Barclays analysts have raised concerns about potential bubble signs in the stock market since the U.S. presidential election. This is driven by the increased activity and speculation among retail investors. The study notes that the surge in cryptocurrencies post-election has spread to other parts of the stock market, influencing stocks popular with retail investors, such as NVIDIA (NVDA, Financial), Tesla (TSLA), and MicroStrategy (MSTR).
In the past month, there has been a notable increase in the use of leveraged exchange-traded products (ETPs), which has intensified rebalancing fund flows. Barclays also highlights a sharp rise in options trading, with U.S. stock options trading volume climbing by 50% to $459 billion in the first week after the election. Although it subsequently decreased, it remains 20% higher than before the election.
The pricing of options on non-profitable stocks shows signs of reverse skewness, which could be a potential indicator of a bubble.
