If Cathie Wood crowning herself the mother of the ‘New Nasdaq’ last week wasn’t enough of a cautionary sign of this complacent market, now we’re back in the era of idiotic FOMO rallies in low-priced no-earnings stocks where bottom-fishing retailers are hoping to get “amazingly rich” once more dabbling in options to ride on the latest tech fad.
Call it meme frenzy 2.0, retail hysteria, smartphone pizza slice investing or whatever you please. ‘Pinky-promise we will make company earnings at some point’-stocks have been exploding again, with AI, BBAI and SOUN running a manic parabola along this latest NADSAQ rally, reminiscent of the Wall Street Bets hysteria in early 2021. This has even swept over into Asian stocks like Hanang Tech (002362), TRS Info Tech (300229) or Cloudwalk Tech (688327), which have staged equal rallies of >100% in a few days.
The ever-bullish online tipster community is rambunctiously recommending buying (e.g. here, here, here, here or here) into this exhaustion move – c3.ai stock yesterday traded 104 million shares, 5 times as much volume as even the heaviest day in its trading history, after a >200% rally in a handful of weeks. Profits are being taken.
This comes in line with other FOMO rallies in meme stocks Bed Bath and Beyond (BBBY, 120% in a day) or Motorsport Games (MSGM, >1700% in 2 days).
Don’t get me wrong – I am highly supportive of the potential of AI and the advances it can bring to humankind, and companies like c3.ai might make money one day. My skepticism is not about the fundamental idea.
However, what we are observing are not early signs you see around a market bottom, but rather late signs before a market top. In this case, likely the top of the current bear market rally. People have clearly not thrown in the towel, if Joe Average is still launching his savings into the market at the recommendations of a random analyst after a zero-profit data-mining algorithm and chat bot (what ChatGPT essentially is) made some online headlines.
