The U.S. stock market is experiencing irrational speculative sentiment. According to Interactive Brokers' statistics, three emerging "hot stocks" Oklo, Bright Minds Biosciences, and 180 Life Sciences have seen a rapid surge in stock prices, attracting a large amount of capital. NVIDIA remains the most popular stock, indicating investors' preference for fundamentally strong tech stocks. Interactive Brokers' chief strategist pointed out that this phenomenon suggests that the U.S. stock market bubble is accelerating expansion
According to the financial news app Zhitong Finance, AI chip leader NVIDIA (NVDA.US) remains the most searched and actively traded stock on Interactive Brokers, indicating that global investors still greatly prefer this fundamentally strong tech giant over meme stocks without any fundamental support. However, on Interactive Brokers' statistical list, there are rare occurrences of "emerging demon stocks" that have surged from around $1 to record price levels in just a few days, reflecting irrational investment sentiment. This irrational exuberance in the US stock market may indicate that as the S&P 500 hovers near historic highs, speculative frenzy in the US stock market is abnormally strong, and the stock market bubble seems to be rapidly expanding.
Steve Sosnick, Chief Strategist at Interactive Brokers, stated on Tuesday Eastern Time that three unfamiliar names - Oklo (OKLO.US), Bright Minds Biosciences (DRUG.US), and 180 Life Sciences (ATNF.US) - have rapidly risen to the top 25 most actively traded stocks and options on their trading platform. These "demon stocks" that have seen significant price surges in just a few trading days continue to attract substantial funds and have successfully entered the top 25 list on Interactive Brokers' hot stock list, which is a very rare phenomenon, implying extremely excited speculative sentiment beneath the bubble.
Oklo ranks eighth on the list, a US nuclear power company focused on small nuclear reactors. The stock of this nuclear startup, supported by OpenAI CEO Sam Altman, has surged by approximately 144% in the past week. US tech giants Google (GOOG.US) and Amazon (AMZN.US) have previously stated that as the power demand for data centers driving efficient operation of generative AI applications such as ChatGPT sharply increases, they are investing in the nuclear power sector, embracing nuclear energy as a clean, efficient, and stable energy source.
To accelerate the expansion and construction of data centers to meet the explosive growth in AI and cloud service computing power demand, US tech giants such as Amazon, Microsoft, and Google are eyeing clean and efficient, stable energy sources - nuclear energy - to provide 24/7 power for their continuously expanding data centers.
Under the global decarbonization trend in the present and foreseeable future, nuclear energy, as an efficient and stable clean energy source, has become one of the most favored energy sources for tech giants like Amazon, Google, and Microsoft. This energy source, which combines cleanliness, stability, and efficiency, is expected to provide strong power support for their immensely large data centers 24/7. Therefore, the current support for nuclear energy by global politicians and tech companies may be stronger than at any time since the 1970s "OKLO is clearly a beneficiary of the nuclear power renaissance driven by artificial intelligence, as the company focusing on reactors saw its stock price more than double last week," Sosnick said. "Unlike the next two targets whose prices surged significantly from $1, the frenzy of investment in these short-term hotspots to some extent is understandable." Sosnick specifically referred to Bright Minds Biosciences and 180 Life Sciences, which ranked 15th and 24th, respectively, on Interactive Brokers' list.
"I will let you decide whether we are seeing some bubbles now," Sosnick said in the report. The stock prices of Bright Minds and 180 Life Sciences have been skyrocketing recently. At the beginning of last week, the stock price of Bright Minds, a developer of drugs for mental illnesses, soared from $1.08 to $38.49 in just two trading days.
Bright Minds' stock price jumped from $2.49 to $38 in one trading day, and a day later, the company stated that it was "unaware of any significant changes" that could explain the recent significant increase in market activity. The stock price then surged to $79.02 on Friday, eventually closing at $47.21 that day. Even with a sharp drop from $79, the closing price still rose by 110% that day.
On Monday, Bright Minds' stock price continued to soar, rising by as much as 33% to $62, as the company announced a major collaboration with Firefly Neuroscience (AIFF.US) for data analysis related to drug development research. The stock price ultimately rose by 1.7%, but it remains near its all-time high, indicating speculative funds are still pouring into the stock.
Meanwhile, 180 Life Sciences, focusing on biotechnology, dramatically entered the online gambling industry, causing its stock price to surge from $1.52 on Monday to $17.75 on Tuesday. The company stated that it would focus on the online casino business model for consumers when starting its gambling business.
After obtaining a fully integrated backend technical infrastructure to host online casinos, 180 Life Sciences has officially launched its online gambling and gaming business. Given the company's long-standing focus on biotechnology, this change in direction was unexpected.
Sosnick commented on this, saying, "The stock quickly gave back most of its immediate gains, but it still remains about four times higher than the previous level, making it a historic feat for the stock." On Tuesday, the stock closed at $4.69.
In its recent global fund manager survey, Wall Street major bank Bank of America found that the "bubble in the U.S. stock market is rapidly expanding," partly due to the Fed's new round of interest rate cuts and the increasing expectation of a "soft landing" in the U.S. economy, driving a large amount of irrational funds into the stock market. Bank of America's survey data showed that in October, a net 31% of fund managers said they would continue to increase their stock holdings, higher than the net 11% from the previous month An "ox-bear indicator" compiled by Bank of America has reached 7.1, but has not yet reached the "super sell signal" level of 8.0.
Renowned American economist and founder of Rosenberg Research, David Rosenberg, has been warning for the past few months that a stock market crash may be imminent. He had previously warned of a potential 39% pullback in the US stock market, which is one of the more extreme predictions on Wall Street. He noted that most investors are optimistic about a soft landing due to the solid performance of the US economy and the downward trend in policy interest rates.
In a recent report to clients, Rosenberg stated, "Observing the market now is like watching a clown inflate a balloon, and when this huge bubble bursts, the scene will be very spectacular."
Rosenberg emphasized that investors need to maintain a cautious attitude, avoid following the crowd, especially in terms of investment enthusiasm for large tech stocks like NVIDIA and Apple. Instead, he advised investors to focus on stocks with strong business models, robust revenue growth rates, and attractive prices, and to incorporate some "defensive factors" into their investment portfolios