0DTE Punters Pump And Dump Momentum Stocks As “Parabolic” Tech Hits An Airpocket

For a few hours there it seemed like the “market” was about to blast off in a carbon-copy replica of the dot com bubble.

With futures opening flat after Asia was closed for trading and with most traders sitting on the sideline ahead of tomorrow’s CPI print, it didn’t take long for the algos and the 0DTE crew to take control of market flows and promptly lift the Mag Seven (or rather the Mag AI since most of the 7 participants did not take part in today’s meltup and instead of was just the AI names) to new all time highs with the liftathon however fizzling the moment Europe closed. And then in the early afternoon, the party suddenly ended with a whimper, when two two consecutive dumps in 0DTE sparked an initial retracement of all gains and subsequently pushed it to session lows…

… which also triggered the biggest sell program of the day, as seen in the TICK puke just after 2pm.

The mini vortex first pushed such parabolic tech bubble names as ARM (which is so clearly and grotesqsuely manipulated by SoftBank again, one has to an en even greater moron than the SEC not to notice it), NVDA and SMCI to new all time highs, before an air pocket emerged, sending both names well in the red for the day before the dip buyers made another appearance.

The continued meltup in the AIvantgarde names was enough to briefly push NVDA market cap above that of AMZN, and is now breathing down GOOGL’s neck.

In the end, however, the attempt to force another all time high failed, and even though spoos earlier hit a new all time high of 5,066 they closed down 0.1%,  with the Nasdaq also sliding to close 0.4% lower…

… which however did nothing to reverse the brutal squeeze that has sent the most shorted names soaring in the past week.

And speaking of ARM Holdings, its its latest 29% meltup has now brought the 3 days surge to 93%.

• *ARM SOARS 29% TO BRING THREE-DAY JUMP TO MORE THAN 93%

For those confused, the move is nothing more than another gamma squeeze orchestrated by SoftBank, the same trader who famously sparked the market-wide Gamma squeeze of the Nasdaq in the summer of 2020.

Softbank is certainly not known for forced gamma squeezes https://t.co/zFyRKkAoZ6

— zerohedge (@zerohedge) February 8, 2024

To be sure, if the market is about to crack, and Goldman warned over the weekend that that may indeed be the case as there are quite a few disconnects below the surface..

… we may have a long way to drop as the coming 30% drop in Momemtum would claim quite a few “AI” names.

Yet even a 30% drop, which Goldman specifically warned may be coming…

… would do little to dent the unprecedented outperformance of the Mag 7 vs pretty much everything else.

The rest of the market – and the rest of the day – was rather boring, with rates virtually unchanged, as the 10Y closed at 4.17%, flat on the day…

… and FX was even more boring with the BBDXY also flat. The only notable outlier was crypto, with bitcoin surging above $50,000 for the first time since Dec 2021 and even Ether finally preparing to break out…

… as all those aggressively shorting every pop higher in the cryptocurrency via futures get REKT.