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Reddit Day Trader Army Tortures Big Hedge Funds

Signage is displayed as a customer browses at a GameStop Corp. store in West Hollywood, California, U.S., on Sunday, May 22, 2016. GameStop Corp. is scheduled to release earnings figures on May 26.

The Reddit Army Hit The Big Hedge Funds’ short betting BY Betting Up Fringe Stocks.  Biden Administration have no idea what is happening… Duh!   Phone a Friend!?! Reddit Gamers Use Game Theory To Outsmart Short Traders By Piling In Together Sending Hedge Fund Managers Soaring Pain!  Elon Musk Joins In On The Fun!

Cooped up at home, glued to Reddit and Stocktwits chat forums, empowered by Robinhood accounts, funded by massive government money-printing and emboldened by a bull market that has turned reckless risk-taking into a virtue, America’s new band of day traders is frantically bidding up a wide range of fringe, oddball stocks in what has become one of the great financial manias in recent history.

To capture how fast and furious the action is and how extreme the price swings — and the trash-talking — are, Bloomberg News tracked Wednesday’s events in real time.

The fireworks actually started the night before, when Elon Musk blasted out a tweet that became a rallying cry for redditors to keep piling into shares of GameStop, which had already soared 276% in the past five days, and inflict more pain on the Wall Street pros.

Here are some of the day’s highlights.

Wednesday, 5:45 a.m. EST:

Propelled by Musk’s “Gamestonk!!” tweet, GameStop hits $365.42 in early morning trading. A week ago, it sold for less than $40.

The tweet also spurs excited speculation on Reddit about whether Musk had joined in. One redditor, whose username is Apparently, asks, “Papa Elon, are you here? Show us a sign”

7:33 a.m., stocktwits.com:

It’s not just GameStop. Retail traders band together, scouring the internet for other bygone ’90s-era companies. On Stocktwits, a user named CEO_Andrew_Ryan casually muses:

CEO_Andrew_Ryan at 07.33AM

$BB or $AMC ??? I want to drop 20k into one which is the next $GME 

9:15 a.m., r/wallstreetbets:

In their frenzy, the cocky hordes on Reddit’s r/wallstreetbets forum manage to turn the tables on short sellers and inflict heavy losses on the likes of Andrew Left and Melvin Capital. According to one early morning post, they’re not done yet.

Every Brad, Chad, and Susan at BIG HEDGE X Inc that shorted GME are awake

THEY ARE READING THIS

They are scouring and scrutinizing every indicator, every sentiment, every post on WSB they can to decide on when they see this post?

… It’s on.

And did we mention cocky?

Future at 9.15 am

“WSB OWNS THE STOCK MARKET”

9:30 a.m., Summit, NJ:

Mike Zigmont, head of trading and research at Harvest Volatility Management, can only shake his head as the market opens.

“I don’t know if this is the future, I don’t know if this is just something quirky, but thank god I’m not involved. It’s not investing, it’s a financial form of a game of uncle. The fundamentals don’t matter, numbers don’t matter. Boy oh boy, it’s wild.”

9:40 a.m., minutes after the market open:

AMC Networks, ticker AMCX (and not to be confused with Reddit darling AMC Entertainment, ticker AMC), soars 19%, extending a rally to 67% over past five days. And AMC Entertainment?

AMC UP 400% Lets get it to 1000% and go back in GME

BUT DONT SELL GME FOR IT JUST USE FREE CASH!!!!

#SaveAMC also starts trending on Twitter, while Barstool Sports founder Dave Portnoy says he’s buying AMC on his “Davey Day Trader” livestream.

“I’m rooting for AMC, I’m rooting to put the hedge funds out of business,” Portnoy says.

Meanwhile, other heavily-shorted Reddit names like Macy’s and Dillard’s also jump.

9:43 a.m., Tootsie Roll is halted after its shares soar 53%:

Max Gokhman, director of asset allocation at Pacific Life Fund Advisors, via IB chat from Costa Mesa, CA:

09:48:06 Wow ok, I didn’t even know that was a stock
09:48:17 Or, rather, a stonk

10 a.m., Newton, MA:

Matt Maley, chief market strategist at Miller Tabak + Co., sees a direct link between the speculative retail buying of heavily-shorted stocks and the broader market decline, which takes the S&P 500 down roughly 1.5%.

“It’s due to concerns about hedge funds. A lot of them are getting burned by their shorts, and I think the market is worried that they’ll have to sell some stocks to meet their margin calls.”

10:16 a.m., r/wallstreetbets:

We have officially broke the market

Robinhood down, TD Ameritrade down, EToro Down, Trading 212 Down, Every Broker I know Is Down

The power of this sub is unfathomable.  These brokerages can’t handle the pressure. Holy fucking shit.

The crush of retail trading causes outages at several online brokerages. Charles Schwab, Robinhood, E*Trade and Fidelity are all hit by service disruptions. TD Ameritrade limits some transactions on shares of GameStop, AMC and others. It says high volume may have curtailed access to its mobile app and urges clients to use its other platforms.

Some redditors see darker motives:  Continue reading here

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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of The Duran.

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