Market On Open, Wednesday 26 February

DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.

So Over / So Back (Delete As Appropriate After 1600 Eastern Today)

by Alex King, CEO, Cestrian Capital Research, Inc

Since we live in a meme stock market right now, I think we can sum up the current market sentiment thus:

In the last week or so we’ve seen a minor selloff in equities that felt like a major selloff to anyone who was (a) leveraged and/or (b) completely unhedged. For reference, the S&P is currently just 2.5% below all time highs. The gamification of retail investing - and with gamification comes leverage through both the use of derivatives and indeed the use of levered (margin’d) accounts - means that, I think, we are likely to see a lot of volatility in the coming months and years. The standard narrative is that we will see volatility because of the rapid change in policy framework introduced by the current Administration. This may be, I don’t know. What I do know is if you have a lot of retail investors who are super-skittish because they keep - at the highs - buying securities with a proclivity to decline to $0 in short order and buying them with other people’s money - then you are asking for grownup market participants to drag prices thisaway and thataway with the sole aim of taking money off of the rubes. Which they just did already in things as boring as SPX options, never mind levered crypto plays.

Don’t be a rube.

Learn how the market works.

Sign up for our work below. You can start for free.

Now, let’s get into it.

Short- And Medium-Term Market Analysis

If you want this daily dose of pattern recognition, and you aren’t yet a subscriber of course, you can read about and choose from all the subscription services that include this note, here.