MarketSurge powers the charts in this video.
The tape made a mockery of the so-called efficient market theory again. A stock left for dead, belonging to a bankrupt company went from 4 cents to 4 dollars within a week after a random Twitter account posted a drawing made by a five-year-old on X. Granted, that stock had a small 37 million shares float and 97% of it was short. The perfect recipe for a short squeeze. This is what attracts people to financial markets – the potential and opportunities are endless and no other work in the world compares.
The short squeezes and volatility we saw last week might be an indication of what’s to come in the following few months or they might be a warning sign for a rug pull just around the corner. The market tends to surprise the majority and go against mainstream expectations.
While price action has become a bit frothy as of late, we remain in a strong bull market with various sectors participating. Energy has been on fire lately. Uranium has been the clear leader in the past few months, URA broke out from a long base last week. Coal has been in a pullback mode since March. Crude oil has made lower highs since April – let’s see if this will change next week. Solar has been among the worst-hit sectors since 2022. FSLR was a ray of shine last week as it continues to make higher lows and higher highs.
Nvidia reports earnings next week, on May 22nd. All eyes are on them. Expectations are high and it is not an accident that the stock tried to rally ahead of earnings. I have no idea how the market will react. My thinking is that any sizable gap (more than 4%) will be faded – upside or downside.
We are entering towards the end of this earnings season. The last to report are retailers, so it’ll be curious to see what the state of the consumer is and how the market reacts there.
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