MW Meme-stock 'animal spirits' are overshadowing inflation worries, at least for now
By James Rogers
'Animal spirits are alive and well, with traders overlooking concerning inflation data to take advantage of the momentum while it's intact,' says Tom Bruni of Stocktwits, the social platform for investors and traders
The meme-stock rally that sent shares of GameStop Corp. and AMC Entertainment Holdings Inc. surging this week has briefly overshadowed inflation in traders' minds, according to Stocktwits, the social platform for investors and traders.
"Animal spirits are alive and well, with traders overlooking concerning inflation data to take advantage of the momentum while it's intact," Tom Bruni, lead writer of Stocktwits' Daily Rip & Markets newsletter, wrote Tuesday.
Related: Roaring Kitty rides again: GameStop's meme-stock rally shows 'gamification' may be back
The GameStop $(GME)$ meme rally - fueled by the return of influential investor and analyst Keith Gill to social media - sent the company's shares skyrocketing Monday, ending that day's session up 74.4%. The stock climbed 60.1% Tuesday.
AMC $(AMC)$ shares ended Monday's session up 78.4% and closed up 32% on Tuesday.
Other heavily shorted stocks - including SunPower Corp. $(SPWR)$, Maxeon Solar Technologies Ltd. (MAXN), MicroCloud Hologram Inc. (HOLO), Children's Place Inc. $(PLCE)$, Beyond Meat Inc. $(BYND)$, Spirit Airlines Inc. $(SAVE.AU)$ and Plug Power Inc. $(PLUG)$ - have also been swept up in the latest meme-stock wave.
Related: GameStop's meme rally will likely be a series of 'descending spikes,' says market-cycles expert
"Time will tell how this emerging saga plays out," added Bruni. "But for now, the U.S. stock market indexes are hitting new all-time highs, and the animal spirits are alive and well. As long as the momentum continues, traders will look to capitalize on it and take advantage of the latest 'meme stock' market move."
GameStop shares were down 11.9% in premarket trades Wednesday. AMC's stock was down 11%.
Experts have been closely monitoring the latest meme rally. The GameStop rally will likely play out as a series of "descending spikes" in the company's share price, according to market cycles expert Dr. Richard Smith.
"All of the GameStop rallies have been pretty spiky," Smith, the executive director and chairman of the Foundation for the Study of Cycles, told MarketWatch, pointing to the "descending spikes" that characterized its performance in the meme stock frenzy three years ago. "That's how it played out in 2021," he added.
Related: GameStop's meme-stock rally is a 'short-term baseless frenzy,' brokerage CEO says
Dan Raju the CEO of cloud-based financial-services provider Tradier, described the GameStop meme rally as a "short-term baseless frenzy" in an interview with MarketWatch Tuesday. "It's not based on any fundamentals. It's based on social resonance around a few securities," he added.
Earlier this week, Cory Mitchell, an analyst at investing information website Trading.biz, warned investors to beware the end of the GameStop "buying frenzy."
-James Rogers
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May 15, 2024 09:05 ET (13:05 GMT)
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