Two weeks ago we noted that weekly market momentum is getting overbought. So the question became what would be the catalyst to prompt a reversal. Then came along GME and r/WSB !
The irony of the whole GME saga is that the so called "smart money", that spends millions for access to order flow, or to monitor investor sentiment on social media, failed to notice the obvious short squeeze brewing. Not only that, but having been caught off guard, the so called "smart money" decided to double and triple down on their short bets.
And, although, in theory this could propel the price of GME into the stratosphere, the reality is that the so-called "smart money" has two things going on for them, and neither one is smarts. Rather, they can rely either on a bailout or on bending the rules in their favor. While the former is not likely at this stage, there's ample evidence that the latter will be the preferred course of action in this particular case.
And so the fun part begins, watching the creative ways "smart money" will try to save their hides by pretending to protect small investors from themselves.
The SPX weekly targets are 3650 and 3800:
Daily market breadth has dropped to oversold levels, suggesting that an oversold bounce is not far behind:
