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While retail investors inflated the GameStop bubble, big players were buying up tech stocks

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Derivative strategist on GameStop’s surge in put volumes Description video: CNBC’s Brian Sullivan breaks down what’s happening with GameStop’s stock action with Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group. For access to live and exclusive video from […]

Derivative strategist on GameStop’s surge in put volumes

Description video:
CNBC’s Brian Sullivan breaks down what’s happening with GameStop’s stock action with Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi \n\nSpeculative trading in some high momentum stocks and options could be signaling a near-term top, but the bull market is likely to run on for some time, stoked by prospects of an improving economy and easy Fed money, investors said.\n\nJulian Emanuel, head of equity and derivative strategy at BTIG, said the surge of options buying and frothy trading in some high-flying stocks is very similar to the period leading up to the tech bubble crash in 2000. He said it’s very possible if the market behaves the same the S\u0026P 500 could go to a lofty 5,047 before the bull market ends, though he is not forecasting such a surge.\n\nMost strategist expect the S\u0026P 500 to end this year higher, with CNBC’s strategist survey at a median 4,100. But many do expect at least one pullback early in the year. The S\u0026P 500 closed at 3,855 Monday, up 0.4%.\n\n“We don’t see any signs yet, concrete signs, of a medium term trading top, but this type of volatility leads us to believe that similar to 1999 to 2000, you could get a 10% to 15% pullback at any time,” said Emanuel. “From what we see right now the level of speculation leads us to conclude the typical retail investor is as bullish in the aggregate as we have seen in over 20 years. With valuations where they are now, that is the recipe for potentially rapid, albeit temporary set back in the market.”\n\nBank of America global strategists also don’t see the market bubble popping soon. “Even the frothiest equity indices still lag well behind performance during previous bubbles. The NASDAQ is up 96% over the past three years,” they wrote. “It rose 201% before its early 2000 peak (after which it fell by 72%). The S\u0026P is up 44% compared to 98% in the late 1990s. The MSCI World ex US is currently flat over 3 years, so no bubble there.”\n\nShort Squeeze Frenzy\n\nMonday’ s trading in some high momentum names sent a flash warning to some traders. GameStop, the poster child of the recent frenzy, surged to a high of $159.18 before reversing hard, to fall below $70. It ended the day at $76.79, up 18% on the day. The company has a high short position, and it is one of a number of stocks being targeted.\n\n“In the last few days, they’re just going at the names that are most shorted, to create one last squeeze,” said Scott Redler, partner with T3Live.com. GameStop is a popular name on Reddit’s Wall Street message board.\n\nAMC is another stock that was surging , closing up 26% Monday. Another short, Bed Bath and Beyond was very volatile, hitting a high of $47.73, before closing at $30.68, still up 1.6% on the day. Other retailers’ stocks got swept up in the ferver Monday, like Nordstrom which soared more than 10% before falling back to close up 1.7%.\n\n“There’s definitely some excessiveness out there right now, which has some professionals scratching their heads,” said Redler, who focuses on short-term technicals. “You don’t want to fight the excessiveness, but there’s nothing wrong with being a little more cautious. Why be aggressive with something like Apple, when it’s heading into earnings on a Wednesday.”\n\nRedler said he has become more cautious, and the wild trading Monday brought a level of fear back into the market for the first time in a while.\n\nPiling into call options\n\nThe frenzied trading comes at at time when smaller investors are contributing much more of the daily volume in the stock market. That’s been especially true since the pandemic, with no fee, internet trading creating easy access to investing. At the same time, investors are piling into call options at a record pace on individual names and have been rewarded as the action drives dealers to buy stocks.\n\n» Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision\n» Subscribe to CNBC: https://cnb.cx/SubscribeCNBC\n» Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic\n\nTurn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide.\n\nThe News with Shepard Smith is CNBC’s daily news podcast providing deep, non-partisan coverage and perspective on the day’s most important stories. Available to listen by 8:30pm ET / 5:30pm PT daily beginning September 30: https://www.cnbc.com/2020/09/29/the-news-with-shepard-smith-podcast.html?__source=youtube%7Cshepsmith%7Cpodcast \n \nConnect with CNBC News Online\nGet the latest news: http://www.cnbc.com/\nFollow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC\nFollow CNBC News on Facebook: https://cnb.cx/LikeCNBC\nFollow CNBC News on Twitter: https://cnb.cx/FollowCNBC\nFollow CNBC News on Instagram: https://cnb.cx/InstagramCNBC\n\nhttps://www.cnbc.com/select/best-credit-cards/ \n\n#CNBC\n#CNBCTV

While retail investors inflated the GameStop bubble, big players were buying up tech stocks

Big investors poured a record $ 4.2 billion into big tech stocks last week, BofA data released Friday showed. Professional market participants took advantage of the slight pullback on Wall Street, while retail traders were busy buying stocks of memes like GameStop..

While retail investors inflated the GameStop bubble, big players were buying up tech stocks

Last month, an army of retail investors clashed with Wall Street professionals by buying up stocks in which hedge funds have plummeted. During the struggle, some funds had to sell their long positions to cover losses, which led to a wider fall in share prices.

«Over the past two weeks, customer sentiment has been unambiguously expressed in purchases amid poor performance in FAANMG (Facebook, Amazon, Apple, Netflix, Microsoft, and Alphabet, which owns Google)», – said Michael Hartnett, Chief Investment Strategist BofA.

Big Tech companies have become one of the main beneficiaries of the pandemic, as their revenues have increased simultaneously with the introduction of lockdowns, in parallel, they have grown in interest from investors who took advantage of the cheap money available..

Meanwhile, a sudden surge in stock market volatility last week also sent investors fleeing in bonds that raised $ 21.2 billion, the largest in four months. This week, however, concerns have eased as major Wall Street indices hit record highs..

Far from the noise of Wall Street, emerging market equities have been a favorite with investors as they put in $ 5.7 billion in the week from Wednesday to Wednesday. This sector has experienced 19 of the last 20 weeks.

The fever among retail investors also saw silver prices jump above $ 30 an ounce for the first time since 2013 before prices fell. The precious metal raised a record $ 2.8 billion in the week before Wednesday, according to BofA.