GameStop Short Squeeze NEVER Happened YET! SEC Report!

hey everyone me kevin here well folks

the truth is out on gamestop and the

events that unfolded in january it is

apparent now that what happened in

january was not a short squeeze on

gamestop it was a short sneeze and in

this video we're going to talk about how

powerful the ape army really is and how

it's actually way stronger than anyone

expected and this sec report that i just

spent over an hour and a half going

through word for word i actually did

most of it live on the channel you could

see it is mind blowing in this video i'm

going to give you the highlights let's

get into this because this gamestop

short sneeze happened on my birthday

january 28th so it's really special to

me all right folks let's get right into

this number one the sec says gamestop is

quote quote this is their wording okay

like somebody's got to frame this or

make t-shirts of this in my opinion okay

the sec says gamestop is quote

the most famous of meme stocks

i love that i really frame that all

right number two uh and this is gonna be

the first couple of these are gonna be a

little bit of background to help you

understand the rest

best execution for stocks which we keep

hearing brokers talk about all we give

you the best execution does not mean

best price it just means the best speed

or best quality or quite frankly best

whatever's available at the time so when

a broker tells you you got the best

execution it does not necessarily mean

you got the best price

number three the median account balance

for robinhood account holders is 240

and the average age of customers 31

years old

one six number four one sixth of the

accounts made through apex clearing

through companies like weeble have an

average age of just 19 years old in

other words not the accounts of the age

but the people who have those accounts

so one-sixth of all the users using apex

clearing again websites like weeble have

an average age of just 19. number five

market makers can either make trades

through public exchanges which is public

information or internally which is off

market through what are sometimes called

dark pools but more technically known as

internalized trades or consolidated

trades

number six according to the sec a

combination of factors led gamestop to

skyrocket and this you should write down

because this is the definition of a

momentum movement one large price

movements so in other words you see

large movements in price people are

interested large volume changes so

quantities and the amount of shares

moving not just the price of a share

going up but a lot of shares trading

large short interest number three four

frequent reddit mentions they even

mentioned youtube potentially five

significant coverage in mainstream media

those are the five criteria really for a

momentum based stock kind of neat to

write those down so again large price

moves large volume changes large short

interest frequent redditer youtube

mentions and significant coverage in

mainstream media number seven until

recently gamestop was one of the only

stocks that had its short interest go up

over 90 percent since 2007 and 2008

they did also state that it is normal

for stocks to potentially go over 100

percent short interest when people

re-lend shares that they then short that

is okay they said well i mean they

didn't explicitly say it was okay they

just said this is how it happens and by

not really saying it's not okay they're

kind of saying yeah like it could happen

it's just really really rare number

eight yes hedge funds did in some part

at least certain hedge funds like

quantitative hedge funds and trading

hedge funds did actually participate in

buying

shares of gamestop

to make profit off the trade

so there were hedge funds that were

actually competing

with retail investors

which makes sense and there were hedge

funds that did

likely according to the sec buy shares

of gamestop to cover their shorts

however

the sec did not find that drops in short

interest actually led to large price

increases alone though the drops in

short interest contributed

the sec says that large price movements

really came from more people just buying

shares and huddling them so in other

words

not the squeeze basically putting to bed

that the idea of gamestop's price going

up was caused by a short squeeze there

was short covering but we didn't really

see a short squeeze it was a lot of

retail buying and hodling that led to

this which is really important for what

ended up causing all of this to fail

we'll get to that in just a moment

which i think this is a really good part

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number nine

uh instead of a short squeeze we likely

had continued buying pressure occurring

from social media because everybody

wanted to maintain a short squeeze so

even though a short squeeze wasn't

happening we all felt united and trying

to maintain a short squeeze and this led

the army the army of retail investors us

to continue to buy and huddle it was the

reason to keep fighting

and we did leading the price to continue

to go up

now what about a gamma squeeze remember

a gamma squeeze is when hedge funds or

institutions buy shares to delta hedge

call options that are going in the money

if that was really foreign to you don't

worry about it it basically means when

people are buying yolo call options that

actually start becoming profitable

institutions might have to buy shares to

hedge those call options

so don't worry if that still doesn't

make sense basically the more things go

to the moon the more things go to the

moon

the sec found that a gamma squeeze was

not

a reason gamestop went to the moon they

said that options trading actually

peaked around january 27th which was the

day before we saw gamestop actually go

to the moon of about 484 dollars and

they said that this increase in peak

options trading was actually driven by

put purchases so market makers were

actually buying call options with the

apes rather than buying shares to

hedgehog puts crazy but they did mention

that between january 22nd and january

27th we saw a lot of people actually

getting out of options like getting out

of call options and we stopped put

volume increase more so people were

increasing their bets against gamestop

by the 27th and 28th which means the

odds of a gamma squeeze

wouldn't really make sense because the

opposite was actually happening in the

market at the time crazy so no short

squeeze no gamma squeeze dark pools yes

but what about naked shorting well this

is when you short a stock that you don't

own and you have no intention of

actually finding somebody to borrow the

shares for you just basically short it

without actually owning the shares or

knowing somebody where you could borrow

them from from it's evil it's

complicated it is based on trust and

being able to clean it all up after the

fact and the sec's determination here

was

no

that naked short selling was not a big

cause of price action in gamestop that

most failed to deliver which can happen

on longs and shorts making it kind of

difficult to determine if there are

short fail to delivers or long failed it

delivers but either way

most failed to deliver it's cleared

within a day and there were no quote no

persistent fail to deliverance so wait a

minute if there was no short squeeze no

gamma squeeze no naked shorting why did

the stock go up that much

simple folks people kept buying it and

they bought it and they held it

squeezing liquidity this led to

significant off exchange trading via

dark pools which likely led to poor

pricing for consumers and wide spreads

and big profits for the market makers

it also again reiterating this led to

extremely low liquidity remember if

you're on the public market generally

more liquidity transparent pricing dark

pools not transparent pricing wide bid

ask spreads lots of pauses and halts on

the trading stock that's a sign of low

liquidity in fact these automated pauses

aren't the suits trying to screw us

although maybe that's what they

programmed them for i don't they're

really intended whether we believe it or

not they're really intended to pause the

market to allow people to put in more

buy sell orders so we have more

liquidity in the market and so the

market could try to function normally

again but because everyone was hodling

this wasn't working leading to a lot of

pauses and the price

continuing to go up remember folks the

definition of momentum large price moves

check large volume changes check large

short interest note not short squeeze

just large interest short interest

giving people a reason to participate in

the trade right

frequent reddit and youtube mentions and

significant coverage in mainstream media

we had all of these things so what

killed momentum

well it was none other than the pausing

of trading specifically from companies

like robin hood who blamed the nscc for

bankrupting margin requirements that

would have basically demanded so much

money from robin hood that they would

have potentially gone bankrupt

but ultimately the sec found that it was

up to the brokers to pause or restrict

trading it was ultimately the broker's

responsibility

they did not have to pause or restrict

trading if they could have come up with

the money the margin requirements for

the nscc which in fairness robin hood

was able to within 48 hours potentially

as soon as 24 hours come up with the

money they needed so in theory trading

didn't have to get restricted but we

hear from robin hood that this was a

five sigma event and that their hands

were tied because of retirement

requirements from the nscc which

in fairness to the nscc because

everybody wants to blame them the nscc

actually

waived penalties during this time

because otherwise brokers would have to

have come up with even more money so

it's almost like the nscc is like yeah

this is crazy we're going to try to be

as nice as possible here

maybe everybody's at fault who knows the

way the system was set up was designed

to clearly screw the retail here but

anyway now

this is interesting because of

essentially all this high volatility and

these wave penalties but still companies

like citadel taking 55 percent of all

the internalized trades during the peak

of this gamestop crisis and virtue

taking 26 percent of all these trades

there are rumors and speculation that

companies like citadel and virtue ended

up colluding with companies and brokers

and this is just a rumor could totally

be wrong and and not factual at all and

there are even lawsuits around this that

potentially robin hood and citadel and

virtue of these companies colluded to

say hey look our buddies like melvin

capital are losing their pants on shorts

they're getting burned can we just

restrict trading and try to let this

momentum die really fast nobody knows i

guess we'll find out more in lawsuits

obviously that is the suspicion right

now

again the sec found it was ultimately up

to the brokers as long as they were

capitalized well enough and this has

obviously led to the argument that well

robin hood should have had more money

but again robin hood's argument is like

we could have never planned for this but

then again they were able to raise the

cash really quick so who knows so

at the bottom line of the report the sec

recommended less gamification which kind

of feels like a slam on robin hood and

more short interest reporting and

transparency on dark pools this was a

staff report so it doesn't actually say

anything about what the sec is going to

do they're just sort of trying to

outline what the heck happened and so

folks there you have it what happened

retail investors got a nail in the

coffin shoved into them

on january 28th

screwed from continuing the movement and

then everybody jumped chip so think

about it we were like we were like a big

old trojan horse and we were ramming the

castle ramming the castle really hard

but all of a sudden somebody came around

and took our battering ram out of our

trojan horse i guess it wouldn't really

be a trojan horse if it's a battering

ram but i think you get the picture and

all of a sudden we're like oh well we

can't really do anything anymore okay

let's leave and everybody jumps ship and

uh you know the stock crater's like 80

now obviously gamestop is recovered but

yeah folks the sec here saying not a

squeeze

dark pools exist

we've got uh no gamma squeeze

not a real issue with naked shorting but

instead we had a massive momentum

movement that got crushed

by brokers

there you have it folks if you find my

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it we'll see in the next one thanks so

much folks goodbye

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