GameStop surges 27% to lead meme stock rally in otherwise boring market

Meme Stocks Post Best Day Since June as GameStop, AMC Surge

Meme stock king GameStop rallied 27% on Tuesday as some retail investors came back in full force despite an otherwise quiet market.

The video game retailer surged as much as 36.5% to $225 apiece in heavy trading volume. More than 14 million shares changed hands, seven times more than its 30-day average, according to FactSet.

It’s been tough sledding for GameStop shareholders this summer, with the stock languishing between $140-200/share for many weeks. Things perked up a bit today, as the stock topped it’s highest price level since July 1, 2021 today. 

GameStop (GME) shares hit an intraday trading high of $225/share earlier today, and while it appears there may be some profit-taking by traders going into the close, the stock is having its best day of the summer. Many traders, investors, and onlookers are trying to explain today’s share price move, and while there are some fundamental reasons underpinning the move, but the stock is also in a very interesting place on the chart. 

While the shares have pulled back a bit in the final hour of trading today, there is a key buy signal level to pay attention to on the GameStop monthly chart. A breakout above last month’s high of $216.83/share triggers an outside month up buy signal. This momentum could continue into September if the stock breaks out above August’s high point. Right now, there are only a few days left in August, but traders will now have a new fence post to watch for another signal of continued momentum. 

Retail traders have sent shares of once-abandoned stocks like AMC soaring since January when fee-free trading apps like those offered from Robinhood Markets Inc. became household names. The gains made AMC and GameStop the largest companies in the Russell 2000 earlier in the year before GameStop graduated to the Russell 1000 Index.

The strength spread to other retail favorites like Naked Brand Group and Clover Health Investments Corp., which at one point soared more than 10% each. Robinhood Markets, which itself has become a meme stock, rallied 9% Tuesday.

Options trading for both AMC and GameStop stood out compared to recent trends. AMC call options with a $40 and $50 strike price were among Tuesday’s most active for equity-linked derivatives, Bloomberg data show.

“Short interest seems to be a non-factor for both AMC and GameStop, so this move is just retail jumping back into call options,” Moya said.

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