What happened

Shares of AMC Entertainment Holdings (AMC -4.04%), Skillz (SKLZ -2.95%), and Tonix Pharmaceuticals (TNXP 5.50%) are down 1%, 6.5%, and 5.3% as of 1:30 p.m. EDT on Wednesday, with the fickle meme stock trading crowd reversing recent bullishness. Leading the charge for today's rout, however, is Clover Health Investments (CLOV 5.83%), down 12.7% as of mid-session.

So what

If you're looking for the headlines behind the moves, don't bother. There aren't any.

As has been the case for the past few months, traders looking for a speculative edge are simply gathering around these stocks in an effort to collectively create the price action they desire, often by creating memes regarding these companies. Such efforts cause incredible price volatility.

Falling chart drawn on a chalkboard.

Image source: Getty Images.

Many of these names -- like Clover this week -- have also been recently targeted as short-squeeze candidates. That's not a terribly bad bet right now either, to be fair, in that more than 7% of the outstanding shares of the health insurance company are currently tied up in short trades. That's enough short positions to prospectively spark en masse buying that drives the price sharply higher, if those short-sellers start becoming unnerved by a bit of bullishness. Tuesday's 15% jump for Clover shares didn't do the trick, however, with most of that gain being given back today.

Shares of movie theater chain AMC Entertainment aren't really helping the broader bullish effort either. While one would expect this king of all meme stocks to soar following reports of record-breaking Labor Day weekend box office ticket sales, a bit of Tuesday's near-9% gain from AMC shares is also unwinding with Wednesday's1% sell-off. While that's hardly a devastating setback, the failure to follow through on Tuesday's advance is telling in and of itself.

Of course, the broad market's sell-off today is also creating a headwind for these well-known meme stocks.

Now what

The advent of meme stock mania (and in particular, organized efforts to spark short squeezes) comes as no real surprise. If you give enough people enough time and the means of doing so, it's reasonable to expect them to capitalize on an opportunity -- including one they must plan out on one of the internet's more popular message boards. A little success on this front early this year prompted the trading crowd to replicate the effort.

Regardless of the strategy's previous effectiveness, however, meme stock mania is losing steam. Not only are hedge funds and other managed investment pools now shoring up their risk exposure to short squeezes, traders are also running out of stocks they can push around.

They're also running out of other buyers and bullish arguments.

See, for most meme stocks to continue their rallies, new buyers must bring new money to the table to purchase shares from traders that have already scooped up the stock and are now looking to lock in a sizable profit. Enough people were willing to take such a swing early in the year when AMC was trading around $2 per share. Now that it's trading at more than $46 per share, however, would-be buyers are considerably less interested. Underscoring this idea is the fact that shares of Tonix Pharmaceuticals and Clover Health have yet to respond to the same rally driving strategies that -- at least for a while -- buoyed AMC stock. In a similar vein, Skillz shares have also stopped responding to the bullish prompts that drove the stock from around $11 per share in November of last year to February's high in excess of $46. They're now back near $11, unable to keep a rally going.

There's something of a litmus test for the entire meme stock movement due this afternoon. Another meme stock company, GameStop (GME -1.44%), is slated to report its fiscal second-quarter numbers after today's closing bell rings. The numbers are important. But even more important is whether or not the trading crowd relaying on the web's popular message boards will be able to convince others to start and sustain a rally from GameStop. If it can, other meme stocks like AMC and Clover will remain at least somewhat in play. If it can't, it may well be a sign that the underlying strategy of individual traders targeting one ticker at a time is no longer effective. This in turn may sour most of them from even trying to do so, continuing the conversion of many of these meme names back to more conventionally priced stocks.