Meme’s stock has apparently taken over the entire stock market. If you don’t think so, you might agree that they have at least become the main talking points.
Every day we see more and more stocks joining the list. What started as a short squeeze game on GameStop (GME) – Get report and AMC Entertainment (AMC) – Get report a few months ago it has been transformed into a completely new ball game.
After these actions began to gain traction, Jim Cramer of TheStreet told readers that Beyond Meat (BYND) – Get report would be the next, and it was.
ContextLogic has been all over the map lately. At Monday’s low, the stock was trading at $ 7.52. At Wednesday’s high, the stock hit $ 15. In other words, the stock was within pennies of doubling in just a few days.
The action is beyond the wild and a growing list of traders are getting frustrated with this price action. Many say it is akin to a circus act, a disgrace in the markets.
ContextLogic was up more than 30% at one point on Wednesday, but the stock is now down about 5%. Here’s what to watch out for if you dare to trade a speculative numbness like this.
On Monday, ContextLogic flirted with a major breakdown below $ 7.50. That area has had strong support over the past month as the stock has come under considerable pressure. Note that this stock was above $ 30 earlier this year.
We’ve seen a painful bear market wash out growth stocks and SPACs, and it didn’t spare ContextLogic stocks.
However, on Tuesday we saw a massive rebound as the “meme trade” took over. ContextLogic shares topped the 10-day and 21-day moving averages. Despite flirting with a breakdown below $ 7.50, the stock quickly rose to $ 10 and closed north of $ 11.50.
Although ContextLogic was putting together a torrid rally, it ran into resistance from the 50-day moving average and resistance to the downtrend (blue line). At least temporarily.
Stocks opened higher on Wednesday, but again, they did so directly at resistance. This time, resistance was near the $ 15 mark. Since then, we have seen a pullback to the 50-day moving average.
Now investors are in a difficult situation. The action is shaky, but it still has “meme potential”.
If the stocks close below the 50-day moving average, the next step could be a test of the 10-day moving average. A close above 50 days keeps $ 15 at stake. Above $ 15.50 and the 21-week moving average is a possible upside target.