We wrote about GameStop (GME) last week when we said that, "Right at this juncture in time, the charts of GME show more risk than reward. Stand aside."
So far, that looks like good advice, but things can change quickly on Wall Street, so let's check on the charts again today.
In this updated daily Japanese candlestick chart of GME, below, we can see two large upper shadows in recent days. An upper shadow tells us that prices closed off their best levels and that traders rejected those prices. This is not a reversal pattern, but it is a clear sign that traders are not willing to go home extremely long. Notice the huge volume that was traded last week. The 12-day price momentum study does not show a bearish divergence, but today's bar is the first lower bar, which is a subtle difference.
In this five-day intraday chart of GME, below, we can see how the volume surged above $30 and above $35. What this means to me is that when or if prices decline below $35 and then below $30 a large number of traders could have underwater positions.
In this daily Point and Figure chart of GME, below, we can see that prices reached their Point and Figure price target of $40. Some technically oriented traders may be inclined to take profits.
Bottom line strategy: The charts of GME still look risky to me. The key level I am watching is $35. Weakness below $35 is likely to precipitate further declines.
