Short Squeeze In the House
By Thu, Feb 18, 2021
Hey Scoopers,
The Fed’s January meeting minutes reaffirmed the economy still needs help until full recovery. — More on that in the “Overall Market” section.
Beyond the overall market, one old-school retailer hit all-time highs, while an eCommerce stock fell after talking about 2021’s uncertainties. — More on that in the “What’s Up?” and “What’s Down?” sections.
Oh, by the way, the short squeeze drama reached the House of Representatives. — More on that in the “Water Cooler” section.
But, first, here is a recap of what happened in the market yesterday:
Market Recap
- U.S. markets: The stock market indices finished Wednesday with mixed results once again. Scroll down to the “Overall Market” section to read more.
- Cryptocurrency: Bitcoin’s price hit an all-time high of $52,000 per coin.
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The Economy Needs More
The stock market indices finished Wednesday with mixed results. While the market movements may seem gloomy, indices are hovering near all-time highs.
The Fed released the notes from its January meeting, and as we have discussed before, Fed’s official plan to retain the interest rate near zero until the inflation rate hit the target 2%. They also believe the economy is still far from recovery, and more support is needed until full recovery.
Surprised By an Old-Timer
So, what happened?
Shares of Burlington Stores (Ticker: BURL) hit an all-time high record. The company shut down its online operations just before the start of the Pandemic. You would have imagined, with the pandemic in full swing, Burlington Stores must be headed for bankruptcy. But, instead, the company has had an excellent 2020, opening more than 60 new stores in the year to serve its price-conscious customers.
It is truly an astonishing winner story, going against the prevailing global e-commerce trend
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Uncertain 2021
So what happened?
Shares of Stamps.com (Ticker: STMP) were down by more than 15%. Today’s price drop comes after an excellent quarterly earnings report. It managed to meet and far exceed analysts’ expectations by its revenue and profit performance. Why did the price drop?
The management didn’t provide any guidance for the next quarter, sighting 2021 to be a challenging year with many uncertainties. It seems the lack of guidance spooked investors who rushed to lock their gain before it’s too late.
Short Squeeze Drama In the House
So what happened?
Remember when the GameStop short squeeze drama was unraveling, we discussed possible legal consequences if it is proven that parties involved were intentionally manipulating the market?
Well, those legal proceedings are just about to start. Today, on Feb 18th, the executives from Robinhood, Melvin Capital, Citadel, and Reddit appear in front of the House Committee on Financial Services to talk about the short squeeze drama.
Moreover, you may have seen a Redditor and YouTuber known as the Roaring Kitty known as a long-time GME bull that ended up making millions of dollars from his GME options trading, is also expected to show up at the committee.
This guy was once known as the Redditors’ pack leader with a so-called Diamond Hand holding GME shares and options. Further investigations showed that he is no ordinary retail investor but rather a registered broker. While it is not proven that Roaring Kitty has done anything wrong, the plot is getting ticker by day.
We hold off from making any judgment until all the legal proceedings are complete. But, as retail investors, it’s quite interesting to follow the progress in this regard. I’ll keep you posted as the story unfolds.
If you have any questions, or suggestions let us know by emailing us at members@tradestocks.com. We look forward to hearing from you.
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
