Meme trading cooled off quickly this morning as names like AMC Entertainment (AMC) see substantial downside volatility. On Wednesday, there was a slew of smaller stocks making moves of 10% or more. So far this morning, we only have about 20 or so, including Lordstown Motors (RIDE) , Tilray (TLRY) , and Conn's (CONN) . One of the few meme names with follow-through is BlackBerry (BB) .
The broader market is struggling with some concerns again about inflation and the possibility of a less dovish Fed. That is preventing the rotational action that typically occurs when we see an abrupt shift in speculative trading.
Breadth is running poor with around 1750 gainers to 5900 losers. New 12-month highs have dropped to around 170. Although this is weak action, there are plenty of charts that have bounced recently that need to pull back to develop better technical conditions. This is not the same sort of selling that occurred when the topping action in February occurred.
One name on my radar this morning is Xeris Pharmaceuticals (XERS) that was identified by ZeroHedge as having a large short position. I believe the company is solid fundamentally and is now in a position to benefit from a short squeeze.
It is likely a positive for the broad market if the meme trading loses some of its appeal. It will always exist to some degree, but when it reaches levels as it did on Wednesday it hurts the rest of the market as it creates an atmosphere of a casino.
We have some messy action out there currently, but I am optimistic about some of the chart patterns I see developing.