We Saw The Stock Market Dump Like This Just A Few Weeks Ago

Yesterday the Dow fell over 633 points for an over two percent decline and there was selling just about across the board in the financial markets. Gold, though, wasn’t even down one-half of a percent showing us once again that it is less volatile and stable than the stock market, although mining stocks got hit with the rest of it for the day.

We saw a day like this after the election in December and I think that has ramifications for how the market is going to play out over the coming weeks and months, but one thing happened yesterday that is a bit different. Even though the market dumped, there was a slew of heavily shorted stocks that simply soared.

Once again Gamestop Corp (NYSE: GME) went up another 135%.

I talked about Gamestop yesterday and on Tuesday, as it is essentially going up in an epic short squeeze. Supposedly traders on a Reddit message board are playing it along with other heavily shorted stocks as it isn’t the only stock now soaring. Koss Corp (NASDAQ: KOSS) went up 480%.

And movie chain AMC Entertainment Holdings (NYSE: AMC) went up 301%.

These are all epic short squeezes and the traders on the internet, many of whom are apparently Robinhood traders, are celebrating and going wild, but on CNBC and much of the mainstream media there is outrage and a call for regulation as the short squeezes are crushing big money hedge funds short these stocks.

For instance, Steve Cohen, whose group has a controlling interest in the NY Mets had to issue a statement reassuring Mets fans that things are fine, giving one such fan a moment of fame.

The two biggest Gamestop shorts closed out their positions yesterday in defeat, while one of them got an over two billion bailout from a couple of other larger funds to continue to survive. Reddit is making the message board at the center of focus private and its Discord messaging group has been banished for “hate speech.”

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William K. 1 month ago Member's comment

Thanks for additional explanations as to how this was not just an innocent ploy to rip-off some big hedge funds, but actually resulted in damage all around. But some individuals do not care how much damage they do. My solution would be to send them out of the ballpark and never let them play again. That might possibly deter others from the same stunts.