I did a video a week ago talking about the trading in shares of Magic Empire Global (NASDAQ: MEGL). It’s an obscure Hong Kong based stock that IPO’d on the US Nasdaq two weeks ago. The company makes very little money and yet sports a massive market cap; so it has a P/E ratio over 1700. Yeah, you read that right. When I did my video last week what I talked about was how famed trader Michael Burry tweeted and made fun of it.
Well, yesterday the stock went up over 115% and became the third most traded stock among Fidelity account holders.
Notice at the top of the list is BBBY and not far after MEGL is AMC!
Yep, meme stock trading continues to be in play.
That’s what this rally is about.
It’s not about new leadership emerging inside the stock market ahead of coming new growth in a sector, but about small traders jumping on the fast moving meme play of the day.
However, take a look at the chart of MEGL.
While MEGL went up over 100% and attracted all of these traders Monday, it is down huge from its high of just two weeks ago when it opened up over $220 a share!
A crash of under $10 from over $220 in days is a huge crash, so this is more of a bounce than anything.
This is not people buying a stock making new highs, thinking that they are getting into a real company that is going to go up for years, but people aiming for short-term gains in this market.
That’s what is going on in the market now.
The rally has encouraged people not to buy to invest, but to try to make a quick buck in anything that moves.
It’s remarkable when such stocks as this became the third most traded stock among all of Fidelity’s customers!
I talked about this meme stock trading in the video I posted Monday.
In case you missed it you can watch it here:
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-Mike
