So Much OPEN Speculation That Perry Mason Would Call for a Judge's Ruling
With this kind of activity in a meme stock, is a pullback at hand?
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Did you ever watch those old Perry Mason shows on television, or really any courtroom drama, where one lawyer is speaking and the other one objects and calls out, “Speculation”? Then the judge must make a ruling.
I found myself looking at my screen on Monday, watching the stock Opendoor Technologies OPEN, thinking Speculation!! I mean, what else would you call the nonsense that took place in that stock over the last week?
A week ago, the stock was under a buck. On Monday, it traded –intraday—to five bucks, before falling back to close just over three bucks. Anyone who was watching the market on Monday saw that. But did you also know that the stock traded just shy of two billion shares on Monday?
Nasdaq traded about ten billion shares Monday. That means this one stock—this meme stock—traded nearly twenty percent of all the volume on Nasdaq Monday.
Not only that, the stock has just over 700 million shares outstanding, which means, with two billion shares traded, it traded more than twice its float. If that is not the picture of speculation, I am not sure what is. But you can be the judge and make your own decision.
Aside from that, not much changed in the market. Breadth was flat or slightly negative. It was the first consecutive red breadth days since the last day of May. I suppose when all the energy in the market goes to one stock, there’s not much else left for other names.
I suppose the one change was the put/call ratio. It ended the day at .90. This is the highest reading in two weeks. In many ways, it confirms what I am seeing and hearing: so many are looking for a 5-7% pullback. The one thing I know is that when the majority are thinking 5-7% pullback, we either never get it or we get a lot more than that.
My vote is still for a pullback. A pullback would reset the sentiment and the speculation (well we hope it would reset the speculation). It would give the indicators a chance to get back to an oversold condition.
It would also, perhaps, get the Insiders to do some buying. You can see from this chart of Insiders sells to buys has been rising for months. Last week, it pushed up closer to where it was in early December, which you may recall was when most stocks topped out.
But as prices came down in the spring, the buys outpaced the sells. Now we have quite a high level for this ratio. Will the Insiders be proven correct? They usually are, although if you tried to line this up against the market indexes, you’d never see it. There is a lag.
Notice how the ratio got to ‘bullish’ in February, but the market did not bottom until April. Timing-wise, it’s not a great indicator, but overall, when it has become too persistent as it is now, we should pay attention. The Insiders seem to be saying "Speculation."
