The Bear Den by Shortside Jonny
Monday, January 25, 2021– DIA 309.65 -.10%, QQQ 328.11 +.83%, SPY 384.39 +.39%
Chicago Fed National Activity Index came positive at + .52 for Dec. vs. .31 for the previous month. (Zero is considered at trend for growth with a standard deviation of 1). A big speculative face-off-resulted in the shares of GameStop (GME) 76.79 +18.12%, with the high on the day printing 159.18. It was reported to have one of the largest short interest in the latest filings and pitted the hedge fund shorts vs the new crowdsourced longs from the rabid Reddit boards. The short interest has been elevated for a period of months, but the short squeeze became epic this week. The best S&P 500 sectors on the day were Utilities (XLU) 64.10 +2.01%, followed by Consumer Staples (XLP) 65.72% +1.00%. Both considered low Beta (a measure of volatility) and defensive investments. The worst performers were Energy (XLE) 41.64 -1.02% and Financials (XLF) 30.12 -.73%. Both sectors were under pressure from the new regulatory environment. Individual technology names did well on the day as Apple (AAPL) 142.92 +2.77% moved higher into earnings on the 27th. Chinese internet companies NetEase (NTES) 124.29 +6.45% and JD.com (JD) 98.38 +3.66% gapped higher.
Tuesday, January 26, 2021 – DIA 309.39 -.08%, QQQ 328.59 +.15%, SPY 383.79 -.16%
The S&P Case-Schiller Home Price index YoY (year over year) came in +9.1% vs. 8.8% expected. Consumer Confidence came in higher as well 89.3 vs. 89 expected. Markets opened slightly higher. The best sectors of the S&P 500 were Communication Services (XLC) 70.18 +1.36% and Real Estate 37.53 +1.02. The laggards were Energy (XLE) 40.75 -2.14%, and Basic Materials (XLB) -1.38%. Market attention continued to be fixated on Reddit and the impact of these chat rooms on the market. Market veterans and commentators were left speechless and watched in amazement, as short covering on epic scales rallies rarely seen. A steady diet of long buying of the stock mixed in with also purchasing upside call options (all targeting the January unwind) produced momentum buying and short-covering rarely if ever seen by the street. The rise of names like GameStop (GME) 147.98 +92.71%, Bed Bath & Beyond (BBBY) 36.87 +20.1%. became the faces of the Reddit movement. The energy sector has been hammered recently as fallout continues from new USA Biden directed energy policy is ordered and initiated. Reality is setting in for names like Occidental (OXY) 20.38% -5.25 which continued its steep decline and fallout over new environmental policy.
Wednesday, January 27, 2021 – DIA 303.26 -1.98%, QQQ 319.43 -2.79%, SPY 374.41 -2.44%
FED Decision Day: Rates unchanged. Durable Goods orders collapsed to +.2% vs. an expected +.9% down from the previous 1.2%. Non-Defense Capital Goods ex-aircraft came in as expected at +.6%. Performing best on an overall down day was S&P 500 Real Estate (XLRE) 37.05 -1.28%. The worst was Communication Services (XLC) 67.91 -3.23% and Consumer Discretionary (XLY) 165.36 -3.08%. The short squeeze in heavily shorted stocks continued to be the focus of traders and investors GameStop (GME) 347.51 +135% was the headliner for the show once again but had a supporting cast of Reddit fueled names participating as well. We saw a general theme of heavily shorted names being covered; AMC Entertainment (AMC) 19.90 +301%, Bed Bath & Beyond (BBBY) 52.89 +43%, Fossil (FOSL) 23.66 + 61%. The squeeze had a spillover effect in names across the board. Levered hedge funds with billions in losses having to make good on margin calls end up having to unwind other positions, accounting at least in part to the selloff in the general markets.
Thursday, January 28, 2021 –DIA 306.07 +.93%, QQQ 321.32 +.59%, SPY 377.63 +.86%
GDP came in as expected +4% for the quarter. Initial Jobless claims reported a lower reading of 847K vs. 875K expected showing potential stability in the workforce and encouragingly even lower than the previous jobless figure of 914K. Continuing claims continued to be elevated but better than consensus 4.771M vs. 5.054M and down from the previous 4.947M. New Home Sales were a little lighter than anticipated at 842K annualized vs. 865K expected. Markets rebounded smartly but succumbed to some late day selling. Several online brokerages, restricted trading in the highly volatile short squeeze names creating an uproar. New longs were restricted, but closing sales were allowed. AMC Entertainment (AMC) 8.63 -56.63%, GameStop (GME) 193.60 -44.29% Fossil (FOSL) 14.60 -38.04% all fell as the buyers needed to sustain the lofty levels were shut out and the stocks plummeted. In one simple stock name, we saw a microcosm of a changing society and the true power of affinity and online community.
Friday, January 29, 2021 – DIA 299.69 -2.08%, QQQ 314.56 -2.10%, SPY 370.14 -1.98%
Personal Income beat expectations handily +.6% vs. +.1%. Spending declined less than expected -.2% vs. -.4%. Chicago PMI came in much stronger at 63.8 vs. 58.5. Pending Home Sales declined at a greater rate -.3% vs. -.1% expected. The equity markets opened lower and traded lower throughout the day. The best performing S&P 500 Sectors were Utilities (XLU) -.54% and Healthcare (XLV) 115.07 -.81%. There was continued selling in Energy (XLE) 39.32 -3.32% and Technology (XLK) 128.93 -2.36%. GameStop (GME) 325.00 +67.87% continued to swing wildly closing higher but off session highs. Also having a rebound day was AMC Entertainment (AMC) 13.26% +53.65%. In another potential Reddit hunt, Siebert Financial (SIEB) 8.122 +121% bolted higher. Perhaps fueled by a Reddit idea, the heavily shorted brokerage firm opened at a high off $18.50.before pulling back to close @ 8.12!
We will watch this one! On the downside, online health insurance marketplace eHealth (EHTH) 47.85 -38.81% was halved after they preannounced disappointing earnings results (unaudited). I-Rhythm (IRTC) 168.42 -32.90% was another casualty in the E-health space as the company dropped on news of a slash in Medicare reimbursement for its key products.
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