Are these redditors (r/wallstreetbets) strong enough to disrupt the Stock Market? In this blog post we are going to throw some lights on the latest Stock Market movements, especially when everyone is talking about the redditors and their effect on the Stock Market in particular.
Who are these redditors and what are they doing in Stock Market?
According to Wikipedia for these redditors, “r/wallstreetbets, also known as WallStreetBets or WSB, is a subreddit where participants discuss stock and option trading”. The median age of these redditors is only 24 as they say. These “kids” (the redditors) in the Stock Market are also known as “degenerates”.
The
trading strategy of these redditors for the Stock Market is not well known from either fundamental or technical perspective. Nor the redditors have demonstrated their interest in the risk management aspect of
Stock Market trading. What the redditors are trying to do is to identify the most short-sell-interest (significant short positions) stock (probably by mutual fund(s)), then buy and hold it and thereby significantly pushing the price of the same (also known as
meme stocks). Lets see some example of these meme stocks created by the redditors:1. Gamestop Corp (ticker: GME):
On 12-Jan-2021 GME was trading at a price of US$ 19.94. Just after 11 trading days, GME shot up to an astronomical 2,400% from the buying frenzy of these redditors and was trading at a high of $483.00 as shown below:
Now let us see the effect of these redditors on S&P500 Stock Market index: As far as our understanding goes, if S&P500 Stock Market index closes below 3,830 level in a weekly basis and its goes lower then this level of 3,830 then we will consider this as a side-effect of these redditors and then we will come up with our targets for S&P500 Stock Market index in our next blog post.
Till then relax and possibly look for buying opportunities in well known companies like Tesla, Apple, Square, Afterpay etc.
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