Happy Holidays everyone! With the end of the year coming up, trading will probably be slow. It may give me a great chance to push my portfolio back over break even but we’ll see how the action goes the next week. Next week I will be traveling back home for some engagement photos with my fiancee and as a result will most likely not be available to blog due to lack of time or sheer exhaustion. I’m working on bringing up a new theme for the new year as well as a yearly recap of my trading events (best trades, worst trades, etc). Enjoy the holiday season and hopefully I can sneak back here a day or two next week just for my sanity! Happy Holidays!
Jorge
So yeah.. GME broke above the $60 resistance and pulled away to about $61 and change before pulling back the past couple of days. First, here are a couple of different charts, one showing a 5 minute time spread with GME on the “breakout” Tuesday and the other a daily spread with my signals as of this morning. Let’s start with the 5 minute time spread:
Note the volume on the resistance breakout. It’s about average when you compare the 5 minute volumes to the week prior. From what I gather, breaking resistance should carry a higher than normal volume in order to force the old resistance to become new support. In other words, low volume = not many buyers I think.
Here’s the daily chart before the markets open today:
A couple of things to note. First, the breakout we saw this week looks to be relatively light on volume which may not be a good sign. However, here’s my take on things. We’re currently in expiration week preceding the holiday season AND the end of the year so volume should be somewhat lighter than normal. Does this bode well for the $60 to become new support? I’m not sure. This is the first time I’ve had to deal with the markets and the holiday season so I guess I’ll find out along with the rest of you. A quick glance at the MACD shows the averages diverging from the trigger line in an upward trend leading me to believe GME may have some momentum behind it. From the slow stochastic, it appears there may be a cross in lines within the next couple of days, perhaps creating a mildly bullish signal. If the cross were to happen under the 20 horizontal, I’d be more inclined to feel very bullish with GME.
For now, I’m currently playing GME with a mildly bullish observation. If I can grab a couple of points from GME with my open calls, I’ll send them a letter thanking them for paying for my copy of Super Smash Bros. Brawl.
By the way, if you have any need for relaxation, pick up a Wii and a copy of Super Mario Galaxy. By far the best investment you’ll make in terms of mellowing out for a couple of hours a day.
Currently long GME Jan Calls
Being an avid gamer, I figured it’s about time I looked at GameStop (GME) from a technical perspective. Let’s take a look at the chart!
You’ll notice the HUGE run in GME over the past 9 months. GME’s practically doubled since May. From a fundamental standpoint, GME appears to be having a great holiday season with the Wii still in shortage, pricing on the PS3 lower, spurring software sales, and Guitar Hero / Rock Band. Fundamentally, GME is sound, but what about technically? Looking at the graph above, you’ll notice I’ve drawn what’s called an ascending triangle. Ascending triangles are normally a bullish pattern with a breakout about 2/3 to 3/4 inside the triangle. Notice how GME broke out around late November / early December. Normally I’d say this was a result of the technicals but if you recall, GME was recently added to the S&P500 I believe giving it an artificial boost.
At first glance, I’d guess GME breaks out sometime within the next few days to the upside if it can break the 59/60 overhead resistance level. There’s a huge demand for video games for all ages and in the end GME benefits greatly from it. GME also has NO exposure to the subprime mess, making it even more attractive! I’ll post some technical studies on GME later this week.
George at FatPitchFinancials has posted the 67th Festival of Stocks. This edition, my first TA attempt using EMC and my CPI article have made the cut. Just wanted to thank George for all of the hard work he puts into the carnivals day in and day out. Thanks sir!
I know I know… it’s Monday. I had to go Christmas shopping, and, seeing how I’m lazy, it took the entire weekend to fight traffic and angry shoppers. For being such a happy time of year, people are more cranky and overall more angry than normal. In any event, here’s a list of some articles I managed to browse in between shopping pit stops.
Good luck this week. The major brokerage firms report this week. If Goldman tanks, I’d place my money shorting the entire sector. Goldman’s the best run brokerage firm and if they show any signs of weakness this week, expect the entire sector to come down with it. A heck of a ton of options expire this week as well, something known as Quadruple Witching. I’ll figure out exactly what that means and share it with the rest of you.
