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.