The Financial Associated Press reported on January 9 (Editor: Xiaoxiang), despite the mixed performance of the three major indices in the USA on Wednesday, the worst performing index only fell by 0.16% - a performance that clearly cannot be considered bad. $S&P 500 Index (.SPX.US)$ This "bloodbath" started with the remarks made by CEO Jensen Huang at the CES Technology Conference in Las Vegas about Quantum Computing possibly needing another 20 years to truly reach the market, which triggered a plunge of several Quantum Computing concept stocks by half.

However, for many American retail investors who enjoy indulging in speculative meme stocks, this Wednesday seemed to be a complete disaster day: because many of their favorite investment symbols faced astonishing collapses.

This "bloodbath" started with$NVIDIA (NVDA.US)$CEO Jensen Huang's statement at the CES Technology Conference in Las Vegas that Quantum Computing may take another 20 years to truly push to market, which caused several Quantum Computing concept stocks to crash sharply.

FactSet's data shows that $Rigetti Computing (RGTI.US)$on Wednesday, it closed down by 45.41%, $IonQ Inc (IONQ.US)$ and fell by 39%. Both stocks saw intraday declines exceeding 50% that day, ultimately setting the record for the largest single-day decline.$Quantum Computing (QUBT.US)$Including other Quantum Computing concept stocks also experienced similar severe declines.

This seems just to be the beginning of a 'domino effect' where high-risk speculative stocks begin to fall...

Farzin Azarm, Managing Director of Mizuho Securities, indicated that as speculators rush to cover margin calls, this pressure quickly spread to other stocks favored by retail investors.

Azarm pointed out, "Retail investors are facing a day of reckoning today. They have been buying these highly speculative stocks, but now they are starting to break."

Historically, traders' extensive use of leverage has often magnified gains during bull markets while also exacerbating losses during downturns. It seems that this situation is repeating itself.

According to LSEG data, a set of indicators tracking the performance of heavily shorted stocks in the FTSE Russell Index fell by over 5% on Wednesday. Since the meme stock craze in 2021, this index had one of its strongest starts this year. Additionally, a basket of the most shorted technology stocks also experienced its worst day ever on Wednesday.

Aerospace and space exploration stocks also faced a sell-off on Wednesday: "the first stock for lunar Infrastructure" Intuitive Machines ($Intuitive Machines (LUNR.US)$) fell by more than 5%.$Archer Aviation (ACHR.US)$Down nearly 6%.

Nuclear Power stocks were also impacted.$NANO Nuclear Energy (NNE.US)$Fell over 11%.$NuScale Power (SMR.US)$ Fell over 9%. Other themes favored by retail investors, such as Cryptos, cannabis, and autonomous driving, were also hit.

In addition,$XTI Aerospace (XTIA.US)$ Also, the so-called penny stocks (stocks priced below $1) were severely hit. The stock's trading price is only 5 cents per share, plummeting over 50% on that day after rising 30% the previous day.

Is it all the fault of the retail investors getting too crazy?

Azarm from Mizuho stated that retail traders have been particularly active in the market recently, indicating that they bear significant responsibility for the movements of these speculative stocks.

Earlier this week, the trading Volume in the USA stock market surged. According to data from Dow Jones Market Data,$Nasdaq Composite Index (.IXIC.US)$the trading Volume on Tuesday rose to nearly 14 billion shares, hitting the highest record since 1995. However, the market was not very active on Wednesday.

According to data tracked by Azarm, about 55% of trading activity in the USA market over the past two weeks is related to platforms typically used by individual investors. He pointed out, "This trading scale proportion is very large. Even during the retail battle against Wall Street in 2021, we rarely saw such a surge in retail trading enthusiasm."

Joe Saluzzi, partner and co-founder of Themis Trading, pointed out that the recent surge in trading volume in the USA market seems to be related to 'penny stocks.' He found that the trading volume of company stocks priced at $1 or below has recently increased unusually.

Julian Klymochko, CEO and CIO of the alternative investment company Accelerate, stated that since the November elections in the USA, stocks related to Quantum Computing, heavily shorted stocks, and other popular speculative stocks have surged, as President-elect Trump's victory seems to have unleashed the 'animal spirits' of the stock market.

In fact, the recent market bubble is not limited to the stock market. A clear bubble has also appeared in the cryptocurrency market.$Bitcoin (BTC.CC)$Prices rose to over $0.1 million before and after the election, while the popular meme token Fartcoin's Market Cap surpassed $1 billion, higher than some publicly listed companies.

At the end of last year, there was a large amount of Short Sell on $Hims & Hers Health (HIMS.US)$ 、 $SEALSQ Corp (LAES.US)$ and $Enovix (ENVX.US)$ The stock prices of companies like this have also surged. However, they all encountered troubles this week.

Klymochko of Accelerate stated, "There is a significant amount of speculative Bids in the market, causing the prices of these heavily shorted stocks to remain high. In the industry, we call them unprofitable junk stocks."

Is everything not over yet?

It is worth mentioning that the recent sell-off of these speculative stocks coincided with the struggles of the large-cap US stock market.

According to FactSet data, as the 10-year US Treasury yield approaches its highest level since the end of 2023, the S&P 500 Index, Nasdaq Composite Index, and Dow Jones Industrial Average have all fallen this week. For retail traders who have bought these speculative Stocks, the rise in US Treasury yields could have a serious negative impact on their investments.

Institutions have stated, "Rising yields may have changed the entire market's risk and return calculations, which could suppress speculation, and until today, yields were not actually a consideration for people regarding valuations and market performance. Frankly, I believe that those heavily investing in speculative Quantum Computing stocks are facing severe losses, and this impact is now spreading to other speculative stocks."

It can be confidently said that as of Wednesday's close, there are still significant bubbles in some areas of the US stock market. According to Klymochko, in his opinion, "the first stock of Cryptos"$MicroStrategy (MSTR.US)$has become a typical representative of excessive market speculation. This Software company has transformed itself into a tool for purchasing Bitcoin, and as Trump was elected, the price of Bitcoin soared to an all-time high, and its stock price followed suit.

The company's stock price has currently retreated from its high in November. However, MicroStrategy's stock price is still significantly above its net asset value, which is primarily composed of the value of its held Bitcoins.

Editor/rice