Without a doubt, yesterday’s headlines were dominated by the surge higher in meme stocks.
After months of decreased volume and a steady trend lower, meme stocks experienced a rapid and violent move higher yesterday into the close.
GameStop surged 28% on Tuesday on no material news event. The action in GME lead to a resurgence for other meme stocks.
For GME, yesterday marked its highest close since June 30th and its highest trading volume since June 11th.
Other meme stocks, such as AMC, CLOV, BB, and WISH, experienced similar moves.
After a long hiatus, GME re-emerged yesterday as the most discussed stock on Reddit’s r/WallStreetBets forum.
From Apewisdom, AMC, BB, CLOV, and WISH all jumped higher in the rankings.
So, are meme stocks officially back?
GME was up 27.53% yesterday on no fundamentally changing news. After almost three months of slow and steady selling, the stock remains up 1016% year to date and 4218% over a year.
The short float currently stands at 13.17% in GME, which is considerably less than at the beginning of the year. GME has a float of 58.19m shares, which means that 7.97m shares of the float are short.
Yesterday the stock had its best day in five months and traded more than ten times the amount typically traded over the past five sessions.
If the sudden interest and attention surrounding GME is sustained, and the stock can hold over $200, then a move towards $250 could be possible. $250 is resistance to the downward trendline.
As the stock trades at elevated levels, the short interest will likely continue to rise. If the stock continues to trade higher, then another short squeeze might be possible.
AMC finished up second highest yesterday, among the meme stocks, up 20.34% on the day. Like GME, after one and a half months of steady selling in the name, the stock remains up 718% over a year and 1987% year to date.
The short interest is currently 19.14% which means that 87m shares are presently short, as the float of AMC is 448.56m.
The stock jumped seven spots yesterday to finish in second place for mentions on the WSB Reddit forum. It was the top trending stock on Stocktwits yesterday, along with the phrase ‘’#AMCSqueezing’’ trending on Twitter.
As with GME, if AMC can firmly hold above yesterday’s breakout levels, then the short interest will likely rise, along with the stock.
In the near term, if the stock can continue to base over the previous resistance of $40 and then proceed to hold up in the high $40s, the potential for a squeeze over $50 could exist.
Significant resistance in the stock exists between $50 and $60, as this is where the stock failed to hold above last time, and supply hit the tape.
Third on the list, with the most mentions on the WSB Reddit forum, is BlackBerry.
BB closed the day up 9.47% yesterday. The stock is up 67.42% year to date and 131.73% over a year.
BB has a smaller short interest than GME and AMC, with just 8.42% of its 557.87m share float short. This means that 46.97m shares are short BB.
For BB to potentially break the downward trend, it will be vital for the top meme stocks like AMC and GME to continue to hold up. In the future, $11 will be a crucial level of support for BB.
Bulls will want to see $11 act as support in the stock and increase the short interest.
The Bottom Line
So, are meme stocks back?
Quite frankly, I do not believe meme stocks ever left. Year-to-date meme stocks are still up an impressive amount!
The real question is, can meme stocks continue to rise? As I mentioned above, if the short interest and the media attention in the names continue to grow, I believe these stocks might have what it takes for another squeeze higher.