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8/19/22 The Next Great Meme Stock

News:

Thursday was green across the board on Wall Street.

The major three indexes posted modest gains between 0.1 – 0.2% each.

Small caps outperformed, pushing the Russell 2000 higher with a gain of 0.7%.

Looking for a catalyst? Here’s what we know…

  • Markets have absorbed the recent announcement from the Fed.
  • Earnings season is rewarding winners more than it’s punishing losers.

Sector Roundup

Energy (XLE) remains the most volatile sector, with a gain of 2.7% on Thursday. It was 1 of 7 sectors to end the day in positive territory. 

The other winners gained 0.5% or less.

At the bottom, Real Estate (XLRE) and Healthcare (XLV) fell 0.7% and 0.4%, respectively.

Meme Crash

The party is over for Bed Bath & Beyond (BBBY^). The stock fell 20% intraday and another 40% after hours.

Photo of Bed Bath and Beyond store with empty parking lot
Image from Ocean County News

The stock enjoyed a 560% run over the course of 15 trading days before the crash.

Yesterday we reported that activist investor Ryan Cohen filed plans to sell his entire stack. 

Today we can confirm that he’s sold it all, banking a cool 56% gain for a $68 million profit in just over five months.

But another celebrity stock picker has emerged…

The Rich Get Richer

The Financial Times reported on a 20-year-old college student who turned $27 million from “friends and family” into a $110 million payday with a bet on BBBY.

The trade lasted just 24 calendar days, according to filings.

It turns out this rich wiz kid stock picker has another favorite investment…

Trippy image of oil and water
Image by Anni Roenkae from Pexels

According to a letter he sent to MindMed (MNMD^) executives, he and his fellow investors own “5.6% of the total outstanding shares” of the psychedelic drug maker.

  • Shares of the stock nearly doubled intraday and closed the day with an impressive gain of 36%.
  • We bought a stake and wrote a bullish case for MNMD in March of this year.
  • At writing, we still maintain our full position size. Our first profit target is $2.15.

Technicals:

The S&P 500 has enjoyed an impressive rally over the past month, gaining 13% since July 14.

It broke through a critical resistance level last week … We are still expecting a retest of this level.

SPY chart with support level marked near $420
SPY Daily Candles – Chart via thinkorswim

A positive close today would mark the fifth straight week of gains for the S&P 500.

No change in our other indicators…

  • The VIX is bullish
  • The put-to-call ratio is neutral

Timing:

Today is Friday, and the August options expiration … could drive some extra volume near the close.

Next week is the final full week of trading in August.

September is traditionally the weakest month of stocks. We will have a monthly outlook for you before the 1st.

Watchlist:

*Low Float
^Open Position

*GSUN support at $50
*AEY support at $2
*FPAY resistance at $3
MAXN support at $20
BCAB support at $10
COGT support at $15
SIGA support at $22.50
COCO support at $14
RYTM support at $23
CSIQ support at $43
TCDA support at $12, resistance at $14
VUZI support at $9
VERU support at $17.50
INFI support at $1.30
CPRX on watch

Secondary watchlist … +100m float

GEO^ support at $8
TCRT resistance at $2
BFLY resistance at $8.75
ABCL support at $12

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