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8/18/22 Ryan “Paper Hands” Cohen

News:

The market spent Wednesday trading in the red.

All eyes were focused on the 2 p.m. release of the FOMC minutes from July. Markets showed little reaction to the release…

Sector Roundup

Of the 11 sectors we track, only 1, Energy (XLE; +0.8%), ended the day in positive territory.

Communications (XLC), Materials (XLB), and Consumer Discretionary (XLY) lost more than 1% each.

A look at the S&P 500 map reveals several bright spots across the market, though…

S&P 500 map
Image from Finviz

From the Fed

The market took the minutes in stride. Markets rallied to their highs of the day immediately after the release … But settled lower.

Here are your key takeaways:

  • Inflation is “uncomfortably high”
  • More rate hikes are likely in the future
  • Those hikes could cause an “increase in unemployment”
  • The FOMC may slow the pace of rate hikes in the future
  • The next FOMC meeting is scheduled for September 20-21.

Paper Hands

Bed Bath & Beyond (BBBY^) rose another 12% yesterday.

But after hours, a filing revealed that WallStreetBets god Ryan Cohen intends to sell his entire stake within 90 days.

  • In the Wallstreetbets group, selling is widely discouraged as members tout their “diamond hands,” referencing their willingness to catch falling knives (stocks).
  • Those who sell are called “paper hands”
Emojis of toilet paper and hands

Cohen is a notable character in the meme stock craze. Best known for…

  • Founding of Chewy (CHWY)
  • Becoming chairman of the board at Gamestop (GME^)
  • Being an activist investor in BBBY as of in March

Shares of BBBY are down more than 12% in pre-market trading this morning.

Technicals:

The market needs to cool off.

This chart shows the S&P 500 with its RSI at the bottom…

SPY chart showing overbought conditions.
SPY Daily Candles – Chart via thinkorswim

We’ve been monitoring the overbought conditions for days now and expected the rally to slow.

Yesterday’s dip relieved some of the overbought pressure … Futures are lower again this morning. 

We’ll be watching for support near $420 to hold over the next few days.

Timing:

Options expiration is Friday, 8/19—Watch for added volatility heading in the weekend.

The next day circled on our calendar is Thursday, 8/25:

  • Tesla (TSLA^) stock split is set to take effect
  • Final Q2 GDP numbers will be released

Watchlist:

*Low Float
^Open Position

*AEY support at $2
*FPAY support at $2
MAXN support at $20
BCAB support at $10
COGT on watch
SIGA support at $22
COCO support at $14
RYTM support at $23
TCDA support at $12
RAD support at $10
VUZI resistance at $10, support at $9
VERU on watch
INFI support at $1.30
CPRX on watch

Secondary watchlist … +100m float

GEO^ support at $8
TCRT resistance at $2
BFLY resistance at $8.75
ABCL support at $12
BNGO support at $3

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