The Next Big Meme Stock

Hey traders, it’s Matt here.

Last week, the biggest meme stock spike came from Faraday Future Intelligent Electric Inc. (NASDAQ: FFIE). It spiked 9,600%* in total!

And there were multiple opportunities to profit.

Read Bryce’s blog post from yesterday for all the details.

Now, it’s possible that we see FFIE squeeze higher.

But judging by the chart after Friday’s move, there are quite a bit of bagholders the stock would have to push through. Again, anything is possible! But it’s not my favorite setup right now … 

Take a look at the FFIE chart below where I circled the bagholders:

FFIE chart multi-day, 1-minute candles Source: StocksToTrade

I’m most interested in the next big meme-stock spike. I’m looking for a stock that’s likely to use the meme momentum and doesn’t have recent bagholders.

I don’t know the name of the ticker yet. I’m not psychic lol.

But when the price starts to move on Monday, I’ll know it when I see it.

The Next +1000%* Spiker

Usually we want to trade stocks with a bullish catalyst.

Maybe something like:

• A new business agreement.
• A private placement for funding.
• A government contract.

But when it comes to meme stocks, the reason their spiking is less obvious.

Usually there isn’t a visible catalyst at all. The price just spikes +100%, lmao.

Here’s how it happens:

It’s a short squeeze. These are crap stocks that shouldn’t be spiking. Overaggressive short sellers identify the unsustainable bullish price action and they pile in to ride the price lower.

But if there are too many short sellers in a stock, the strategy becomes overcrowded. Any more bullish momentum could cause short sellers to panic and buy to get out. That leads to a domino effect of short sellers blowing up.

And theoretically, if short sellers keep trying to guess the top … The price could squeeze indefinitely.

So, if there isn’t an obvious catalyst, how do we recognize a true meme-stock short squeeze?

#1: Watch for bullish volatility.

I’m talking about a stock that’s spiking +100% on the day.

You saw FFIE … it spiked 9,600%.* A stock that spikes +100% in this market can spike A LOT higher.

#2: Watch for crappy stocks.

Essentially, these are any and all penny stocks.

The price should be below $5.

The low share price helps it spike higher from a percentage perspective. And that’s how small-account traders can make real money, in the percent gain.

#3: Watch for a low float.

A stock’s float shows how many shares are available for traders to buy and sell in the market. It’s also known as the stock’s supply.

When there are fewer shares in circulation, it’s easier for short sellers to become overcrowded. That lends the stock to a short squeeze.

A float below 10 million is considered low. Keep an eye on that factor.

And get ready for Monday’s profit opportunities.

Feel free to join our pre-market trading session. It’s where we find all the hottest runners before the market opens.

Cheers,

Matt Monaco

*Past performance does not indicate future results