UK Uncensored: brought to you by Exponential Investor
In today’s issue…
- 100% in a day?
- This wasn’t a one-off
- Trading on fruity language
How would you like to make 100% on a stock in a day?
Well if you’re on the Reddit boards you just might have a chance.
Of course if you have no idea what Reddit is, then here’s a crash course.
Reddit is a social forums site where anyone can go and post (pretty much) anything they like. It’s really a big online location for communities to come together online and talk about the things they like.
You can find a Reddit thread (known as an r/) for just about anything you can think of… or anything you like.
What about beer and unicorns? No. There’s not one for that. But there’s also one for Spiderman cosplay!
The point is there’s a lot of stuff on there.
Including… communities for stock trading, investing, and pushing short sellers out of the market. This is where the WallStreetBets phenomenon originated.
Back in February I wrote about “How to trade WallStreetBets” because at the time, it was causing havoc on the markets.
It caused a select number of stocks, that were heavily short sold, to pump like crazy closing out the short sellers and bleeding them of billions of dollars in capital.
They almost singlehandedly shut down several hedge funds because of their community rally to beat the short sellers. The target of focus at the time in February were the likes of GameStop (GME), AMC Entertainment (AMC) and even at one point going after the silver (SLV) market.
Then as fast as this “short squeeze” took place, it petered away. It was a short squeeze boom and bust.
Or at least that’s what it looked like.
Truth is these communities never went away. Yes, looking at the stock price of GME and ACM, they peaked, crashed and then didn’t do much for the next few months.
But guess what?
The darlings of the short squeeze
Last week we saw these short-sold stocks boom again. AMC was leading the way at one point last week intraday, seeing its stock price go from $32.04 closing price on 1 June to a high of $72.62 on 2 June.
It wasn’t alone. Other stocks that had been beaten up by the market also saw big swings in price. Workhorse Group, the embattled electric vehicle maker closed on 1 June at $9.63. Intraday on 3 June it hit $18.33.
Workhorse is one of the most shorted stocks on the market right now.
BlackBerry – yes, the former phone maker – even got its fair share of the action. It closed on 1 June at $11.56, rising to $20.17 on 3 June intraday.
These are all the stocks that are being targeted by the WallStreetBets Reddit threads and community again. All stocks still highly shorted, all being squeezed higher to hit the short sellers (again).
It was believed the February short squeeze was a one-off.
Nope. Doesn’t look that way now. In fact, it appears this kind of stock activism is here to stay. You never really know when it will hit and with which stocks. But when it does, they fly – however, only for a very short period of time.
This market can be traded, with great risk. But the place to start, where you want to be as it begins to kick off again, is right in amongst the Reddit boards.
I just hope you’re ready for some “fruity” language!
Editor, Exponential Investor