Jan 31, 2021 10:39 PM EST
As so-called Reddit investors engage in unprecedented and deliberative speculative trading, giant hedge funds suffer as a result.
Apart from a worry that there is a market bubble being created, likely to burst anytime soon, the US stock index futures witnessed a decline in overnight trading. This built on last week's decline, making it the worst since October.
Futures contracts tied to the Dow Jones Industrial Average have witnessed a decline of 81 points, or 0.26%, as reported by CNBC.
On the other hand, the S&P 500 futures slipped 0.4%. Nasdaq 100 futures further fell by 0.55%. None of these are good signs.
Tobias Levkovich, Citigroup's chief U.S. equity strategist, believes the market's valuation is stretched anyway. As such, the ongoing turmoil triggered, if not fueled by retail traders just might be the thing that could serve as the catalyst of a correction from all the overvaluation.
"We think that the vulnerabilities are there, and while we do not know precisely which catalysts might emerge or their exact timing (including some of the recent retail-oriented pushes against heavily shorted stocks), we suspect that they would derail the current rally and provide entry points that may be 10% lower," he wrote, in a note sent out to the clients.
The issue is that the Reddit boom might not end anytime soon.
READ MORE: 'Toys R Us' Closes Two Remaining Stores in the US as COVID-19 Pandemic Rages
Futures contracts for silver saw a massive surge on Sunday night, which is a sign that the Reddit boom is spreading to other areas of the market. The topic of silver is quite popular on the celebrated (and controversial) subreddit forum WallStreetBets.
For the first time since December, the Dow already dropped 620 points on Friday, or 2%. It is now close below the 30,000 level.
Further slips can be seen in the Nasdaq Composite, which slipped by 2%. The S&P 500 fell 1.9%.
What made all these dips so alarming is that for each and every one of these three major averages, they are more than 3% for their worst weekly performance since October. The Dow and S&P also posted some noticeable losses for January - the first negative month in four. Conversely, the Nasdaq was able to post a gain for the month.
Friday's dip happened in the midst of the drama involving GameStop and AMC Entertainment, leading for their stocks to rise up in an unimaginable rate and for Wall Street giants to lose billions. The whole phenomenon fueled concerns about the overall health of the market. Goldman Sachs noted that the current short squeeze can be described as the worst in 25 years.
"This week's events may have turned markets on their heads, but fear indicators imply that we may have seen the worst of the degrossing," Jefferies wrote in a note to clients over the weekend.
Barclays however, reassured that it's unlikely that the effects of the short squeezes will reverbrate across the broader market.
"The ongoing short squeeze in a few stocks by retail investors has raised concerns of a broader contagion," the company wrote in a recent note to clients."While we believe there is more pain to come we remain optimistic that it is likely to remain localized," the company added.
READ MORE: GameStop UPDATE: Melvin Capital Loses 53%, Redditors Want to See it Lose Remaining 47%
And the world of NFTs expands far beyond art and collectibles. A new era of tokenized digital assets is being created using the blockchain. Here are seven unique NFT use cases that the interested investor should know.
However, there are some simple steps that anyone can take which will help to improve their performance when it comes to trading foreign exchange markets. Here are ten small things that can make a big difference in your FX trading success.
o prevent significant losses, risk management expertise is essential. His adage, "Rule No. 1: Never lose money," has become a stock market classic. Never forget Rule No. 1; this is Rule No. 2. This practice is followed by even the most successful investor, Warren Buffett, who advises others to follow suit.
One of the significant advancements is shifting the payment operations for remote workers. If the compliances are not met, it may lead to severe legal complications. The owner and organization may be held labially separately. The remote working lifestyle continuously grows and is a testament to becoming an endless working mode. Today we discuss components for payroll for remote workers
BRG International Founder Matias Alem had recognized this fact for a few years. So he remodeled his real estate brokerage into something completely new to solve the problem for his jet-setting international client base.
Ryan Early, hailed as 'Farmer Ryan' among sustainable agriculture experts, is a busy man. He has a laundry list of companies to his name, including Blue-Green Ventures, the company behind the revolutionary product, Blue MagicTM, a non-toxic and eco-sustainable pest preventative product using his patented BiomeMax TM Pheromonal Replication Technology.
Investor, financier, and expert in both cryptocurrencies and blockchain technology, Joy Mbanugo is the go-to in the sector. She has vast experience and knowledge across tax services, auditing, business operations, financial analysis, capital markets, and other specializations.
When Nick Collins was just 14 years old, he started his first business, which included around-the-clock phone calls and numerous questions from his parents. In fact, he began building his stout portfolio in the seventh grade by doing web design, incorporating creative content with brand strategies and plugging in a then-fledgling tech Flash.
Barry Gabster is the founder of InitiateU and is a leading proponent of the marketing mailer revolution, having already taken his company to 10x growth in 2021, alone. In fact, the exponential growth has seen the company rise from $800K-$8.5M just on word-of-mouth referrals.