The big story last week was about the amazing short squeeze in GameStop (GME) with the stock surging over 300.00 for the week. This short squeeze was orchestrated by Reddit’s Wall Street Bets through their chatroom.
There is now talk that they will go after Silver based on the stories of the massive, short positions that are out there as of now. First let us cover the shorts. SLV carries an 11% short interest compared to GME 147%. Short-squeezing a stock with short interest of 140% is one thing, but short-squeezing a physical commodity where market-ready stockpiles are 3 times average daily futures volume is another. Comex Silver Futures short interest has fallen 26% from a year ago.
As algorithmic traders, we are one up day from being long Silver and would benefit from a major short squeeze. However, the probabilities of seeing that type of squeeze are virtually zero. Yes, Silver can rally without question, but because it’s a commodity the full quantities available and not mined is not known. Stocks only have a certain number of shares that can be traded.
The bottom line in this Ponzi Scheme being created by Reddit is a classic case of front running market. You can bet that the originators of this squeeze were long from the bottoms. I suspect that there is no difference in Silver, and they have already bought.
In the meantime, our positions stand as before, short Gold and Silver, long Platinum. Gold failed once again to take out resistance, Platinum holding support and Silver looks like its ready to breakout.
Todd Horwitz Chief Strategist BubbaTrading.com
Stop being a prophet and make profits
On Monday nights I do a strategy call, tonight Andy Hecht and myself are going to discuss the short squeeze in GME as well as the much talked about upcoming short squeeze in Silver. You are invited to this webinar just register below.
We have also included a registration link for session 4 on Saturday February 6th at Noon EST