(The Street) — The whole Reddit saga will be remembered for a long time and as a result so too will GameStop (GME).
It’s actually quite impressive how high the stock price remains given that it’s been months since the short-squeeze hoopla created a stir in January.
Impressively, the stock remains elevated despite multiple earnings reports and the company’s announcement to raise $551 million via a secondary offering.
While this action will result in more shares coming to market – increasing the share count or “supply” – bulls have remained undeterred, keeping “demand” high as well.
As a result, the stock price remains higher by more than 1,100% so far this year.
Another short squeeze stock from Reddit is AMC Entertainment (AMC). While it hasn’t maintained its gains like GameStop, it’s been coming back to life lately too.
How long can GameStop keep it up?Trading GameStopDaily chart of GameStop stock.Chart courtesy of TrendSpider.com
I want to preface this with a rather obvious caveat: GameStop is speculative, it’s volatile and its trading ranges are incredibly wide. While there is great risk in trading this stock, there is also opportunity.
With a new CEO succession plan in place and plans to capitalize on e-commerce, bulls have several catalysts to latch on to.
Earlier this month, GameStop stock reclaimed the 10-day and 21-day moving averages, but it continued to struggle with the 50-day moving average. That is, until Monday when it reclaimed this mark too.
Still, it’s been an uphill battle for bulls lately. Even after reclaiming the 50-day moving average, the stock still struggled with $188. On Tuesday though, the stock finally erupted through this mark, climbing 16.3% in the session and closing at a multi-month high.
It did give investors some pause though, as shares struggled with the $212 level. However, they didn’t have to wait long to see how it would resolve.
With GameStop stock gapping over this level now, investors want to see shares stay above the $210 to $212 area. To lose this zone could very well put the 10-day moving average and the $188 level back in play.
On the upside, let’s see if GameStop can take out this week’s high and clear $250. Above the latter puts the $275 to $295 zone in play, with $300-plus possible if it clears that area.
On the downside, a break of $188 puts the 50-day moving average and uptrend support (blue line) back on the table.
Article originally published by The Street