Short Squeeze Is Back With Banking Stocks Skyrocketing

Beat The Market With Realtime Data! Join our LIVE Trading Session at 8amPT/11amET͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ ͏ ‌ THE WEEK IN REVIEW Every Saturday Starting At 8am PT / 11am ET Every week we review the rollercoaster ride that is the most dynamic stock market in history. We review, in detail, the best options and equity plays of the week. Your host, Mike Anderson, will provide a step by step breakdown of how these winning trades were first identified and how they were timed. Understanding how these trades are made will help you to identify similar trends and have confidence in executing your own successful trades. Plus: Bring your ticker and we will use Trade Algo's proprietary algorithms to help you analyze that trade you've been thinking about. [JOIN OUR LIVE TRADING SESSION @ 6am PT / 9am ET!]( [Shadow] Hello investor, Remember those months where retail investors led massive short squeezes in “meme” stocks? We’ve witnessed another short squeeze in bank stocks, as traders didn’t want to hold their short positions over the weekend. PacWest skyrocketed 81% while Western Alliance jumped 49%. These moves came after a measure of short interest on the S&P Regional Banking ETF (KRE) hit its highest level since mid-March. After all, anything could happen on Saturday and Sunday. Maybe banks will get sold. Maybe FDIC will strike new deals. Nobody wants to hold the bag if a positive catalyst comes out during the weekend. - “You’re getting the type of trading where emotions flip on a dime,” said Steve Sosnick, chief strategist at Interactive Brokers. “There is no secret-sauce for saying what turns a seemingly healthy bank one day into a source of concern another, and it might be nothing more than just people worrying about it.” Steve Sosnick, chief strategist at Interactive Brokers (Photo: CNBC) But the troubles are far from over. The anxiety is high. If there is any whiff of trouble in a bank, a massive deposit outflow could follow. - “The wild card or caveat is always that banking systems are built or based on the trust of depositors. If that trust or confidence is questioned (potentially due to negative news headlines or sharp declines in share prices), a panic or frenzy can unfold where people start pulling their deposits at otherwise solid banks,” said Phillip Colmar, global strategist at MRB Partners. Short selling was amplifying the losses in these banks. So, lawyers at the Wachtell, Lipton firm urged the Securities and Exchange Commission to impose a 15-day prohibition on short sales, so banks can have some time to restore confidence. There is also a lot of uncertainty around banks. There could be new regulations that make it more difficult for regional banks to lend out money, making their stocks less attractive. As you know, uncertainty is fatal for almost any stock. - “It’s said that when a pebble starts to fall, you don’t know if you have a landslide,” said Michael Sonnenfeldt, founder of Tiger 21. “The banks are concerning not because of the couple that failed, but because the sea change of policies is going to make lending much more difficult,” he said. Michael Sonnenfeldt, founder of Tiger 21 (Photo: CNBC) Will the Fed pause rate hikes? The hot jobs report led to speculation that there could be another rate hike. Goldman Sachs’s economists don’t think so. First, credit conditions are very likely to tighten after the troubles in the banking sector. Second, the rates just reached the restrictive level. Meaning? Rates are above the current pace of inflation. Historically, that usually leads to inflation falling. - “We continue to expect a pause at the June meeting because of tighter credit conditions, the restrictive level of the funds rate, and [Fed Chairman Jerome] Powell’s view that the May FOMC statement represents a ‘meaningful change,’” Goldman said in a client note. Market pricing currently assigns a 91.5% chance of a hold in June, according to the CME Group. And markets also expect the central bank to cut rates by 0.75% from the current fed funds rate target range later this year. Want To Get In The Cloud Computing Boom? Buy This STock Today’s Stock Pick: DigitalOcean Holdings Inc ([DOCN]( Cloud computing has been a game-changer for any type of business. It is so easy to forget what it was like without the cloud. In the past, you must save everything on a hard drive. There is a limit to the amount of memory it can hold. Plus, you must physically carry it around with you. If a business holds massive data, then we’re talking about an entire room of data center. Now? Everything is on the cloud. It makes things far cheaper for businesses to develop exciting products that don’t demand investments in a physical data center. Now, Amazon and Microsoft dominate the industry of cloud computing. Their technologies are remarkable, such as tools for machine learning and platform services, but it is often an overkill for small businesses. It basically requires a full-time IT team to maintain these things. That brings an opportunity for DigitalOcean to serve simplified cloud computing for small businesses. It doesn’t require specialized training to get it running. Just a few clicks. Plus, it is armed with round-the-clock support to all customers. Believe it or not, SMBs will spend more than $70 billion on cloud infrastructure and platform services, according to the International Data Corporation. This number is expected to grow at 26% annually to reach $195 billion by 2026! In other words, the market opportunity could more than double in just three years: (Source: DigitalOcean) Let’s talk money. Its revenue grew by 36% in the recent quarter. Seems like an incredible quarter, don’t you agree? It was a slight slowdown from what it saw during the pandemic boom. Management said the slowdown in revenue growth is simply due to the industry headwinds, rather than its business problems. Its momentum is nearly unstoppable. The company said more than 144k customers spent over $50 per month – a growth of 45% from the prior year. This demonstrates that DigitalOcean can be indispensable to its customers and capable of growing with a single customer over the time. Plus, the company showed incredible consistency in ARR growth since 2015: (Source: DigitalOcean) A good time to buy: DigitalOcean set a guidance of reaching $700 to $720 million in revenue and 21% to 22% free-cash-flow margin for FY2023. This would imply about 23% annual revenue growth. However, the stock plunged by 74% from its all-time high. Yes, it is more expensive to own cloud-computing stocks than a blue-chip stock. You get what you pay, though. Cloud-computing companies grow at a breathtaking pace while maintaining superior margins. [JOIN OUR LIVE TRADING SESSION @ 6am PT / 9am ET!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](