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Ryzie

3,795 Posts.

1980

28/01/21

12:34

Post #: 50502181
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Originally posted by Ryzie: ↑

I don't think there will be a big correction at the moment. The sell off in the US was a short squeeze on investment firms by hedge funds and retail investors. GameStop and AMC have been overly shorted to the tune of around 75%. Investment firms have been using derivatives to increase their short positions so that they exceed the actual number of shares on issue for each company. There's been a lot of talk about it and this short squeeze has been building for about a week now. The investment firms have had to cover their shorts at big losses. To counter the losses they have pulled money from the tech sector and other stocks that have had a big run since the pandemic. This offsets the losses.

Now that short squeeze has started to play out it's causing fear in other markets that track the US. I don't see this affecting IOU to badly. It will be mainly companies that are priced to perfection or overpriced for example APT which is down 5% at the time of writing. Even the stocks that are getting punished today are still up quiet a lot over the last 12 months and will probably remain in an uptrend and will more than likely go higher throughout the year as the global economy begins to recover from the pandemic. Just my opinion.

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Interesting to note that this type of short squeeze also happened in the past with Volkswagen. Also of interest is that Michael Bury whom was a major character in the movie/book "The Big Short" has made approx 1700% profit off the GameStop rally.

IOU Price at posting: 16.0¢ Sentiment: Buy Disclosure: Held
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