TWO REASONS IMPACTING EARLY TRADING:
- POSTPONEMENT OF A DECISION TO APPROVE A BITCOIN ETF: Cryptocurrency optimist hoped for apositivedecision by market regulators this week to move forward with a planned launch of a BITCOIN ETF. Unfortunately, the bulls were delivered disappointing news as the Security and Exchanges Commission (SEC) postponed a final decision for the listing of a BITCOIN ETF. The SEC has now until September 30th to provide a decision on this outstanding matter.
- EARLY WEAKNESS IN S&P 500 FUTURES PUTS PRESSURE ON STOCKS & CRYPTOCURRENCIES: The weakness in the S&P500 futures this morning is causing some investors to take a more defensive posture today. This includes pressure on individual stocks as well as cryptocurrencies. One possible reason for the pressure maybe the news on Tesla potentially going private. Up until yesterday, TSLA was a favorite stock for SHORT SELLERS. In fact, SHORT SELLERS have amassed a SHORT position nearly of 35-million shares or 27% of the share float in TSLA stock. One often cited reason for SHORTING the stock is TSLA current negative cashflow situation. It is plausible that SHORT sellers are LONG more conservative large cap stocks to offset their SHORT position in TSLA. In other words the need to balance their portfolios of LONGS vs. SHORTS. As the TSLA SHORTS are forced to unwind (cover) their short positions they are likely also forced to SELL their offsetting LONG positions (comprised potentially of S&P 500 stocks). Since TSLA is NOT an S&P stock, the news may in effect cause a nearly $1.75 billion of selling across the S&P 500 to start the day today.
