A tough market as the spotlight shines on inflation, meme mania rally faded

Wall Street is in for a choppy market until Thursday’s inflation report.  Global bond yields are falling, stocks are mixed, the dollar is up slightly, bitcoin has a flesh wound, and meme stock mania is fizzling.  The conviction behind today’s market moves is minimal at best.

This is an attractive trading day-trading environment for meme stock mania, but rather difficult for your typical swing or long-term investor. US stocks have largely been stuck in a range since mid-April and don’t seem likely to be breaking out anytime soon. Investors want to see how hot pricing pressures get and how much downside in equities will occur once the Fed’s taper tantrum begins. A repeat of the 2013 taper tantrum seems unlikely as the economy will still be roaring back from the pandemic and likely benefiting from infrastructure spending. US stocks still seem destined to finish the year much higher from where we are now, but markets already appear to be in summer doldrum mode. To move the needle, Wall Street needs to see either a couple of more super-hot inflation reports or well over 2 million jobs added to the economy over the summer months.

Meme
Active day traders have been loving the volatility, liquidity, and relentless retail support.  Even after a total of seven AMC insiders have sold a portion of their stake since May 28th, the stock continues to attract buyers. CEO Adam Aron remains committed to owning the stock and has not sold any shares.

There is just too much liquidity in AMC and some other meme stocks that it makes it impossible for money managers and hedge funds to pass up this opportunity. The AMC apes are having their way, but this latest frenzy will eventually wear off.  Today’s meme stock rally was short-lived.

Today, GameStop and Wendy’s are in focus.  Wendy’s joined meme stock mania as social media forums look to widen their coverage of stocks.  Wendy’s has as an easy fundamental backdrop, the company just raised guidance and should see strong momentum as the country continues to reopen.

GameStop is getting pumped up ahead of tomorrow’s earnings and hopes of some more details with their new NFT platform.

Meme stock mania part two is in its third week and if it follows the pattern we saw earlier in the year, it could calm down by the end of next week.  This time, however, could be different, if US stocks remain anchored.

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