GameStop (GME) gapped sharply lower today, refreshing the downtrend that has been in force since late 2015. Prices might stabilize around the November lows but the risk remains that new lows could be seen in the weeks ahead.
Let's visit with the latest charts and indicators.
In this daily bar chart of GME, above, we can see the downward-sloping 200-day moving average line, which has pretty much defined the downtrend the past year. GME is also below the declining 50-day moving average line. The On-Balance-Volume (OBV) line made a low in November with prices and has improved since, even in March as prices turned lower. The OBV line is probably going to turn sharply lower in the days ahead. The trend-following Moving Average Convergence Divergence (MACD) oscillator is already below the zero line for an outright sell signal.
In this weekly chart of GME, above, we can see prices are below the declining 40-week moving average line. Rallies above and to the underside of the 40-week have failed in the past year. The weekly OBV line shows a much more bearish picture than the daily OBV line. The weekly line has been in a downtrend the past three years and suggests that investors have been fleeing this stock for a long time. The MACD oscillator has been below the zero line for much of the past three years.
In this Point and Figure chart of GME, above, we can see a trade at $19.50 would be a new low on this chart and could open up the possibility of a $9 price target for the months ahead.
Bottom line: With weak technical indicators for a long time, GME should have trouble stabilizing at its November lows and the risk is high that the losses continue.