GameStop
GameStop (GME) shares are on the move again as the stock jumped more than 40% into the close on Wednesday.
There has been a flurry of headlines on the stock over the last few days, including speculation that Morgan Stanley (MS) – owner of E*TRADE – was considering kicking Keith Gill, "Roaring Kitty," off the trading platform.
The real news today hit the wires in the early afternoon when “Roaring Kitty” announced that he would host a livestream session on YouTube tomorrow at noon Eastern Time. That news sent shares to highs at $45, followed by a pullback to $37.50. As the news spread, GameStop shares rallied into the close to prices back above $45.
The most recent short interest data for GameStop shows a short interest ratio of 2.45 along with a short interest to float ratio of 25%. Both figures have dropped of late, suggesting that the upside volatility is less likely to be driven by a short squeeze, but instead a simple wave of speculative buying.
To put things into perspective, Warren Buffett made news when it was released that his company, Berkshire Hathaway (BRK.A), had purchased 6.4% of Chubb (CB) insurance last month. The stock rallied 8% on that news.
Keith Gill’s recent screenshot of his personal position in GameStop reflected a 5% ownership of the company. His recent headlines have resulted in the stock rallying as much as 275%.
Is Keith Gill a better investor than Warren Buffett?
lululemon
lululemon (LULU) is telling the same story that we’ve heard from retail companies all earnings season.
The company announced earnings and revenue that were better than expected this morning. The news was a shock to investors who have been selling shares of the high-end athletic clothier to the tune of 30% losses over the last six months.
Shares have traded higher on that news, but the company’s outlook has investors checking just how high LULU shares can go.
Management lowered their outlook for revenue and earnings as the company struggles with slowing consumer spending. However, they raised their 2025 earnings targets, suggesting the company will work on increasing margins and revenue.
As I often say, the price and technicals of a stock don’t lie.
Investors are selling into the initial strength of today’s rally. LULU shares started the day 10% higher at $337 but are limping into the close with only a 5% gain for the day.
The stock’s 50- and 20-day moving averages are currently in a bearish trend. That suggests that short-term buying is likely to be met with an abundance of selling pressure.
Lululemon stock is also trading in a long-term bear market trend. The stock moved into that trend in April as it closed below its 20-month moving average.
Shares are likely to continue their move lower with support at $300, followed by a move to $270 if that $300 level fails to hold the sellers at bay.
Palantir
Shares of second-level AI company Palantir (PLTR) are trading higher by almost 4% today as the company hosts its AIPCon event. The event is part of a YouTube Live series during which Palantir customers highlight and display their uses of the AI service company’s products.
Today’s rally is a continuation of the run that started after the company announced its latest Department of Defense contract last week. That news was the catalyst that took the stock back above its 50-day moving average, a trendline that is currently in a bearish trend.
Based on that trend, investors should increase selling pressure on Palantir stock over the next few days as the stock has found it difficult to break that trend line. Last month, Palantir shares spent just two days above their 50-day after the company released better-than-expected earnings results, displaying the difficulty of any company to break this key trendline.
We have seen a migration of money into AI service companies of late. Shares of C3.ai (AI) and a few other AI service companies have seen short-term bullish activity as it appears that investors are diversifying into the AI service sector.
That said, shares of Palantir remain cautiously optimistic on a short-term basis at best. The stock does remain above long-term support at $20 and within striking distance of $25. A break above $25 would take the stock through a psychologically significant price, triggering even more buying.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.