Most of you are acquainted with the subreddit known as wallstreetbets (which I usually refer to simply as WSB). It’s largely a community of undiagnosed gambling addicts who latch on to tales of someone out there making such-and-such a profit based on some insanely aggressive trade and wanting to ape their behavior. WSB is the rich, loamy soil from which meme stocks spring, such as AMC, GME, and the late BBBY.
The typical “investment” these rakish young lads dive into is typically a stock which USED to be worth a tremendous amount more and which, they are quite certain, will “rocket” higher Real Soon Now once a certain something happens (like an earnings report or a hedge fund squeeze which they imagine they’ll engineer). The latest meme stock, implausibly, was First Republic (FRC), which soared in recent days to the tune of hundreds of millions of shares in anticipation of an explosive move higher. Well, you already know what happened.
This latest demolition of Robinhood accounts is no surprise, and surely it will cause a free intermission in the activity of these imagined traders, at least until such time as they take out more 29% interest rate personal loans to replenish their long-suffering accounts.
The disappointment from the likes of FRC vomiting up blood are being witnessed in the market in general, although if the past fifty thousand sessions are any guide, the lovely double-digit red numbers on ES, NQ, and RTY will all be pushed higher throughout the day until we wind up with a +0.00 change for every stock and index on the planet. For the moment, however, we can bask in the gentle glow of an /ES which has clearly failed to push past its major Fibonacci resistance.
A far more intriguing chart may be found with the small cap futures, the /RTY, which over a period of months have hammered out a beautiful shape. This is actually an electrifying chart, because my concern has been that the bullish run following the basing pattern on the left side would be echoed with the basing pattern on the right. Indeed, the basing pattern on the right was substantially larger, and I feared a piercing of resistance at 1827.40 would encourage our dear, dear bullish friends to send prices rocketing higher. Well…………..no.
So now we enter into what promises to by a fantastically exciting three days. I honestly don’t give two craps about FRC, but now that Tuesday is here, we’re going to have a smorgasbord of huge earnings events that actually matter. I am fully and utterly loaded to the teeth with put positions, and I’ll be crossing everything I’ve got two of, for good luck.
Onward!
