The Next Big Squeeze is Coming
Stocks faded from their highs following yesterday’s morning gap that launched the Dow and S&P 500 to fresh all-time highs.
Buyers sat on their hands most of the day following the release of some squishy manufacturing numbers, despite assurances from the financial media that investors remain cautiously optimistic as the averages hover near uncharted territory.
Trump continues to point to the markets to prove his administration is, in fact, doing everything right for the economy. He even took an early victory lap Monday morning just as the averages were streaking higher on news of the U.S.-China trade truce:
After a historic June rally and another potential jinx from the president, are we in store for a rocky July? We’ll have to see who steps up to buy during this short (and quiet) trading week. The market could have a few tricks up its sleeve while everyone’s focused on Independence Day.
As the major averages rally, short sellers are racking up some serious losses.
The most recent leg of the epic Snap Inc. (NYSE:SNAP) short squeeze has finally run out of steam — but not before short sellers racked up more than $1 billion in losses, according to data from S3 Partners.
SNAP shares have quietly consolidated below $15 for the better part of the past two weeks following a five-month squeeze that pushed this hated stock to triple-digit gains. I told you to sell half your position for gains of 25% in early June right after the stock jumped almost 7% following an unexpected analyst upgrade.
The stock still has more room to run from here as price continues to coil. Shares have yet to hit the $17 price target Pivotal Research set last month after noting increasing signs of momentum in Snap’s business.
A breakout above $15 could trigger the next leg of the rally — and possibly another powerful short-squeeze.
“Snap remains a popular short bet even as some bears have started covering their positions,” MarketWatch notes. “The Snapchat creator is the fifth-largest short bet among U.S. interactive media companies, behind Facebook Inc. (NASDAQ:FB), Google parent Alphabet Inc. (NASDAQ:GOOGL), Match Group Inc. (NASDAQ:MTCH) and Zillow Group Inc. (NASDAQ:ZG).”
Speaking of Zillow, the online real estate listing provider pushed to new nine-month closing highs yesterday.
Shares jumped more than 3% on the day, easily outpacing the Nasdaq as the major averages faded into the closing bell.
Thanks to the power of artificial intelligence, Zillow’s home price estimation tool — the oft-touted Zestimate — is becoming eerily accurate at judging your home’s value.
“Now the software has been upgraded with new image-recognition technology that can pore over the photos included in for-sale listings and identify key features — like kitchen countertops, fireplaces and bathroom fixtures — that may play into the sale price,” Business Journal explains. “In a statement released Thursday, the Zestimate’s creator, Zillow Chief Analytics Officer Stan Humphries said the software’s artificial neural networks were trained to recognize features by examining millions of home photos.”
It’s a little creepy to have Zillow spying on my home value — but not surprising. With Google tracking my internet browsing, Amazon watching my purchases, and Siri listening to my every word from my iPhone, another spy in my house really doesn’t make much of a difference.