Return of Meme Stock Mania Has Traders on Alert for Market Froth

The reemergence of meme stock mania last week has professional investors facing a quandary: ride the excitement of retail traders or take it as the latest warning sign that the frothy markets are due for a pullback.

The speculative stocks caught up in the frenzy this week, like Opendoor Technologies Inc. and Kohl’s Corp., gave up some of their gains as the week went on, but most are still trading at their highest levels in months. The broader S&P 500 Index and Nasdaq 100 Index are doing even better, sitting at all-time highs after charging back from the early ...