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The dealer army signals withdrawal on the latest wave of stimuli

(Bloomberg) – From bullish options to basketball trading cards, the multi-billion dollar retail frenzy is showing signs of fading. Just as $ 1,400 stimulus checks hit the US, daytrader favorites are losing steam and fueling speculation that the army of individual investors who disrupted markets last year chose to cash in on the Spend plane tickets and restaurants instead of their trading apps. The volume of bullish options preferred by members of Reddit’s WallStreetBets forum has fallen. Blank check stocks are falling. Even Robinhood Markets Inc.’s ranking in the Apple App Store fell into the top 100. So far, those have only been dips in years of financial markets reshaping by millennial traders that whipped hedge funds, broke volume records, and even held a congressional hearing on a troubled video game retailer that rose 1,400% in a month. Many of her favorite stores are still not far from their highs. But their almost simultaneous declines over the past month, especially in the past few days, suggest that the speculative force that fuels them is weakening. “I think the retail industry’s interest in trading ebb and flow,” said Don Calcagni, chief investment officer at Mercer Advisors. “When you see something like a GameStop, or when you see that Bitcoin has worked exceptionally well, interest rises. And after this hype, interest in retail stores tends to wane from the markets. “Here are some signs of the retail army withdrawing: Stock favorites Since its March 15 peak, a basket of retail favorites from Goldman Sachs fell around 7%, compared with a 2% decline in the Russell 3000. Cathie Wood’s ARK Innovation ETF, which has become synonymous with retail admiration for daring tech betting, is about to see its worst month since the pandemic sell-off a year ago, with inflows and volumes also declining. The ETFMG Alternative Harvest ETF, which invests in cannabis stocks, is down 32% from its high. Another indicator for retail is the 10-day average percentage of stock volume outside of the stock market – where most retailers have routed orders – has fallen to 42%, compared to nearly 50% at the end of January. Blank-check companies The record-breaking listing in the stock market Special purpose vehicles was seen as a sign of surplus as these so-called blank check companies publicly raise money before looking for companies to buy. An index of these stocks is now at 21% from its February high. Three-quarters of SPAC’s debuts on Tuesday traded below their quotation price – “the sound of the IPO window closing,” said Julian Klymochko, CEO of Accelerate Financial Technologies and SPAC expert, on Twitter. Robinhood’s ranking in the Apple App Store has steadily declined and has moved from the first free apps at the beginning of February to among the top 100, as data from the Sensor Tower shows. Similarly, Google searches for “buy stocks” and “bitcoin” have also decreased over the period. Stock Options A feature of the retail craze is the use of short-term bullish options or calls by the Reddit horde to bet on their favorite stocks. Well that is fading a bit, although activity remains historically high. An average daily average of 23 million contracts has changed hands on the US stock exchanges in the past five days – after more than 30 million in February. Crypto AssetsBitcoin is down more than 8% from its high, while Ethereum is down about 13%. Bitcoin volumes have declined and inflows into publicly traded funds tied to the crypto asset have slowed, according to JPMorgan. While it is difficult to anchor certain catalysts behind the volatility in this market, this is another speculative favorite that is losing momentum. Even prices for NBA Top Shot trading cards – sports collectibles with a crypto twist – have declined. The data has been compiled on the Add website to show more funds. All in all, the YOLO – You Only Live Once – crowd seems to have been distracted lately, though its mark on the financial markets remains. Of course, macro forces have turned against some of these trades. The surge in bond yields hurts tech bets like the ARKK ETF and Tesla Inc., which are essentially long-term bets on a distant, transformed future. While the more adventurous day traders are turning elsewhere, it doesn’t necessarily mean that individual investors are generally no longer putting more money into stocks. Equity funds hit a record $ 68 billion for the week ending March 17, the latest data from Bank of America shows, with the trend still pointing towards US and tech stocks. More articles like this can be found at bloomberg.com. Subscribe now to stay ahead of the curve with the most trusted business news source. © 2021 Bloomberg LP

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