With the declining business model and the shift to online "downloads" GME is fairing poorly.
R/R is unfavorable but nimble in comparison to the balance sheet.
Down side potential of ~30%
Upside (S/L) set at midpoint, or 15% retrace.
GameStop started the week in inside week. It has been awful 25 days, To do with the downloadable games to users according to ceo back on 4/14/15 it’s hurting the company’s business. I think it’s going to be lower than previous years on games. I don’t know about other games makers. Watch this one and see what is coming soon
Sorry I didn't get to post this before NY close ... .
Filled for a $94 credit. I usually like to see a $100/contract out of these setups, but I figured it was close enough ... . I'm looking for price to stay between my short strikes between now and expiration and for volatility to contract post-earnings announcement. Post-announcement, price is down about $2...
Having announced earnings about two weeks ago, IVR/IV in GME remains high (70/55).
The standard setup -- the short strangle:
Jan 22 27.5/38.5 short strangle
POP%: 71%
Max Profit: $113/contract
BPE: ~$333/contract
Break Evens: 26.37/39.63
Look to take it off at 50% max profit and move on ... .
Well most of us do know about the Gamestop earnings beat. Well that beat propelled the stock up breaking the descending trendline which has capped the upside since January 2014, now approaching strong horizontal resistance at the $44.70-$46.70 area.
My approach to entering long on the trade prior to a possible break of horizontal resistance would be to wait for...
After seeing the ascending wedge form recently I noticed that it could be considered completing a reversed cup and handle pattern.
We also just had MACD cross down on the signal, but I could see it oscillating in the wedge a bit longer before breaking out.
We see some bearish signal in weekly chart plus today's 6% drop may suggest bearish brutal free fall that started early this year may continue but for now target price $35 area.
Stock came from $16 to almost $58 in year and a half but was sold off on bad earnings results almost 2/3 of it is initial move up. In such a strong tape I think it looks ready for move higher, as it found support at $33 and have built higher highs with consolidation support at $35-$36. It broke downtrend line to the upside with strong, green candle and building...
Fundamentally this company is looking quite grim.
As an avid gamer, i know (as do most) the future is digital downloads. There is no reason for a company like this to be the "middle man". As much as I like owning a physical copy of the games, I'm a minority. Most people are lazy and want gaming on demand. Its like vinyl records.
Gamestop is quite reminiscent of...
Everyone downloads games anyway now...
This is just speculation based on my elliott wave count. We may have a tiny pop up to 42 area or so, but we still have a long C wave down after that so it doesn't really matter. Earnings are tomorrow which is interesting, my guess is they will disappoint.
The overall trend is down so I would need to see a strong push to break this trend. It has ramped up this last month but is closing in on resistance. Hourly charts would probably be the safer play for longs but don't be afraid to get out if it closes below 36.
As the days march on it will be pinched off and be forced to move one way or the other. Time will tell....
