# Why These Meme Stocks Are Starting to Diverge

Canonical: https://stocksurgedaily.com/why-these-meme-stocks-are-starting-to-diverge/

It’s been a while since we talked about “meme stocks.”

And while it used to be the “Mother of all Meme Stocks,” **AMC Entertainment Holdings, Inc.** (AMC) has fallen out of the news lately.

[**Are the Reddit traders finally calling it quits**](https://stocksurgedaily.com/how-i-plan-to-trade-amc/) and giving up on this stock?

I’m not sure, but I certainly am.

And I’ll tell you why below…

I’ll also tell you why I think another stock that’s a favorite among retail traders could be gearing up for another bullish move.

I'm talking about **Tesla, Inc.** (TSLA), which much to the chagrin of its many haters has held up extraordinarily well recently...

Even as many of its meme stock peers have plunged extremely far below their post-pandemic highs.

There could be more in store for TSLA going forward, but given the volatility in the market, I'm taking a more cautious, short-term approach to my trading right now.

## **AMC Falling Out of Favor**

I first brought AMC Entertainment to your attention back on Aug. 19.

At the time, AMC had already made a massive move higher out of its early 2021 consolidation range.

The stock peaked at over $70 per share in early June following its first breakout, and started to pull back. 

For a while, [**it was looking like a textbook consolidation pattern**](https://stocksurgedaily.com/heres-what-a-textbook-breakout-looks-like/)...

We saw decreasing volume, shallower pullbacks and good relative strength when compared to the market.

![](https://lh3.googleusercontent.com/s8fntHLvXb23pcji4rVBqYIxG8ce5KbVTfy7qOQ8_5ZFgcPKeaum5tEgQ-8pEXcl3iYdaB7lN7uqJabZDfNsLs93TPMMlWxKBUDlMkU5J4W3uR2cEZIObvq93qMDI6c0INfPoBjk)

**_Daily Chart of AMC Entertainment (AMC) -- Source: TradingView_**

But that all changed this past week, as you can see in the chart above.

AMC is now breaking down from a technical standpoint.

The stock broke through short-term support (dashed red line) during Wednesday's session on heavy volume, which is a clear “get out” sign for anyone that was still holding.

[**Remember the “80/50 Rule”?**](https://stocksurgedaily.com/the-one-simple-rule-to-remember-before-you-chase-a-rising-stock/)

It states that once a secular market leader like AMC puts in a major top, there’s an 80% chance it will decline by 50% and a 50% chance that it will decline by 80%.

Well, the stock has already dropped about 60% from its highs...

And with the shares below the 200-day moving average, the long-term trend is no longer bullish.

Therefore, I think it's possible we could see AMC fall even further to notch that 80% decline from the June high.

Only time will tell, but AMC is dead to me now.

Once a stock closes below its 200-day moving average, I won't touch it, and that's exactly what happened on Wednesday.

## **Tesla Continues to Triumph**

On the other side of the meme stock story is Tesla, which I first saw setting up in a classic breakout pattern back in the [**Sept. 1 issue**](https://stocksurgedaily.com/why-i-bought-tesla-yesterday-how-to-trade-along/) of **_Stock Surge Daily_**_._

I first took a position in TSLA around $729.75, and [**I added to my position**](https://stocksurgedaily.com/why-i-bought-more-tesla-stock-on-friday/) when it broke $764.00 and made a new multi-month high.

![](https://lh3.googleusercontent.com/wxkv2QCQkwR4Hi4NmqjpUOsipYD6COaJfiTVuvY3WpIZDYfLbZ_nIdRzXXaoXrElzGAVfjQn0foEBxrjZkA5MiLn14otdBNgHTIOcFobRuiC5-q5848O6lX3MJNQor39vDSeSgkw)

**_Daily Chart of Tesla, Inc. (TSLA) -- Source: TradingView_**

Sure, Tesla pulled back on Wednesday as well, but the stock is once again consolidating in a new range between about $1,000 and $1,200 per share.

It's also still above both its [**50-day and 200-day moving averages**](https://stocksurgedaily.com/why-stock-charts-should-matter-to-you/), showing that the bullish trend is still intact.

If you missed that trade, don't try to jump in right away.

I think we're probably in the early stages of another long setup, but as I mentioned above, I'm taking a more cautious, short-term approach to my trading right now.

Markets have been skittish lately about the inflation landscape and concerns over a new variant of the coronavirus, so it makes sense to be patient here.

But once TSLA starts to show some signs of a pending breakout, I'll get back in touch with another update.

Embrace the surge,

![](https://lh3.googleusercontent.com/NB_cHajt0xvHCZ_gqv9Xde2-S0fNLhq0u5YOo0x28oZM7u2eaKmfb05g2-FN6W2KDU8FU2ZilOE3Y0XNKWiuHecvXcv3VKNg4x9sWX9cUiTml9dblJGN5t9nyvdKJ_sEdx5QE5x-)

Ross Givens

Editor, **_Stock Surge Daily_**