Thursday January 28, 2021
Our title comes straight off the front page of today's WSJ. We have shown numerous indications of frothy top of the market action via
bullish surveys, option trading, and crowding into fewer stocks like the FANG Group. Yesterday Gamestop GME and AMC Movies became the poster stocks for a bubble.
This reminds of the dot.com frenzy peaking March 2000, just a month from being 20 ears out and the housing stock frenzy of 2007-08.
GME tradedd twice the 1 day average volume of Apple. The details are in several artices. The ability to trade call options for free encouraged small investors to pile in.
the stock is up 64x from late August. There is not Warren Buffet moat around GME, any company can sell computer games.
Be sure to read page B10 Onliine Investors Create Buzz. It has an excellent explanation of how options played a big part in the GME run up.
AMC
Movie theaters have been on life support for months AMC is the largest chain and has been borrowing big time to avoid bankruptcy. Now they have been able to sell new shares, and how.
DJIA
This is the third 58 day advance since the low last March. No one has had any good luck calling a top in this market. But the action in GEM AMC BBY
suggests a higher probability of a larger correction.
NASD Summation Index
NASI is coompleting a clear five wave pattern to the upside. This too suggests at least a good sized correction may begin.
NYSE Summation
The NYSE Summation looks more like an ABC correction to the upside. We have noted it has been further along in breaking down than the NASD and that is clearly the case here.
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