Mastering the Madness: Seven Relative Strength Movements Fueling the Meme Stock Frenzy

The stock market is often perceived as a complex, intricate, and highly regulated arena of finance. Yet, in recent years, we've seen a new phenomenon that has disrupted this perception: the rise of meme stocks. Meme stocks are shares in companies that see a sudden, exponential increase in value, not because of their financial performance, but due to hype and speculation driven by retail investors on social platforms like Reddit. One of the key strategies these investors use to identify potential meme stocks is relative strength movements. This approach involves comparing the performance of different securities or market sectors to identify areas of strength. Now, let's delve into the seven relative strength movements that have been fueling the meme stock frenzy.

The Power of Social Media

The first relative strength movement is the power of social media. Platforms like Reddit, Twitter, and TikTok have become hotbeds for discussions about potential meme stocks. The subreddit r/WallStreetBets, for example, has been instrumental in driving the GameStop and AMC stock frenzies. The power of social media lies in its ability to rapidly disseminate information (or misinformation), influencing the decisions of retail investors. This strength can cause a stock's price to skyrocket, demonstrating the significant impact of social media on the stock market.