Meme Stocks Come Back for an Encore

I have commented numerous times over the last month about what I view as all that speculation in the market. It showed up first in the way of meme stocks and then morphed into massive trading in penny stocks.

I thought it had calmed down and drifted away when the likes of Game Stop and AMC were no longer daily names on the Active List. That changed on Monday as they reappeared. What is interesting though is that volume on Nasdaq was the lowest since May 13th, when all this nonsense first started.

More Gamestop:

Even though these meme stocks came back for an encore presentation, and they were the two most active stocks, the overall volume drifted off. Back in mid-May we saw Nasdaq trade seven or eight-billion shares each day with one day topping twelve billion shares, the most in history. Monday, Nasdaq traded a much more normalized 5.4 billion shares. That’s not quite back to pre-meme levels, but close. Prior to this recent meme-mania, Nasdaq was regularly trading between 4.5 and 5-billion shares daily.

I figure it is like anything else, on the second time, the excitement dies down.

However, I do want to share one other statistic on this with you. The Financial Times reported that seven of the top ten most active stocks in May were penny stocks. Now we already knew it was craziness but I did not realize it was that crazy.

As for Monday’s market, if you were excited in the morning because stocks were up and then depressed in the early afternoon because stocks were down and then confused by the end of the day because stocks were sort of flat, then welcome to the world of chop.

We’re still not overbought but we’re no longer oversold. But we are back on uptrend line watch. These lines, while not as long as they were back in March, have begun to appear on a lot of charts.

The Russell 2000 has it. I drew this in for you last week but we have barely lifted off of it.

The SOX has it. Yes, I know, can you believe the Beloved SOX is trading so close to an uptrend line? It is.

The Bank Index has a different line, not as short term, and it has not been tagged yet. I drew this line in for you about a month ago, noting that I wouldn’t be surprised if the Bank Index came down to tag it since we know the uptrend in the banks is filled with fits and starts.

Finally the S&P has it too, although it is quite far away from the line, having rallied one hundred handles in the final hour on Friday.

Last week we discussed that the bulls had all backed off but there was not a commensurate rise in bears. If any of these lines start breaking then I believe we will see a pick up in bears.