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You might have missed it in the middle of Bitcoin's bull run, earnings, and Warren Buffett's portfolio rebalancing...
But I was paying attention, and to be fair, some analysts were, too.
Global equities just had their biggest two-week inflow of capital ever, as in, the history of the stock market.
Retail investors, on their own, not including institutions, plowed $5.8 billion into stocks in just five sessions, while a record high number of call options have been traded over the past 20 sessions.
These folks are almost a force of nature to deal with, like the weather, and their style and taste for investing has multibillion-dollar implications for, well, everyone.
Here's what it means - and what to do about it.
Wall Street's New Biggest Shot-Callers
There's no shortage of theories as to why new, mobile app-based investors have poured into the markets, but there's one that works just as well as any I've heard.
One of the biggest changes coronavirus forced on society: no live sports.
No live sports means no sports betting. That's an $85 billion global industry, and about 10% of that comes from right here in the United States. For a few weeks, the hottest line in Las Vegas wasn't who would win the World Series, but whether there would even be a World Series.
Of course, we've managed to pull off a World Series and a Super Bowl, but there was a while there when it was completely up in the air. During that time, people desperate for "action" hopped on mobile apps like Robinhood and started, basically, gambling in the capital markets.
MISSING OUT? Millions are feeling the pain of "FOMO" right now as Bitcoin blasts past $51,000. But, as this chart shows, it might not be too late - though it's possible it soon could be. Watch...
Why it happened isn't as important as that it happened. When you combine that "new blood" with trillions in Fed stimulus, you've got a recipe for a truly historic bull run.
It helped drive the incredible rally that took markets from the "COVID Crash" March 2020 lows to today's all-time highs - at a time of truly scary unemployment and deep uncertainty.
These new players are highly, and I mean highly, speculative; they are rolling the dice in a big way. Just look at what happened a couple of weeks ago with GameStop Corp. (NYSE: GME). It rocketed several thousand percent, and it's still trading for more than 10 times what it did a year ago.
(And, by the way, it's worth repeating: Don't go near GME.)
GameStop grabbed a lot of headlines, but these retail investors are having a much broader impact. By some estimates, their speculating has boosted the market cap of some of the smallest U.S. stocks by more than 30%.
Look at the iShares Russell 2000 ETF (NYSEArca: IWM) that tracks the massive U.S. small-cap segment. It was actually slightly lagging the SPDR S&P 500 ETF (NYSEArca: SPY) for most of the time since the crash, but IWM crossed above it in November and blew it out of the water.
This is happening at a time when America's small businesses have been under absolutely brutal pressure from COVID-19.
Mobile app investors are partially responsible for that performance. Their impact has been even heavier for the small- and micro-cap stocks you don't find on the Russell 2000.
THE "SUPER SQUEEZE" could be nothing less than a market revolution, happening right in front of our eyes. Regular investors have figured out how to turn the tables on the Street. Here's what everyone should know...
And, like we've seen, when these investors coordinate, the effects can be... powerful. Powerful enough to bring some of Wall Street's most powerful hedge funds to their knees, anyway.
And with that much impact, you just know there's money to be made.
Here's How to Profit... for Much Less Risk
If you missed it, this week I named three stocks I think fit the bill for a potentially explosive short "Super Squeeze" situation: Bed Bath & Beyond Inc. (NASDAQ: BBBY), Utz Brands Inc. (NYSE: UTZ), and Weibo Corp. ADR (NASDAQ: WB). Definitely watch those; I'm often in touch with my Super Squeeze Profits followers to give specific instructions.
So, clearly, whether you're on their side, rooting for them, or you wish they'd go away, you have to reckon with these new investors - especially when they start getting together. Like I said, they're kind of like the weather now - no use fighting it.
The smart thing to do is position yourself to profit from their appetite for profits, and it's possible to do that with just a couple of regular ETFs, believe it or not. No need to make risky plays like GameStop (especially not with so many other potential Super Squeeze plays out there).
You've got the S&P 500, the Dow Jones Industrials, the NASDAQ Composite, even the Russell 2000. You can easily take positions in IWM, SPY, the SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA), and the Invesco QQQ Trust (NASDAQ: QQQ) to limit your risk and get exposure to the extremely bullish nature of these folks' investing.
Then there's juicing your profit potential with options; my colleague Tom Gentile has some interesting research on put selling out right now that I think people should see. It's helped deliver 23 wins and ZERO losses since April 2020.
So, the bottom line is, if you can't beat 'em, join 'em. Just do it the smart way.
After all, these folks have helped spark a rapid-fire revolution in the markets, using Wall Street's own tactics against them. Some of them have gotten rich doing it. That's why I think trading techniques like the "Super Squeeze" have become some of the hottest on the market. I've tweaked my proprietary S.C.A.N. algorithm to help me identify what I think are the two best predictors of these kinds of situations. You can go here to learn more.
About the Author
Andrew Keene is a globally known trader and a renowned expert on all things options.