Feb 8, 2021 4 min read market update

Weekly Market Update #4

The Weekly Market Update's goal is to give you some insights on the stock market, some visibility on my portfolio, and how I make decisions.

Subscribe and receive The Next Wave directly in your inbox:

Markets

Green week. Almost everything is going up. Financial indicators are optimistic again. I bought the signals for INDA and QQQ, and increased my positions.

Gold seems to be slowly bleeding. It is not surprising: investors sell their gold to buy more stocks. However I plan to keep my allocation, it could become useful in the future.

Graph(s) of the week

Last week I came across an interesting tweet from Yoni Assia, CEO of eToro:

This is a chart showing the end of day prices of $TSLA and the number of investors in @eToro holding it's stock. It seems like there is some correlation between them - @elonmusk I would love on behalf of our 127K users investing in $TSLA to have your view on the future... pic.twitter.com/UEUnrGxbwW
— Yoni Assia (@yoniassia) February 1, 2021

Yoni Assia, CEO of eToro, tweeted a chart comparing the growth in number of investors (Users Hold) in Tesla and the actual stock price (EOD Price)

Clearly, there is a correlation between both. What about causation? Looking at the graph, it seems that the price is leading the number of investors. This means that a price increase attracts more eToro investors. Therefore, it is probably a lagging indicator, not useful information for trading.

Yoni managed to plot the number of investors. So it means the information is accessible somewhere, right? They probably store the number of investors per instrument.

After a little bit of digging, I found the API endpoint. And I managed to get the data:

Table of the most popular eToro assets — Most popular eToro assets sorted by number of investors (total), "buy" and "sell" correspond to the ratios of "long buyers" and "short sellers" respectively.

Interestingly we see that eToro is mainly used for cryptos. Then come the FAANG and other tech stocks. And the infamous GameStop is now the 17th most popular stock on the platform!

Unfortunately, I can't access the history. So I started recording these numbers every 10 minutes. And I got some exciting graphs:

Plot comparing the number of investors in Bitcoin and its price — The number of Bitcoin investors (orange line) collapse on the 6th, just before the price (gray line). And then the number of investors recovers, just before the price. Again.

Plot comparing the number of investors in Cardano and its price — In Cardano's case it's hard to conclude anything. The number of Cardano investors (orange line) seems to be following the price (gray line).

It's too early to conclude, and it mostly depends on how eToro computes the price. Does it execute the orders itself? Does it use an external provider? If it's the former, then there is a chance this information is valuable.

I will keep digging and keep you posted ;)