How big was GameStop? It was the capo di tutti capi of all the meme stocks during the 2021 “Meme Stock Mania.” Its daily volatility was something out of a day trader’s “bucket list” fantasies and its monthly returns were equal parts amazing and ridiculous. Amazing if you owned it long and ridiculous if you kept trying to short it. Roaring Kitty and the r/wallstreetbets crowd became the embodiment of what Andy Warhol reputedly said all those years ago, “In the future, everyone will be famous for 15 minutes.”
On a year/year closing basis from Jan ’20 – Jan 21 GME was up an otherworldly 8,364% (not a typo). We’ve done historical work on bubbles and suffice it to say that GME re-wrote the study. The other side of the study is what happens in the aftermath of a bubble and it’s safe to say we’re all watching it occur for GME now. There’s an excellent chance GME gets back to single digits.
After its intra-month peak of 483 in late January 2021, GME fell 92% in 15 days (also not a typo), rallied 800% in 13 days (see other parenthetical comments) to a lower high, dropped 2/3 in the following 11 days, and then consolidated for a few months before rallying to still another lower high in early June 2021 (+195% over 51 days). The stock dropped almost 60% over the next 41 days but proceeded to repair itself over the next several months. However, the “bacio della morte” occurred in November 2021 for GME as it was saddled with two fake breakouts – “bacio della morte” fits perfectly with fake breakout.
GME is now at its lowest level since early March 2021 and is burdened with every possible negative technical input imaginable. The weekly chart that follows is similar, if not identical, to other meme or FOMO-type stocks / indexes we reviewed in our note from November 24, 2021, “The Not So Magnificent Eleven.”
