Squeeze Time

Squeeze Time

MARKET OVERVIEW
Some weeks there is a certain ticker or news item that just dominates the market discussion all across the land. Early this week, we had both. Yes, this week featured more earnings reports and many intraday opportunities to kill the market and stalk off with the plundered profit. However, as the week dawned, the talk was firmly centered on Nancy Pelosi’s visit to Taiwan and a brand new listed stock called HKD.
Singapore-based AMTD Digital (ticker HKD), IPOed on July 15th at $7.80 per share. On Tuesday, August 8th, the price hit $2,500 per share.

Cue the choruses of To The Moon.

To be clear, no one really seems to know that the company is. Additionally, not one person found in MarketLand suggests buying the stock. By Tuesday of this week, it had become likely the most risky market investment you might be able to make. The retail part of the trading at that point was doubtlessly only gamblers hoping the tremendous move keeps happening. Some observations: a brand new ticker climbs 30,000 percent in two weeks and is one of the biggest companies in the world by market cap? Yeah. I wouldn’t buy that. Something about Fugazi from a film I saw somewhere? Bears were palpably on the sidelines on Tuesday salivating and imagining the world’s biggest rug pull.

Nonetheless, it was a fascinating early week element in this wild market week.

When this sort of a climb happens, it is often called a “squeeze.” The HKD action in the early week is reminiscent of the Gamestop squeeze from a couple years ago. From time to time squeezes happen, there is no doubt about that. However, this one was something else. As it turned out, by the end of the week, it was under $700 per share.

And Nancy Pelosi did, in fact, go wheels down in Taiwan in the face of significant geopolitical pressures. Whatever comes, or doesn’ come, of this it is certain that the market was watching the index futures for moves related to any perceived retaliation from China’s government over the visit. On Monday and Tuesday of this week, her visit was trending just about everywhere.

Wednesday was a strong green day, Thursday inched down a bit, and…as it often does…Friday decided to give it all back. Overall, it was a week full of range and opportunity.

 

INSIDE THE BOX
This week we continued discussing tickers, trades, and theses inside our trading communities. One successful alert was the ROKU 8/5/22 $68 calls. The alert came through on Monday when price action hit the bottom of the ORB channel. After and bounce and retest, it blew through the ORB high and climbed to a 272% gain. This is an example of our many alerts that can help inform trade theses across the board, regardless of trade style. The alerts are never to be taken as buy or sell signals. They are simply additional data you can add to your trade decisions if it aligns with your trade preferences.

 

TAKEAWAY
Pelosi, squeezes, and ER…oh my. A wild week indeed, and it was made more sensible by communicating with informed traders with wide experience levels in our community. We hope to see you there one day soon!