Volatility at GameStop (GME) – Get report it remains high, with stocks falling 13% and reaching new session lows.
The moves came after the company reported earnings and amid a sharp rally in “meme stocks.”
Only this time, GameStop isn’t the leader of the meme stock movement. It could be argued that the crown belongs to AMC Entertainment. (AMC) – Get report, while a host of new stocks have been added to the mix.
GameStop shares have been jumping a lot lately, but apparently the quarterly report isn’t doing much to spark a surge.
The company reported a loss for the quarter, while an impending investigation by the Securities and Exchange Commission has investors taking a conservative stance rather than an aggressive one.
What do the charts look like after the post-earnings fade? Let’s look.
In late May and early June, GameStop shares rose to the $ 280 to $ 300 zone. That was after a breakout in the $ 210 to $ 215 area.
However, this area continued to act as resistance, just as it did in March. While GameStop was able to top $ 300, it didn’t do so convincingly.
By that, I mean its rallies to the mid $ 350 could not last during either the trading sessions on Tuesday or Wednesday. They both fell back toward the $ 300 mark.
While the actions were technically Above the $ 300 resistance, there was reason to hesitate on the long side. At the same time, it is clear what a bullish reaction could have done to this stock, putting more than $ 350 at stake.
Currently, we are getting the first correction to the 10-day moving average in 11 sessions. While this moving average has been guiding stocks higher, it has not been tested since GameStop’s massive breakout of over $ 212.
Now that we are there, aggressive bulls can look for a rebound. If we get it, the $ 280 to $ 300 zone has to be on guard. It is true that it is a large area, but it must be respected.
If GameStop shares break above $ 300, the $ 345 to $ 350 area could be up for grabs after that.
On the downside, hold a close at the 10-day moving average. A close below it could put the 21-day moving average on the table. Below that and the breakout level of $ 212 will be back in play.
The levels for GameStop they are not that difficult to understand. It’s the emotional baggage that comes with trading such a volatile stock with wide ranges. In that sense, this action is certainly not for everyone.