When the meme stocks start to run, the market can seem to get a little crazy as other highly shorted names seem to follow the moves. Over the last couple days traders saw crazy swings in GME and AMC both running over 100% while some other stocks seemed to have followed with similar beaten down charts since their 2021 highs. Here are some (more) of my favorite setups for a meme stock sympathy trade:
HTZ
Shares outstanding: 305.81M
Free float: 297.4M
Market Cap: $1.83B
Short Interest: 26.89%
I met with a trader friend over the weekend for a beer and he passed along the idea for a Hertz trade (which: what a great friend–if the stock goes up, of course!). The new CEO took a $1 million bet on the “[b]attered [s]tock” according to Barron’s. Always a bullish signal when that happens, especially when the stock is conveniently sitting at a dip with a reversal signal. The chart today made a bigger move after Monday 5/13’s mini run, but was rejected below the 50-day MA almost to a T at $6.56. Tomorrow 5/15 I would be looking for this level to be broken and a close above. It ran a lot from the 10DMA $5, so I would remain bullish above this level and ideally would bounce a bit higher $5.50. If it can pass and close above $6.56, the next main level is $6.92 which served as a major support from about February-April. So a swing trade idea would be scaling into $7.50 calls expiring 6/21 with a $5 put hedge. According to Bloomberg Options Volume Increase on the 5DMA, Hertz was one of the top options volume increase stocks. I am leaning bullish.
CHPT
Shares outstanding: 423.36M
Free float: 374.18M
Market Cap: $783.22M
Short Interest: 27.29%
Chargepoint was one of the most popular EV stocks in 2021 hitting as high as $49.48 ATH. And while the balance sheet isn’t the best and the stock is almost 1/3 short, there is potential on the technical side for a bigger move. The 10DMA crossed over today 5/14 which has me leaning bullish; it also finally broke above the 50DMA the last 7 trading sessions and today finally closed a little gap above. While that gap could fill back down, I would be looking for a bounce above the 10DMA $1.66. Today’s resistance $2.06 was rejected but if tomorrow it can close above there (and even still above today’s main support $1.80s), I would be looking for $2.40-2.70-3.13; $3.13 is the end of 2023 resistance from 12/15. They did burn a lot of cash recently, so if the stock does make a big move there is potential for an offering which can happen after market hours. A swing idea would be 6/21 $2 calls.
DJT
Shares outstanding: 136.7M
Free float: 40.03M
Market Cap: $7.30B
Short Interest: 84.61%
DJT got my attention again when I saw a video of Donald Trump saying the shorts were doubling down; knowing this stock was a low float, I had a feeling retail traders would pile into DJT based on the short covering potential alone (85% short!). Not to mention previously this was trading above $100, and when it rips, it rips! In mid-April it seemed to have bottomed right around the 200DMA at $22ish where it continued to run until $55 where it topped. Now support has been found above $44ish, and has yet to break that main $55 top. If it does happen to surpass this level, I am very, very bullish to $61-70. The bid and the ask is pretty wide for the OTM calls, but the $55-60 calls have potential for 6/21 with a $50-45 put hedge to maybe revisit that support but I am team $55+ bullish.
LCID
Shares outstanding: 2.31B
Free float: 2.26B
Market Cap: $7.20B
Short Interest: 31.68%
Everybody loves to hate on Lucid; the cars are absolutely gorgeous (I have even had the pleasure of sitting inside one at the showroom), but they unfortunately reported a loss for Q1 2024. However things are not all bad: their manufacturing plant has expanded recently in the beginning of the year as it prepares for its future vehicles. So, while you gotta spend money to make money, the future could be brighter than the balance sheet says if you’re a believer in the EV company. As far as the chart is concerned, it is almost identical to Chargepoint on the daily closing significantly above the 50DMA with a bonus 10DMA crossover as of 5/13. If it plays out, it could finally break the $3s to see $4-5. Ideally it can close over that $3.40 hump. If it closes above there I am bullish. For a swing you could try 6/21 $3 or $3.50 calls and hedge with $3 puts.
DM
Shares outstanding: 330.4M
Free float: 253.59M
Market Cap: $219.81M
Short Interest: 27.19%
DM was one of my favorite trades in the beginning of the year but failed to continue the breakout after an underwhelming earnings report (which of course this was one trade I had a more fundamental thesis VS technical). It also broke a main support recently which had me super bearish trading below the 50 + 10DMA. Now it’s showing signs of finally retreating back to the 10DMA $.75. If it can close above there and pass $.80, bulls could be back in business, in addition to the 27% short interest. I am leaning back bullish after this minor correction considering it did run $.40s-1.18.
NIO
Shares outstanding: 2.09B
Free float: 1.93B
Market Cap: $12.08B
Short Interest: 14.14%
Nio, Nio, Nio—how you never fail to break my heart and chart predictions time after time. But something changed my mind and flipped me bullish on 5/1 with that green vol bar and roughly 150M shares traded finally breaking above the 50DMA. If it can close above the main resistance the last 2 months a little above $6-6.25, I am very bullish to see back above the 200DMA $7.53. Looking at 6/21 $6-7 calls.