Morning Comment: The REAL Reason Why GameStop's Action Should be a Concern



Everybody has been talking about GameStop (GME) in recent days...which makes total sense given that the stock had rallied over 3,000% from its August level...and it has done this even though its prospects are worse than anything Judge Smells would ever describe. (They sssssssssssuck!) This has led some people to say that the recent action in GME is another sign that the broad market has become a speculative bubble. They say that the willingness to buy this stock at these crazy levels is another sign of froth.

Well, the recent action in GME is certainly a reason for concern, but most of those people who are talking about GME are not discussing the REAL problem with its recent action. Most of people who are talking about this issue are not taking the next step...by going into the details of what has taken place in GME in the last week or so. In other words, even though most people realize that this situation with GME has little to do with traders “willingness” to buy the stock at these stratospheric levels...and much more to do with them getting squeezed (in the mother of all short squeezes)...they don’t discuss what it really means for the rest of the market. They don’t discuss how the term “short squeeze” is just another way of describing “forced buying”...and that it works in the opposite direction when “margin calls” create “forced selling”!!!

Therefore, the real issue surrounding the irrational rally in GME is that is shows what can happen when to many people get on one side of the boat...especially when they get to that one side of the boat with large levels of leverage. (Since short sellers are by definition leveraged...and the short interest on GME was very, very high...the situation became ...

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Morning Comment: Bitcoin should be a good indicator for the stock market near-term.



The funny thing about Bitcoin right now is that people either want to read or hear everything they can about the asset...or they’re sick and tired of everybody talking about it. (The latter group tends to be the ones who ...

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Morning Comment: Charts on NFLX, GS, and UPS.


As expected, the market reacted well to Janet Yellen’s confirmation testimony yesterday...and the ensuing bounce led to a 50% retracement of last week’s losses in just one day. The rally came on pretty mediocre “internals”...as the volume was nothing special ...

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Morning Comment: Chip stocks: Great run, but they're getting very overbought near-term.


We find it comical that some pundits think that since a couple of Fed members have come out to say that the Fed is unlikely to cut back on their QE program any time soon, it means that we should ...

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Morning Comment: The Next Two Weeks Could Be Key For Bitcoin


The stock market took it on the chin a little bit yesterday, but it came on breadth that was basically flat for the S&P 500, the Nasdaq Composite and the NYSE Composite indexes. It also came low volume of less ...

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Morning Comment: What if the dollar actually rallies for a while?


There is no question in our minds that what those people did when they took over the capital building this week was appalling...and disgraceful. However, what in the world would have happened if they had been terrorists? Sure the Capital ...

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Morning Comment: One Day Does Not Make a Trend....S. Korea....Gold.



The S&P 500 Index fell 1.48% yesterday...and in the 21st century, there have only been three other years where the first day of trading gave us a decline of more than 1%. Those years were 2001, 2008, 2015. The average ...

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Morning Comment: Bring on the trivia!


Welcome to January...which is “trivia month.” That’s right, after the first day of trading...the third day of trading...the first week of trading...and the first month of trading...of every new year, we hear all sorts of trivia about what the action ...

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THE WEEKLY TOP 10


Since we are constantly getting new readers, we like to start our weekend piece with a quick note every once in a while...and the first piece of the year would seem to be a good time to do this once ...

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Morning Comment: It's (still) All About Liquidity


We have been out for several days due to the holiday, so although we have certainly kept an eye on the markets over the past week, we don’t have our fingers on the pulse of the markets to the degree ...

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THE WEEKLY TOP 10.....2021 Preview


Two quick notes: First, due to the holiday, we will not be sending out a weekend piece next weekend. Second, this weekend’s piece deals with our macro outlook at next year. Thus we talk about our view on the broad ...

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Morning Comment: Chip Stocks Starting to Get Quite Overbought


We have been quite positive on the chip stocks for a while now...and we turned particularly bullish on the group three months ago, in early September. Back then we said that although it was a good idea to pare-back on ...

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