The GameStop stock price followed the WallStreetBets favourites lower yesterday. However, bulls were saved from slaughter when GME bounced from key support.
GameStop Corp (NYSE: GME) closed at $190.66, down $8.90 (-4.46%).
For the fourth consecutive day, GME stock finished lower. Furthermore, yesterday’s sell-off led to the price settling at the same level that started May’s 80% pump.
However, the selling was not limited to GME. Many of the so-called meme-stocks made famous by Reddit’s wallsStreetBets forum suffered heavy losses.
ContextLogic (NASDAQ: WISH) cratered 8%, AMC Entertainment (NYSE: AMC) gave back almost 10%, and Workhorse Group (NASDAQ: WKHS) was not far behind with a 9.6% decline. So on that basis, you could consider GME to be a relative outperformer.
However, the outlook for the gaming console is starting to worsen.
The daily price chart shows the GameStop stock price has lost the support of the 50-Day Moving Average at $204.79 and a key uptrend in place from March, at the same level.
Although, GME did bounce after briefly penetrating the 100 DMA at $179.75. The lower end of a short-term descending channel at $177.00 lends its support to the 100 DMA and reinforces the significance of this area.
The recovery into the close saw the price recover horizontal support at $188.00. In March, when the price broke above this previous resistance level, it triggered an 80% melt-up to June’s $344.66 high.
The bearish outlook will deteriorate further should GME close below $177. In this event, $100 becomes a logical downside target.
However, if the price climbs above $208.00, it will have cleared the 50 DMA, recovered the uptrend, and broken out of the bearish descending channel. This would put GME’s prospects firmly back in the hands of the bulls.
Therefore, the next few days could swing the balance either way.
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