Meme stocks seemingly have taken over the entire stock market. If you don’t believe that perhaps you’d agree that at the very least they have become main talking points.
Each day we’re seeing more and more stocks join the list. What started off as a short-squeeze play on GameStop and AMC Entertainment a few months ago has morphed into a whole new ballgame.
But since then, dozens of others have joined the list, including BlackBerry , Clean Energy and ContextLogic .
ContextLogic has been all over the map lately. At Monday’s low, the stock was trading at $7.52. At Wednesday’s high, shares hit $15. In other words, shares were a few pennies away from doubling in just a few days.
The action is beyond wild and a growing list of traders are getting frustrated with this price action. Many say it’s akin to a circus act – an embarrassment within the markets.
ContextLogic was up more than 30% at one point Wednesday, but shares are now down about 5%. Here’s what to watch for if you dare to trade a speculative doozy like this.
On Monday, ContextLogic flirted with a major breakdown below $7.50. That area has been strong support over the last month, as the stock has been under considerable pressure. Keep in mind, this stock was north of $30 earlier this year.
We’ve seen a painful bear market sweep through growth stocks and SPACs, and it didn’t spare ContextLogic stock.
However, on Tuesday we saw a massive spike as the “meme trade” took over. Shares of ContextLogic ripped through the 10-day and 21-day moving averages. Despite flirting with a breakdown below $7.50, shares quickly powered through $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 downtrend resistance (blue line). At least, temporarily.
Shares gapped higher on Wednesday, but again, did so right into resistance. This time, resistance was near the $15 mark. We’ve since seen a fade back to the 50-day moving average.
Now investors are in a tough spot. The stock is wobbly, but still has “meme potential.”
If shares close below the 50-day moving average, a test of the 10-day moving average could be next. A close above the 50-day keeps $15 in play. Above $15.50 and the 21-week moving average is a possible upside target.
This article was originally published by TheStreet.