Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.
GameStop Corp. (NYSE:GME) is a retailer of video game products and PC games. As the stock has recently made a good move off a near-term bottom despite lousy August video game sale numbers, it caught my attention.
The weekly chart displays a narrowing trading range dating back to 2009. During the week of Aug 15, the stock spiked down to near the $17-$18 range that serves as multiyear support. By the end of the week however, the stock left a long tail and a bullish candle that has so far led to higher prices. The multiyear downtrend line currently comes in around $27.50, which if/when broken to the upside on a weekly basis, could offer us a good long-term entry point.
In the meantime though, the daily chart also offers some interesting views. The violent bounce off the multiyear support area near $17-$18 is clearly visible. The stock currently sits close and cozy to its 50-day and 200-day (lower line) simple moving averages, which are acting as some resistance. At the same time, the $24 horizontal resistance level is also close by.
On a solid daily close above both moving averages and the $24 level, a good long entry point in GME might arrive. With initial stops near $21.50 (followed by trailing stops) and profit targets at $26 followed by $28, this seems like an interesting setup.
- See Sam Collins’ Daily Market Outlook: What’s Lurking in This Market?
- See Serge Berger’s Daily Market Outlook: Wait for Confirmation Before Placing Any Bets
- See Sam Collins’ Trade of the Day: Yahoo Flashing a Buy Signal
