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An Easy Index Trade And Bad News For GameStop Bulls

By Jani ZiedinsStock MarketsApr 13, 2021 12:07AM ET
www.investing.com/analysis/an-easy-index-trade-and-bad-news-for-gamestop-bulls-200572658
An Easy Index Trade And Bad News For GameStop Bulls
By Jani Ziedins   |  Apr 13, 2021 12:07AM ET
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Gamestop Corp Daily Chart
Gamestop Corp Daily Chart

 

The S&P 500 spent most of Monday ever so slightly in the red, but that 15-point dip couldn’t stick and this stubbornly bullish index finished near breakeven yesterday.

No doubt this rally cannot remain this easy and brainless for much longer, but as long as it continues trading well, there is no valid reason to argue with what is working.

Trading is hard enough and we don’t need to make it harder by arguing with the market. Keep following the index higher and lift our trailing stops. This will run out of momentum at some point, but it will go a lot higher than most people think before it does.

GameStop's (NYSE:GME) latest flirtation with $200 is ending in disappointment. I was impressed with how well the stock was holding near $200 and that often indicates the stock wants to break through resistance. But there always comes a point where resting turns into stalling. As I wrote last week:

GME is a buy above $200 but it is struggling to close the deal and it cannot get above this key resistance level. Fail to deliver on this obvious breakout and this starts looking more like stalling than resting and we need to be extremely careful.

GME has clearly crossed the tipping point into stalling and things are not looking good for the stock. This is why it is so important to wait for the breakout before committing. One, it requires the stock to demonstrate its strength before we put our money at risk. And two, it creates a clear stop loss level to protect our backside.

If GME cannot arrest this fall in a real big hurry, expect the selling to accelerate and for prices to tumble under $100 in the blink of an eye.

This remains a strong short until it gets above $200.

An Easy Index Trade And Bad News For GameStop Bulls
 

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An Easy Index Trade And Bad News For GameStop Bulls

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Comments (5)
Peter Green
Peter Green Apr 14, 2021 1:59PM ET
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This aged well, thanks op
Peter Green
Peter Green Apr 14, 2021 1:59PM ET
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This aged well. Thanks op
Tomáš Černohorský
Tomáš Černohorský Apr 14, 2021 11:27AM ET
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And look now
Brandon Hughes
Brandon Hughes Apr 13, 2021 8:36PM ET
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Mike Lee
Mike Lee Apr 13, 2021 2:07PM ET
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thank you sir, i think your right, cheers
 
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