Meme stocks are back with a vengeance. Bed Bath & Beyond (BBBY) is up 75% on the day, and GameStop (GME) is also exploding higher. What does that mean?
It’s important to note this is not a short squeeze, but rather as a liquidity squeeze. In the thin liquidity of mid-August, demand for BBBY managed to propel the price up two-fold in a matter of days.
It’s fair to ask if this rally marks the end of the bear market.
While we can conclude that the conditions are not in place yet, we also note that bull phases during bear markets can be very sharp.
The comeback of meme stocks is significant insofar as it shows that - even when monetary conditions normalize - retail’s animal spirits are in vogue.
In conclusion, market liquidity conditions have been part of what drove prices higher. One should be careful about meme stocks when markets become more liquid again in September.
Idea Spotlight
Volatility indicators for ETSY:NASDAQ dropped to 54.62 and historically, this led to a median increase in price of 15.22% over the following three months. TOGGLE analyzed 8 similar occasions in the past to produce the median projection and this insight received 5 out of 8 stars in our quality assessment.
In other news, Amazon accused the U.S. Federal Trade Commission of harassing its founder and CEO, as it conducts an antitrust probe of the e-commerce giant’s business practices.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.