VirTra Inc (VTSI)

[Schneidku40]

The micro cap trade is so crazy right now. I've been running screeners every day for momentum charts and I find 300 names every day. A month ago I just decided to see what it would do and put $200 into 5 of these stocks. When i sold a stock i used the proceeds to buy the next one, just kept rolling it over. That little "fund" is up 55% in that month. That's not normal. Sure wish I had started with more money in that venture though, ha.

Here's a chart of IWC, a micro cap ETF. It's up 60% in 3 months. That's not normal.



Margin debt is at an all time high and it's shot straight up about 90% above where it was in March (Currently ~ 20% higher than the previous high in early 2018). That's not overly surprising given this interest rate environment, but what all that debt leads to is margin calls when things go south. It is my belief that the ~4% market selloff two weeks ago was due to the GME, etc. debacle. When those stocks started dropping that week, people long those names got margin calls and were forced to sell other holdings. That could happen at any time again right now. With all this hype amongst so many micro caps, and with how much they move in a day (Often 2x greater than the big S&P stocks), a fun for the exits of micro caps could lead to a big selloff event.

That's my big risk theory anyway. It may or may not happen, or anytime soon. But I'm watching that IWC chart very closely.