Robinhood and his cheerful traders lean


Until yesterday’s closing, 98% of the S&P 500 shares were traded above the average movement of their 50 days, encouraged by reopening hopes and reports that were far better than expected. S&P 500 has officially destroyed 2020 losses, and other global markets have seen big profits in two months. MSCI All World Index is traded more than 20 times 2020 revenue, the highest level since 2002.

The Panic/Euphoria Citigroup model shows sentiment in the most “euphoria” since 2002 (the dot-com bubble era). “We are worried that the wise approach is overwhelmed by the need to at least compensate for price movements,” said bank analyst. “People ignore unemployment, trade friction, social riots, and rising risks including the possibility of reinfection of Covid-19, the end of an additional unemployment check and election.”

During this rally, retail investors seem to have bought everything including companies in chapter 11 bankruptcy, and small traders encourage speculative spirit by buying to open more call contracts in June than they did in February, before Pandemi. This risk attitude is very visible when someone sees activities in Robinhood, a commission -free investment application that is popular with millennium which is lops openly by older investors. Recently reaching 13 million accounts, up from more than 10 million at the end of last year. Google’s search interest in the company is at this year’s record level. Daily trading in other online brokers also jumped in 2020.

Here are the top 10 stocks that saw the biggest increases in popularity over the last one day on the platform, according to Robintrack:

  • Hertz (HTZ) – car rental company, filed for bankruptcy on May 22
  • Nikola (NKLA) – electric truck maker, expects zero revenue in 2020
  • TOP Ships (TOPS) – Greek oil tanker company, penny stock
  • Oasis Petroleum (OAS) – oil and gas producer
  • American Airlines Group (AAL) – expects to cut management and administrative staff by 30%, domestic schedule down 55% yoy during July 2020
  • Invesco Mortgage Capital (IVR) – real estate investment trust
  • Direxion Daily S&P Oil & Gas Exp. & Prod. Bull (GUSH) – oil and gas ETF
  • Valaris (VAL) – offshore oil driller exploring bankruptcy
  • Delta Air Lines (DAL) – massive layoffs soon
  • Carnival (CCL) – cruise operator
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Typically, when traders and speculators run rampant in a hot market, it doesn’t end well. The dot-com crash of 1999 comes to mind. On the other hand, there are a lot of new market participants putting money to work in the stock market for the first time as they have witnessed the Federal Reserve throw trillions of dollars into the financial markets to stabilize them.

Could this be a classic example of the Greater Fool theory?

“If everyone is holding stocks just to pass on to the next greater fool, and if the greatest fool is a central bank with infinite liquidity to buy them, then, yes, prices will keep going up,” said a note from Rabobank this morning.