There are further signs that this week's meme stock frenzy is fading away.$GameStop (GME.US)$und$AMC Entertainment (AMC.US)$After two consecutive days of decline, the market value of about 7 billion US dollars has been erased, and the decline continued before Friday's market.

GameStop's stock price once jumped as much as 16% during Friday's pre-market trading, then narrowed the increase, and AMC's stock price rose as high as 9.5%. However, the two then took a sharp turn. By the time of opening, GameStop had fallen by nearly 21%, and AMC had fallen by more than 4%.

Friday's trend was mainly due to a marked decrease in the intensity of trading that drove this week's gains. Giacomo Pierantoni, head of data at Vanda Research, said, “Retail investors' purchases of GameStop and AMC have dropped dramatically.” He said that in the past two days, Game Station's capital inflow was about $5 million, while AMC's capital inflow was “almost zero” on Thursday.

Keith Gill (Keith Gill) set off a meme stock frenzy on social media in 2021, summoning retail investors to gather strength, raise the stock prices of companies that are not optimistic about Wall Street, and drive a sharp rebound in several influencer stocks. His return ignited the latest gains at the start of the week.

High volatility and extensive options activity reminded Wall Street investors of early 2021, when retail traders made big bets, driving the two stocks to history$Niitaka (4465.JP)$. However, things are different this time around. Options activity at GameStop has declined, while options activity surrounding AMC shares has been reduced by more than half from Monday's peak.

“In my opinion, the small bubble is collapsing,” Pierlantoni said. When capital flows deviate from an exponential growth pattern and decline rapidly, it indicates that market sentiment is quite fragile.

Furthermore, according to the latest Bloomberg Markets' Live Pulse survey, this week's meme stock boom is a sign that US stocks are bubbling and may reach their peak. Among the 230 respondents to the MLIV Pulse poll, many were skeptical about whether this situation was an encouraging sign for US stocks.

With$S&P 500 Index (.SPX.US)$und$NASDAQ 100 Index (.NDX.US)$This week hit a record high, with the Dow Jones Industrial Average breaking through 40,000 points for the first time in history. More than 40% of respondents believed that the GameStop and AMC transactions were a sign of excessive excitement, which was a potential reason to choose to sell.

Strategist Steve Sosnick (Steve Sosnick) said on the phone: “Unless the stock market is already a little excited, we won't see a meme stock frenzy like this.”

The MLIV Pulse survey found that 43% of respondents viewed the surge in meme stocks as a reverse warning to future markets. About a quarter of respondents thought this was a positive sign for stock prices. Meanwhile, 66% of respondents believe this poses no real threat to the entire stock market.

Compared to the boom in 2021, the recent surge in meme stocks was basically just a blip. According to several poll respondents, one similarity is that bored investors are also one of the reasons for this latest round of action.

Currently, the main reason for the rise in US stocks is that the US economy is resilient, consumer spending is strong, and inflation has subsided, providing impetus for economic growth and supporting the prospects of US companies.

Meanwhile, Fed policymakers have made it clear that they plan to raise borrowing costs over a longer period of time to curb prices, and they don't seem to be in a hurry to cut interest rates.

Homrichberg Chief Investment Officer Stephanie Lang (Stephanie Lang) said, “Although meme stocks have basically been quickly corrected, this can be described as a healthy sign for the market. However, if the Fed waits too long to cut interest rates, it may cause the economy to weaken and put pressure on stock prices. They are highly valued, but while stocks continue to rise, their valuations will remain for a long time.”

Although investor confidence has been growing, one market sector suggests that investor confidence has yet to expand excessively. Athanasios Psarofagis, an ETF analyst at Bloomberg Intelligence, said that leveraging long exchange-traded funds (these funds use derivatives to amplify daily index returns) did not show much different enthusiasm from the 2021 meme stock craze.

Another big difference compared to the 2021 frenzy is that this time it was driven by established traders rather than retail investors. According to Sosnick, in Interactive Brokers' data for the five trading days up to Wednesday, GameStop was the stock with the most active customer orders, and AMC ranked 17th.

Sosnick added that although GameStop showed net buying interest, the options market also showed net selling interest, which indicates that investors have adopted back-up subscriptions or other risk control strategies in addition to speculation.

This is why Thomas Thornton (Thomas Thornton), founder of hedge fund Telemetry, shorted the SPDR S&P retail ETF. GameStop is the fund's biggest stock, and another meme influencer stock, an online car retailer with heavy debt$Carvana (CVNA.US)$It is the second-largest stock.

Thornton said, “Trying to short some of these meme stocks is too dangerous. No one knows if Keith Gill will keep tweeting. I don't need that kind of stress in my life.”

Editor/Jeffrey