Small traders that cleaned up last week on GameStop (GME) , AMC Entertainment (AMC) , and other short-squeeze plays are finding out Monday morning that trading isn't always so easy.
Most of the targeted squeeze plays are lower Monday morning, and the silver ( (SLV) ETF) plays saw some aggressive selling into a big gap-up open. There are few stocks on my screens this morning with sustained momentum and just a handful that are trading at intraday highs.
Breadth is running quite strong at around 2 to 1 positive, but there are only a little over 100 names at new 12-month highs. There is a good list of 10% plus movers, but the themes are a mixed bag. The short-squeeze trade is lagging, although there is interest again in a number of SPACs and some cannabis names.
FATMAAN stocks are showing minor strength, but there is some uncertainty after what occurred last week.
It is important for small traders to recognize that the people on the other side of their trades may not be complete idiots, especially when they are multi-billion dollar hedge funds. The hedge funds looked pretty stupid with the huge amount of risk they took on GME, but professional hedge fund managers adjust very fast, and they did a lot of unwinding in order to restore some flexibility.
I have FuboTV (FUBO) and Vaxart (VXRT) on my short-squeeze list this morning. I like some of the small-cap charts I see developing, but I'm in no rush to build big positions here. I'm doing some bottom fishing and will highlight an example of one later today.
Overall it feels like the market is moving past this short-squeeze issue drama, and we see more "normal" trading. I expect the social media traders to create some momentum, but I do not think they will have much luck in creating sustained moves again as they did with GME.
Charts matter, and you need to use them to manage risk.
