Are meme stocks GME and AMC making a comeback?
Gamestop (GME) chairman Ryan Cohen bought an additional 100,000 shares of the company recently to bring his total holdings to about 12%. As a result, the share price of GME has jumped nearly 50% so far this week, from an opening print of 90.00 to this week’s high, thus far, of 150.93! As has been the case, meme stock AMC followed GME higher. Recently, to the surprise of many, AMC Entertainment bought 22% of Hycroft Mining, a gold mine company. (And if you are a fan, AMC announced a deal with WWE that Wrestlemania will be live in AMC theaters on April 2nd and 3rd!). AMC is currently up nearly 30% for the week.
What is GameStop and why did it trigger a short squeeze in 2021?
On a daily timeframe, GME has been moving lower since making all-time highs in January 2021 after traders at Wallstreetbets on Reddit squeezed the stock to 483.00. Price retraced nearly 100% of the move higher, making a low of 38.50 by the week of February 19th, 2021! Since then, the stock bounced to 344.46 and has been trading in a descending triangle, making lower highs along the way. Last week, price reached its lowest level in a year at 77.58 before bouncing aggressively this week.
Source: Tradingview, Stone X
Trade GME now: Login or Open a new account!
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
On a 240-minute chart price has retraced to the 38.2% Fibonacci level from the highs of November 23rd, 2021 to the low of March 14th, near 144.95. Horizontal resistance and the 50% retracement from the same timeframe are the next resistance level between 165.42 and 166.70. The 61.8% Fibonacci retracement level and the downward trendline of the long-term triangle sits above there near 185.55. If GME moves lower, support at the gap from March 22nd is at 125.60. Below there, price can fall back to near-term horizontal support at 99.22, then the March 14th low at 77.58.
Source: Tradingview, Stone X
The daily chart of AMC looks very similar to that of GME as price made a move from 13.61 to 72.62 in a matter of weeks. However, the run-up in price didn’t occur until May. In addition, after the move higher, AMC didn’t retrace the entire move as did GME. AMC immediately began making lower lows and lower highs and reached its lowest point since the run-up on March 14th at 12.90. However, with the move higher in GME, AMC moved right along with it. Notice the correlation coefficient at the bottom of the chart is +0.96. A correlation coefficient of +1.00 is a perfect correlation, meaning that the 2 stock prices move in the same direction 100% of the time. +0.96 is pretty close.
Source: Tradingview, Stone X
Trade AMC now: Login or Open a new account!
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
On a 240-minute chart, the correlation coefficient is just as strong as on the daily timeframe. First resistance is at the 38.2% Fibonacci retracement from the highs of November 8th, 2021 to the low of March 14th at 25.53. Just above there is confluence of horizontal resistance and the downward sloping trendline of the long-term triangle near 26.83, then the 50% retracement from the recently mentioned timeframe at 29.43. Horizontal support sits below at 16.36, then the March 14th lows at 12.90.
Source: Tradingview, Stone X
Meme stocks GME and AMC have been on the move once again. In the grand scheme of things, the 2 stock price moves have been relatively small, as they haven’t even retraced to the 38.2% Fibonacci level from their all-time highs. However, the move was enough for them to get noticed!
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.
ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.
City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.
The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.
The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
© City Index 2024