• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Stocks

The 'Meme' Strikes Back

The big question now is whether this is just some routine profit-taking after a very strong run, or is it the start of something much more severe.
By JAMES "REV SHARK" DEPORRE
Aug 19, 2022 | 04:37 PM EDT
Stocks quotes in this article: BBBY, CURV, AMC, APRN, GME

A much-anticipated market pullback finally started to build some momentum this week. The action was quite frothy on Tuesday afternoon with speculative traders looking to create short squeezes and overall market breadth very strong, but when the S&P 500 hit its 200-day simple moving average, a wave of selling hit, and the indexes closed well off their lows.

The selling picked up a little on Wednesday, but meme traders stayed extremely aggressive with names like Bed Bath & Beyond  (BBBY) , Torrid Holdings Inc. (CURV) , AMC Entertainment Holdings (AMC) , Blue Apron Holdings Inc.  (APRN) , GameStop (GME) , and others. Some of these stocks were going parabolic, but news that the CEO of GME had dumped his very large position in BBBY caught speculative traders by surprise and sent these names sharply lower.

The blow of cultish "meme" stocks spilled over into the crypto-sector on Thursday night, and suddenly the bulls that were worried about being underinvested and missing out were looking to lighten up their market exposure.

There was very broad selling on Friday, with breadth running around six to one negative. New lows expanded to around $140, and hot groups like growth and biotechnology were hit the hardest. Small caps, which led for much of the recent rally, gave back about 3% this week.

The big question now is whether this is just some routine profit-taking after a very strong run, or is it the start of something much more severe? There still are many market participants that believe this was just a very energetic bull market bounce, but there are plenty of bulls that believe that this move was far too powerful to just be a countertrend move.

The bad news is that this corrective action is occurring as we head into the weakest time of the year seasonally. Volume was quite light this week and will stay light next week. Much of the recent rally was driven by positioning and factors other than improved fundamentals or economic conditions. Some of the positioning issues have now dissipated and won't supply the same level of upside pressure in the weeks ahead.

At this point, the risk of deeper corrective action is quite high. However, this very strong rally left many stocks extended and with poor entry points, so that isn't a bad thing if you have some cash to work with.

Have a great weekend. I'll see you on Monday.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, DePorre had no position in any security mentioned.

TAGS: Investing | Stocks

More from Stocks

Bulls Might Be Smiling, but They Should Also Be Guarded

James "Rev Shark" DePorre
Jun 9, 2023 4:17 PM EDT

This week was good for the bulls, but we have no promises the action will continue, and narrow market still haven't left us.

LD Micro Offers Lots of Big Opportunities

Jim Collins
Jun 9, 2023 1:40 PM EDT

Fresh off my trip to Los Angeles, I'm psyched about what's happening in the microcap names.

3 High-Yield Dividend Aristocrats Yielding Over 5%

Bob Ciura
Jun 9, 2023 1:05 PM EDT

These 'outliers' are suitable for income investors that value reliability, but also want to benefit from high income yields at the same time.

Tesla Paves Path to Become 'OPEC' of Electric Vehicle Era

Stephen Guilfoyle
Jun 9, 2023 11:44 AM EDT

Let's look at the automaker's sudden shift forward and a roadmap for investors.

The Potential for a Market Correction Is Increasing

Guy Ortmann
Jun 9, 2023 10:00 AM EDT

Here's why we think a more defensive approach is appropriate now.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:45 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Bulls, Bears, and Market Predictions
  • 11:31 AM EDT CHRIS VERSACE

    We're Adding to a Position on Weakness

    Check out what's going on in the Action Alerts PLU...
  • 07:19 PM EDT CHRIS VERSACE

    AAP Podcast: This Company Is Not Going 'Solo'

    Listen in as I talk with the very diversified Solo...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login