Meme stock mania back: Your guide to the next big surge
Headlines in the U.S. stock markets have been captivated by the dramatic resurgence of meme stocks.
Notably, $GameStop(GME.US$ and $AMC Entertainment(AMC.US$ stole the spotlight, each soaring over 200% during the trading session on May 14, 2024, an astonishing feat that left investors agape.
Although these stocks have experienced some retracements, they still offer remarkable returns for those who can time their entry and exit effectively. Indeed, a well-timed exit is crucial and can be even more significant than entry in securing a successful investment.
To seize such opportunities in the future, we must first understand the events that transpired, identify the underlying drivers, and strategize on how to capitalize on similar occasions moving forward.
1. A Complete Guide to Meme Stock
Meme stocks are top-rated among retail investors on social media platforms like Reddit, StockTwits, Twitter, and Facebook.
These stocks often share some common themes:
-Weak company fundamentals
-Significant short interest from hedge funds
-Potential turnaround stories
Retail investors use social media to create a buzz around these companies, leading to surges in their stock prices and trading activity.
Here are some examples of famed meme stocks:
2. What has triggered the buying frenzy in meme stocks?
The 2024 meme stock buying frenzy can be largely attributed to Keith Gill, a key figure among U.S. retail investors. Known for his pivotal role in the GameStop rally of 2021, Gill leveraged the power of social media, specifically a Reddit forum, to unite retail traders and challenge Wall Street, resulting in a significant price surge for GameStop.
In a remarkable return to the social media stage three years later, Gill dropped hints of potential activity, reigniting a renewed rally in meme stocks. A shared characteristic among these stocks is their substantial short interest, making them prime targets for retail investors.
When short sellers have to buy back shares to cover their shorts, the demand for the stock could exceed the supply, driving up the price even higher. This situation is known as the "short squeeze".
To know more>>>What is the Short Squeeze?
3. How to grab the next opportunity?
Missed the latest investment wave? Don’t fret – the key is to focus on upcoming opportunities.
Remember, a sudden spike in stock prices often comes with heightened risk, particularly if you lack a deep understanding of the stock or a disciplined stop-loss strategy
Moomoo Learn is here to equip you with actionable trading strategies to help you spot and capitalize on future investment prospects.
2 tips to identify trends
1) Volume and Capital Trend
A sharp price rise is often accompanied by an increase in trading volume. If the trading volume can continue, it may provide further support for the stock price. On the contrary, if trading volume begins to decline significantly, the rise in stock prices may not be sustainable.
Using GME as an example, the chart indicates a downward trend in trading volume, which could signal a potential decrease in stock price as investors engage in short-term profit-taking. A closer look at the capital trends reveals a notable net outflow of funds on May 14th. This was followed by a pullback in the stock's price on May 15th.
However, there is a shift back to a notable net inflow alongside a reduction in short volume on May 15. This could suggest that although the frenzy may be cooling, there remains a level of investor interest that could sustain some market activity in the near term.
2) Fibonacci retracement
For stocks experiencing sharp price increases, Moomoo Learn suggests utilizing Fibonacci retracement as a proficient tool to determine potential support and resistance levels.
When the stock price declines and crosses below these Fibonacci levels, especially if it breaches the 61.8% level, this could be an indication that the stock's uptrend is losing its previous momentum.
Moomoo Learn has created a premium course that offers detailed explanations on how to effectively use Fibonacci retracement. (How to find the premium courses: Open moomoo> Discover> Learn, you'll find premium courses here)
4. How to identify potential meme stocks
Here are some key takeaways from the premium course - A Complete Guide to Meme Stocks.
Check Social Media Buzz
Meme stocks are all the rage on social media. Websites like SwaggyStocks and Reddit can help track trending stocks.
Watch Short Interest
Meme stocks are often heavily shorted. Look at the short-interest ratio, and if it's above 40%, it may mean a large portion of the investors are hoping the shares will go down in value.
An impressive feature offered by Moomoo is the short sales rankings, which help identify stocks that are heavily shorted.
Here's your complete video guide:
It's worth noting that meme stock prices are super volatile. If a stock is in the profit-taking stage, it might be overvalued, posing risks to new buyers.
5. How to dive in before the stock soars?
In the ever-changing landscape of the stock market, timing can be everything. Consider the scenario on May 14, when GME stock prices soared during pre-market hours, offering a prime opportunity for those engaged in the overnight session.
To fully leverage such instances, uninterrupted access to U.S. stock trading is critical. This proves particularly valuable for investors who are unable to monitor the market during conventional trading hours.
With the flexibility of 24/5 trading, you're equipped to swiftly respond to emerging opportunities, unbounded by the typical market schedule.
Here's your video guide about 24/5 US stock trading on moomoo.
Hope you find these helpful and always consult your investment advisor to make a decision.
Follow us to learn more trading tips and how to trade with moooo features.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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102486316 : No movement for pltr at all
White_Shadow : pltr a mem???
Matt the Man : and it will crash as fast as it went up
Moomoo LearnOP Matt the Man:
yes, so it's very important to get in early and exit properly if we determine to engage in
Moomoo LearnOP 102486316: The short volume and short interest data show it won't be the premium trarget
104220663 : hello
151891691 :
151891691 :
creamyall : fud
151449716 : what is "meme stocks" ?