GameStop, AMC Entertainment Continue Surging Amid Meme Stock Revival

UPDATE—May 14, 2024: This article has been updated to include share price information from early trading Tuesday.

Pandemic-era meme stocks GameStop (GME) and AMC Entertainment (AMC) surged again in early trading Tuesday after both gained more than 70% on Monday, sparking memories of the social media-fueled meme stock frenzy that swept Wall Street in January 2021.

During that crazy month, brick-and-mortar video game retailer GameStop saw its shares soar seventeen-fold, while shares in cinema chain operator AMC jumped six-fold, causing significant losses for hedge funds that held short positions in either stock.

The latest rally—apparently triggered by key meme online persona “Roaring Kitty” making his first post on X in three years—caused losses nearing $1 billion for GameStop short sellers, according to data from S3 Partners cited by CNBC. That could fuel further gains in the days ahead driven by a short squeeze, an event where investors rush to cover their positions, putting additional upward pressure on prices.

Below, we take a closer look at the charts of both meme stocks and point out important levels to watch in upcoming trading sessions.

GameStop

Taking a look at the weekly chart, the GameStop share price has remained entrenched in a descending channel since topping out in January 2021 at the height of the social media-fueled meme stock rally. In recent weeks, the shares have moved up towards the pattern’s upper trendline that closely aligns with the 50-day moving average, indicating growing bullish sentiment. Moreover, Monday’s 74% gap higher opens the door for follow-through buying, given the move occurred on above average volume and that the price closed above the closely watched 200-day moving average.

Looking ahead, investors should keep an eye on an area between $37.50 and $63.50, a region on the chart where the price may encounter selling pressure from a zone of resistance from prior price action. A breakout above this level could potentially lead to a retest of the stock’s all-time high (ATH) at $120.75.

After Monday’s big gain, the stock was up another 63% to $49.58 about 15 minutes after Tuesday’s opening bell

AMC Entertainment

Also looking at the weekly chart, AMC shares have mostly traded within a descending channel since climbing to over $390 in June 2021 apart from a bull trap breakout over the summer months last year. Interestingly, volume in the stock has significantly increased since that time while the price has continued to plumb new record lows. More recently, buyers have accumulated shares near the channel’s lower trendline, potentially as word of an upcoming meme rally gathered momentum on social media platforms. 

In coming days, investors should monitor the $13 level, an area on the charts where traders may book profits near a confluence of resistance from the 50-day moving average and a horizontal line extending back to the pandemic-era March 2020 low.

After rising 78% Monday, AMC shares gained another 80% to $9.35 in early trading Tuesday.

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As of the date this article was written, the author does not own any of the above securities.