Greetings retards, autists and apes. Here to share my outlook and some very simple TA in way too many words that you don’t know how to read which may have already been invalidated in after hours trading with the vanilla NFLX news. This is a fictional account and not investment advice.
Today is Wednesday July 14th, 2021. As you can see, GME has been selling off on very low volume and really accelerated today, along with many other caca stocks that are starting to make their way back down to hell after a nice consolation bounce out of the May lows. Many will break May lows and never recover, FYI.
GME is special, though, as it is the Queen of caca stocks standing steadfast beside King TSLA who retired from greatness after the SPX add and has a date with 400. For both, many would say they are not caca and have fundamental upside. Maybe they do, maybe they don’t. What we do know is GME low float, high SI and is subject to gamma squeezes (helped by short covering) and that is what we are looking for come August to September as we watch for a pattern to repeat itself.
# Where we are at
Today just before close, GME found a potential bottom at 165 with huge volume which is peculiarly right where we have several supports:
7) The positive trendline running from the extremely bullish engulfing candle just after the earnings gap down in March to the beginning of the breakout in May heading into Q2 ER.
2) The all-time-highs AVWAP which basically encapsulates the average of volume and price since the day GME sent Gabe home crying. Like moving averages, above is bullish ( 🚀 ) and below it is bearish (🌈).
4) Thicc volume shelves from $100-150 where most volume has traded since January, indicating where traders have been interested in buying in the past, and where those who sold at highs or missed the boat the first time may find value in entering.
6) 151 is a pivotal level related to some gamma/greek mysticism. As we saw after hours today, price hit 151.01 and bounced for 9 pts. Below 151 is certain death, or possibly a 200-day MA test around 110 (orange line)
Not only are we at these multiple, coinciding levels of support, we are in the midst of oversold territory with daily RSI at 33, its lowest reading since before most of you were born (April 3, 2020, $2.80 close). *An aside: What a long way GME has come to be knocking at the year-to-date RSI lows and closing at almost $168, OG GME bull* /u/Uberkikz11 *and the GMEdd team’s bull case fair value target released on 1/20/21. Market weighing machine well at work. Cheers, Rod.*
But wait! There’s more: While GME is in oversold territory, SPX and especially NQ/FAGMAN are well overbought and starting to show weakness here at monthly OpEx with AAPL now carrying all of the weight. We’ve seen money flow to the safe haven of GME in times of hedging need. Should the indexes pull back starting as soon as tomorrow (Thursday 7/15) or sometime next week, the money that was made dumping tech on retail at ATHs will find its way somewhere, and in the past it has been GME (and boomer value stocks). Watch AAPL weakness for clues.
All this being said, today I would put us at or around 3/24 in the quarterly cycle. Especially with the NFLX news knocking us down even lower into oversold territory with support at 151, our capitulation may be in.
# Where we are going
All these factors are indicating that, should patterns repeat, GME is ripe for a bounce in the near future, and it could be a nice 40-60 pt ripper up to resistance levels at the 20 or 50 day MAs around 200, or one of the other two swing high AVWAPs above (207, 235).
At the very least, from the after hours action we will open gapped-down with gap to fill at 167. Could fill now, could fill next week, could fill never.
Now, I don’t think we are going to see a breakout with continuation until we get to mid August, for another ~4 week run up into earnings. As you can see between Q1-Q2 ER, we caught a 64 pt dragon dong oversold bounce out of the 3/24 capitulation candle, and after that came two months of consolidation where GME was pinned in a relatively tight range in order to let IV die down, cheapen OTM calls for large in scale buying, and let shorts get comfy enough to catch them off guard.
**Immediate term:** Watch price action tomorrow AM for a rip out of open which dips may be bought, or a sell at open to re-test 151, followed by a reversal on increased volume if 151 holds and shit starts hitting the fan on NQ/SPX. If it doesn’t reverse strongly but holds 151, look for basing to occur with more volume to come in possibly in the afternoon, eventually bringing volatile movements to the upside. The basing could take a while, might not start getting interesting until Friday afternoon into close.
IF we don’t get a strong reversal by end of this week, but hold 151, look for a dip-to-moon or rip straight out of the gates on Monday.
Targets are the upper resistance levels 198, 209, 235. Don’t be greedy.
IF we lose 151, let it die some more. If you liked GME at 483, you’ll love it in the low 100s. Don’t try to catch the falling knife, you will get cut. Possible supports at 151, 137, 110, 48, 40. Wait for confirmation.
**Earnings play:** Watch for price to consolidate for a few weeks after any bounce, identify the consolidation range and look for entries at the low end of the range around August OpEx 8/20. Sell into strength BEFORE earnings.
Positions: 7/16 170c, 180c, 190c, 7/23 190c. Be realistic with OTM calls. 800c will not print.
Obligatory rockets: 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀
Disclaimer: This is for entertainment purposes only. I live in a dumpster behind Wendy’s. Headline risk is real and any bad or good news can send the stock in any direction fast. All of this can go to shit and the stock can limit down to 0 in 5 minutes if it wants. Expect 0. Risk only what you can afford to lose. Don’t let gains turn to reverse gains. This is not investment advice. GL HF
TL;DR: GME down, maybe go up soon