Is the new round of Meme stock craze facing a subtle turn? Goldman Sachs trading department clients begin to short

Goldman Sachs' trading department stated on Friday that a new wave of meme stock frenzy has driven a surge in the stock prices of a number of small companies, leading its clients to feel "more comfortable" betting on the decline of unprofitable tech stocks.

A basket index of unprofitable tech stocks tracked by Goldman Sachs has risen about 70% since its low in mid-April, but has fallen over 3% in the past two days.

Faris Mourad, Vice President of Goldman Sachs' U.S. Customized Stock Basket team, wrote in a report to clients:

The focus of nearly all our client discussions this week has been on when to take a contrarian approach to the trends in these highly speculative areas (such as unprofitable tech stocks). As this week unfolds, we see clients shifting from a wait-and-see approach to taking action, and they now feel more at ease shorting at this level.

This action by Goldman Sachs' clients coincides with a remarkable rise in the stock prices of companies like Kohl's Corp., GoPro, and Krispy Kreme, drawing attention from Wall Street. Some market participants believe that the movements of these stocks signal a warming of speculative sentiment in the U.S. stock market.

Additionally, reports indicate that Goldman Sachs' "speculative trading indicator" has risen to one of its highest levels on record this week, while bullish options trading accounted for over 61% of total options volume in U.S. stocks, the highest level since 2021. Meanwhile, recent retail trading activity in unprofitable stocks has surpassed the "meme" frenzy of 2021.

As signs of market bubbles intensify, the trading departments of Goldman Sachs and Citadel Securities have advised clients to purchase cheap hedging tools to guard against a potential pullback in U.S. stocks due to multiple risks, including the upcoming earnings reports from tech giants next week and the tariff deadline on August 1 set by Trump