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The market for oil is far more liquid than it is for shares of small-cap companies.
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GameStop
in many ways it was the perfect stock for retail traders who wanted to show their power and teach Wall Street a lesson. The market for the stock was small enough to be affected by the influx of new money, and short interest rates were so high that shares were at risk from pressure.
Since then retail investors have turned their eyes to larger targets, with mixed results. Money was initially promised to be paid off but was quickly disbursed. Now, some analysts are considering what other assets may be vulnerable to a coordinated spree of buying or selling by retail investors.
RBC Capital Markets analyst Michael Tran looked at whether the oil market could be listed.
Tran notes that oil futures prices, like those for all commodities, are driven by a market for physical goods, supply and demand is the key. Although short oil times fell below $ 0 in April last year, they returned to a more reasonable price as real oil changed hands between producers and refiners.
But Tran does not think the oil market is inaccessible. “The oil market is too big to push, right? Think again, ”he writes.
While trading volumes for GameStop stock are generally much lower than for oil, last week’s action in the shares showed that traders can push sales volumes to very large levels with coordinated action.
And while oil trade is much more liquid than the market for small cap stocks, “the dollar-induced dollars were encouraged by the GameStop (GME) and
AMC Entertainment Holdings
Price movement (AMC) was similar to the WTI criterion, ”Tran writes, commenting on futures for crude West Texas Intermediate.
“Daily weighted quantities show a $ 15.9 billion spot spot
WTI
traded daily over the past year, which compares to $ 609 million and $ 224 million for GME and AMC. However, $ 20 billion in trade has been the basis for WTI contracts compared to $ 18.9 billion for GME and $ 7.2 billion for AMC over the past week. “
While the average size may not be in line with the oil market “it is often the speed or pace of capital flows that has the greatest impact on near-term price action,” he says. However, short-term pressure may not be on the rise: Short-term interest in the oil market is relatively low, and in fact is below historical averages.
RBC also showed whether retailers are interested. Early evidence seems to indicate that they are not.
The company analyzed millions of posts on Reddit over the past month and found only 136 that commented on the oil market. Other measures of social media sentiment also showed relatively low interest, and mixed views on the asset, indicating that there is little momentum for a major push to move the price.
Oil traders may, for now, look at GameStop trading with interest, but they may not be afraid.
Write to Avi Salzman at [email protected]