| | | | Real GDP Is in Decline?
First, don’t miss today’s Daily Chart Setup trade idea down lower in this newsletter.
GDP growth is only on the back of government spending. When you look at the deficit and take that away from GDP, we are accelerating in a negative fashion, quarter over quarter.
Come join me as we dive in and see what’s moving!
Plus, as always, we have stocks popping and dropping so come find out what is moving this morning as I look for stocks and do some live premarket analysis on SPX, SPY, NDX, QQQ, Russell, IWM and other stocks that are potential plays for the day.
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WARNING: Goldman Sachs Data Reveals Meme Stock Mania Matching 2021 Peak
I was digging through some market data the other day when something caught my eye that I just can't shake.
Goldman Sachs just released research showing the highest short interest levels we've seen since the 2021 meme stock peak — and if you remember what happened after that peak, you'll understand why this has my attention.
Look, I've been around the block a few times, and when I see patterns like this emerging, I pay attention. You should too.
Here's what's particularly striking about this data: Retail participation in heavily shorted stocks has completely flipped from historical norms.
We're talking about retail traders piling into the riskiest names at levels that would have been unthinkable just a few years ago. Meanwhile, systematic long-short quant managers tracked by Goldman are sitting at their biggest losses — something that rarely happens to these algorithm-driven smart money players.
History Doesn't Repeat, But It Often Rhymes
The pattern we're seeing now is eerily similar to what we witnessed in early 2021. We're getting the biggest short squeeze meme stock activity since that peak period, and the Russell 2000 to S&P 500 ratio with Goldman's meme basket is pushing to levels we haven't seen since before that correction.
What happened after we hit that extreme in 2021?
We went from extreme high to extreme low, right at the beginning of 2021, and then we went into the correction in 2022. The chart doesn't lie about these things.
I'm not saying the sky is falling, but when you see this kind of irrational exuberance building in the most heavily shorted names, it's worth asking whether we're setting up for another major reversal.
What Smart Traders Should Do Now
Don't panic, but don't ignore the warning signs either. This meme stock mania could continue in the short term — markets can stay irrational longer than you can stay solvent, as they say.
But history suggests that when we reach these extreme levels, bigger moves are coming.
Consider tightening your risk management on speculative positions. If you're riding the meme wave, have your exit strategy ready. And if you're a contrarian trader, start watching for signs that this mania is reaching its peak.
The Goldman data is telling us something important about market structure and sentiment. When the smart money algorithms are struggling this much while retail piles into the riskiest names, it usually means we're approaching an inflection point.
I'll keep monitoring this situation closely and update you on any significant developments.
Now be sure to join me live at 9:15 a.m. ET for “Morning Monster,” my market-open livestream on YouTube!
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