The frantic action of the small cap stock market, like Gamestop GME,
and AMC Entertainment AMC,
drew incredulous reactions on Wall Street.
But while some may be tempted to dismiss them as a secondary spectacle, this graph from Société Générale suggests that the gains skyrocketing from a handful of highly sold shares are a much broader phenomenon.
In fact, the best-selling stocks in the $ 3 trillion Russell 2000RUT index have made huge gains since the end of last year, beating the rest of their peers.
The top 5% best sellers have doubled in value since the end of October, surpassing the next top 5% best sellers, which, in turn, surpassed the least sold shares.
“This upper tranche has now separated from the next, implying that the level of overdraft interest itself is the target of much of this activity,” said Andrew Lapthorne, head of quantitative stock research at Société Générale, in a note on Wednesday .
Watch: It’s not just GameStop: here are some of the other heavily sold stocks
Analysts suggested that retail traders gathered on platforms like Reddit and Discord were actively looking for stocks with a high percentage of interest sold in an effort to generate a squeeze on the sale. The hope was that short sellers, in the face of painful losses, would cover their short sales and buy the shares back, accelerating gains.
The S&P 500 SPX,
the Dow Jones Industrial Average DJIA,
and Nasdaq Composite COMP,
are headed for a 2% loss this week.
Read: Is GameStop and AMC trading a big risk? Analysts evaluate