Brian Swint
The surge in interest in meme stocks such as GameStop and AMC Entertainment Holdings this week didn't lead to a corresponding increase in retail trading volumes.
Retail investors are individuals buying shares, rather than big institutions such as investment banks. Overall, they didn't pour more money into the market than usual, even as both GameStop and AMC more than doubled in value.
Retail traders bought a net $2.8 billion in cash equities in the past week, in line with the 12 month average, J.P. Morgan's Retail Radar report showed Thursday. Most of that went into exchange-traded funds tracking the S&P 500 or technology stocks, though there was also interest in emerging markets ETFs and the Euro Stoxx 50, the report said.
Predictably, there was a spike in volumes for GameStop and AMC, as well as for other associated stocks such as SunPower. Retail participation in GameStop reached 30% on Monday, a three-year high. It happened a day after the social media user Roaring Kitty posted for the first time in years. That sparked a massive rally Monday and Tuesday, but shares have been falling back the past two days.
A change in volumes of retail trading can give insight into market sentiment -- a sudden increase in trading could indicate that the market has momentum.
The fact that the new meme frenzy didn't have much effect on overall retail-trading volumes suggest that it isn't an indicator of bullishness. It doesn't necessarily mean people are more pessimistic, either. But it underscores that the meme surge is probably more of a blip rather than a sustained advance for stocks.
Write to Brian Swint at brian.swint@barrons.com
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(END) Dow Jones Newswires
May 16, 2024 11:08 ET (15:08 GMT)
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