Is GameStop’s meme rally over, or the stock carries some juice to be squeezed?

on Aug 19, 2022
  • GameStop has been rallying at the back of a retail frenzy.
  • GameStop Chairman revealed a stake in BBBY fueling meme surge but later revealed an intention to sell.
  • The stock trades down 7% as the price painfully crashes below the 50-day MA.

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If you love GameStop Corp (NYSE:GME), you already know how hard it is to catch lasting momentums. However, it is one of those stocks that tend to return massively after a simple call on Reddit. That is what has been happening to GameStop lately.

The last week has been characterized with interest in meme stocks led by Bed Bath & Beyond. Retail investors grew curious that GameStop Chairman Ryan Cohen held onto his BBBY stake. That was revealed in a Tuesday filing, igniting interest in sister meme stocks GME and AMC. Both stocks were already gaining as risk-on sentiment gripped retail investors. A day later, Cohen was back with the intention to sell the entire stake. That forced a crash that wiped out the previous day’s gains.

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With no important fundamentals, GME investors pushed the stock above $47. It now trades at $34, with more than 7% losses in the past 24 hours. As the BBBY-inspired rally subsides, GME could follow suit.

GME falls below the 50-day MA as the rally comes to a halt

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Source – TradingView

Technically indicators show that GME has crashed below the 50-day MA. The MACD indicators are pointing to bearish momentum. The bearish momentum is likely to continue as the meme-inspired rally comes to an end.

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The GameStop rally was inspired by speculations. Investors buying the stock need to know that a bubble could burst as the price declines. The stock has fallen below a key 50-day MA, pointing to a building bearish momentum.

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