While many pundits are calling this the “squeeze of a lifetime” and a war of retail against the hedge funds, in reality, it was a PERFECT cyclical move after 13 years down. Of course, they are claiming that a band of retail are waging war against the Hedge Funds and the press is claiming “one big question amid the frenzy has been how much the little guys really matter.”
Even AOC has chimed in saying “Gotta admit it’s really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino.” She then added: “Anyways, Tax the Rich.”
While this is being portrayed as some fluke and others are calling for an investigation that this is just manipulation and a pump and dump, interestingly Socrates picked the low in April 2020 and then entered at first a Breakout Mode in August where the model was calling for a high in many different stocks, and then in September, it entered a Phase Transition mode which is a doubling in price when it closed at 1020. It has now been 8.6 months from the April 2020 low.
When we look at the Timing Array, January was a Target with high volatility coming in February and the next turning point will be in March followed by June. Most interesting is that here too we see a Panic Cycle shaping up for August 2021.
When we look at the monthly chart, the breakout began in January when it punched through the Downtrend Line. It then rallied to the Breakout Line at $200 and moving through that you had the classic Phase Transition.
Monday opened below our Projected Opening Resistance at 99.17 coming in at 96.73. It fell back to fill that gap and closed below the opening print. What I find really ironic is how a band of retail investors and traders are being blamed for a war on Hedge Funds. Any Hedge Fund that was short this stock was not a professional, to begin with. I would think any basic technical analysis would have screamed “buy” so if they did not listen, they were trying to manipulate the market assuming they had the power. The huge gap up is clearly shorts bailing out who should have been out a long time ago. As noted, this has been in a bullish trend for about 9 months.
My conclusion is that this rally is not a “manipulation” but an attempt to suppress the market and as such the shorts were compelled to bailout. But that is their fault because they were fighting the charts. Hence, the retail participants should not be pounding their chest just yet. The sharp rally is also due to a lack of liquidity. This does not appear to be a pump and dump against the established trend, as the trend was up to start with.
YES – GameStop is a covered market on Socrates Platform
If you aren’t already signed up for Socrates, you can view the different membership options here. To access Reversals and Arrays (as referenced above), you’ll need to sign up for the Pro Membership.
If you are already a Pro Member and are looking to expand the time horizon of the models and have access to a few additional features, consider upgrading to the business version of Socrates.