03/22/23
This morning we are charting a blue chip stock that is truly part of the fabric of America.
If a stock could be described as “The Norman Rockwell painting” of the market – it’s this one.
*record scratch*
Just kidding.
We are charting Gamestop (GME)
Do the “degens” have it in them to do again?
It seems doubtful.
More importantly, what should you know if you are feeling nostalgic and want to relive some of your favorite COVID lockdown memories?
I have a few different angles to look at.
Behold the hourly chart (with extended hours)…
Why? Well, that’s when it broke out.
From $17.65 at the close to $27.53 at yesterday evening’s peak.
Yeah, it’s a tough one to analyze…
Alright, forget all indicators for a moment.
There’s really no substitute for price action, anyways… not when an entire army of young retail traders gets in on the action.
But let’s keep it simple.
I’ve marked a number of zones here.
Outlined in neon green at the bottom is the most recent area of support which was established at the turn of the year.
Call it $15.50-$16.50.
And over the last week, short sellers have attempted to push it lower, but to no avail.
The zones outlined in blue are previous resistance levels that were ousted in a single candle stick, so I’m keeping them gray for now…
Of course, the red channel shows a price range between ~$27.00-$28.00 where GME took a beating, eventually sending it to the support area mentioned above.
Using the Fibonacci Retracement (take it with a grain of salt, it’s GameStop), I’ve marked the range from the breakout low to breakdown high — skipping on the late buyers and stragglers.
Where would I look for buying opportunities? Two areas.
The initial leg higher left a wide range wick. That’s the green box between ~$23.75-$24.50.
If the price action is as strong as I think it might be, this is where I’d watch first…
But if this doesn’t hold, I’d expect a tough drop to the low $20.00’s.
The reason is more psychological than anything… even if the Fibonacci levels do match up with the midway point of the blue zones.
(Wild, right?)
If this is only the beginning of a run, short sellers will likely cover around this area if that magical $20.00 number presents a buying opportunity for a run back to $25.00.
And if this area doesn’t hold, pack up and get out.
There are thousands of other stocks to trade with far less risk…
This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio
