (GME) saw a $100 drop to $225 on Monday, as the counterfeit shorted shares (the real story here) have covered and more. Pre-market as I write, GME traded even lower- down another $50. Short interest is down to 53.15%.
Tuesday trading update: The bloom is off the WSB trades as Beavis and Butthead learn one of life’s lessons. GME down $110 more at $115, AMC down $5.50 to $7.75 and BBBY down $5 to 25.50. Silver gives up Friday’s and Monday’s gain.
And how soon until hedge funds infiltrate r/WallStreetBets with some galaxy-brain lotto trade posing as part of the “new movement.” Will they herd in the sheep and then fleece ’em? If anyone gets caught manipulating anything, we already know the banksters get away with a fine and that’s it. Hopefully, this part of the mania dissipates quickly before more harm is done.
Wallstreetbets has reached 7 million subscribers.
(Wait until remote learning is over and they’re all back at school…) pic.twitter.com/FyLfCe9Rxq
— NOD (@NOD008) January 30, 2021
Google search for short squeeze:
In reality, the short interest on the market as a whole is at record lows. There just isn’t much squeeze potential in play, just more Beavis and Butthead magical thinking. Short sellers have already largely covered.
There is, however, an enormous squeezable short bet against the U.S. dollar.
Hedge funds leveraged up the ying-yang in primarily the same trades- basically the same adolescent herding mentality.
Mutual fund managers have less than a 2% cash cushion for the first time in history. Pension fund managers have 2.6% in cash, lowest ever.
The “markets” have gotten quite addicted to stimulus. In fact, the bets are all in and at extreme frothy levels historically. Insider selling is at extremely bearish levels. So corporate officers aren’t seeing bullish prospects in their company’s stock price.
Companies flooding the market with capital raise underwritings. This equates to dilution.
Number of zombie companies hit all-time high in 2020 as real yields sank … as noted by @DataArbor, they’re intertwined with current short squeeze: > 31% of zombies carry short interest as % of equity float > 10% pic.twitter.com/PZv7FqZrxq
— Liz Ann Sonders (@LizAnnSonders) January 29, 2021
IMAGINE WHAT WE CAN DO WITH $100,000 STIMULUS CHECKS! pic.twitter.com/mmq0fKb1Wx
— Sven Henrich (@NorthmanTrader) January 29, 2021
The levels of small trader call buying is at mania levels.
— Ramp Capital (@RampCapitalLLC) February 1, 2021