Déjà Vu or Something New? The OPEN Rally and the Echoes of 2020
By Brandon Chapman, CMT

It’s easy to get swept up in the excitement when a stock like Opendoor (OPEN) surges 90% in a single day… only to give much of it back just as quickly. That kind of move fuels euphoria, making it tempting to believe, “This time is different.” But is it truly an original moment, or just a replay of 2020?

Remember the GameStop (GME) saga? The idea was that GME would “stick it to the man” and keep climbing forever. Many of those chasing the squeeze were new investors—armed with stimulus checks and ready to let it ride. It was less about fundamentals and more about momentum and hope.

This kind of “original thinking” can be dangerous. When people start crafting narratives to justify a company being worth four times what it was just a week earlier, it’s often just speculation dressed up as conviction. More often than not, the reality doesn’t support the hype.

There are key differences now compared to 2020. Most notably, there’s no flood of stimulus checks and no ultra-accommodative Fed policy to prop things up. Today’s rallies aren’t riding a wave of easy money, they’re fighting against policy headwinds.

But some similarities remain, especially in the use of margin. Leverage is high, and that creates a risky dynamic: a buy-at-market and sell-at-market mindset that feeds on volatility.

If today’s action in OPEN is any indication, the combination of leverage and volatility puts traders in a very fragile position.

But, as we’ll see in a second, it’s possible to thread this needle in style and trade profitably here. Let’s take a look…