There are a lot of things going on today, so we have many candidates for a catalyst for a big move in the stock market over the rest of this week. The futures are trading significantly lower in pre-market trading, but that doesn’t mean a “big move” has to come to the downside. In fact, we’re not hearing anything particularly specific for this morning’s 1% decline.........Don’t worry, the Street will come up with a reason after the fact....but our view is that a rise in the dollar...the a fall in Bitcoin towards 30,0000...and the crazy move in heavily shorted stocks like GME & AMC...are raising concerns that this overvalued stock market is due for a pull-back.
Again, this does not mean that today’s events will be the beginning of a strong “tradable” pull-back in stocks immediately. Bitcoin could easily bounce strongly and the dollar could easily roll back-over. More importantly, today’s comments from Fed Chairman Powell could calm things down rather quickly...and the earnings announcements out of stocks like AAPL, TSLA, LRCX, etc. could create a strong bounce over the last two days of the week.
Then again, maybe the real reason the futures are down so much today is because investors are beginning to realize that when the #1 issue everybody has been talking about this week has to do with the RIDICULOUS rallies in two stocks that have absolutely HORRIBLE intermediate-term prospects: GME & AMC. In other words, with SO MUCH else going on in the world (pandemic, vaccines, new administration, earnings, China/Taiwan, etc)...the fact that everybody is focused on two companies that are likely to go out of business is probably something that is finally scaring some people.
As we highlighted yesterday, we strongly believe that the REAL issue surrounding GME & AMC is that the huge ...