Is anyone looking at how money is slowly flowing out of normal stocks as retail investors rush for the heavily shorted stocks? Not to mention how hedge funds are heavily leveraged on some stocks "ahem" not to mention.
Pure speculation but either side of the trade isn't going to end well for the stock market.
If it comes to a point when
- Retailers get burnt and lose money, money does not flow back into the sector
- Retailers continue pouring money out of normal stocks and into these heavily shorted stocks
- Hedgefunds other long positions dropped significantly causing a margin call on their short position.
- Hedgefunds short position increase causing margin call.
It may cause massive liquidation and send stocks much lower than the current dip.
**What can we do?
- Trading**
In the few weeks when playing around with penny stocks, I realized that the pump and dumps are pretty resilient to the overall market movement.
So it wouldn't be that bad to pick up the opportunity to learn about penny stocks and trade them at the same time keeping some liquidity.
- "Semi-hedging" into the heavy movement stock
Funnily, you could "hedge" into these heavily shorted stocks and immediately sell them if some of the scenarios above happen.
Finally, maybe all of this speculation is just rubbish
The market could always just sideways back in September 2020.
Would love your guys opinion on this?