After a harsh end to the first quarter on Thursday, GameStop (GME) – Get GameStop Corp. Class A Report stole the headlines after the close. That’s when the company announced that it plans to split its stock.
Specifically, management wants to increase its share count to 1 billion shares, up from 300 million.
As TheStreet reported earlier: “GameStop did not provide further details. The company does not for example spell out the mechanism of this split, like the ratio, in the form of a stock dividend.”
GameStop stock was up as much as 14% in Friday’s regular session and 22.5% in last night’s after-hours session. Now though, the stock is up just 2.5% on the day.
Apple (AAPL) – Get Apple Inc. Report, Tesla (TSLA) – Get Tesla Inc Report and a few others have been on a tear, but many investors didn’t expect GameStop to be on that list as well. I know I didn’t!
From the low on March 14, GameStop stock rallied in 10 straight sessions and registered a 157% rally from the low to this week’s high. Since topping out, the stock has been wobbling, but continues to hold a key support area.
Will that remain true following this stock split news?
Trading GameStop Stock
Daily chart of GameStop stock.
Chart courtesy of TrendSpider.com
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Looking at the daily chart, GameStop stock did a great job punching through the fourth-quarter low and prior resistance area near $130. Then it quickly reclaimed the $159 to $160 area.
This was meaningful, as there are multiple key levels in this area. They include the 10-month and 200-day moving averages, as well as a key resistance level in December.
After rallying to the 61.8% retracement, GameStop couldn’t push higher without a rest. That’s the same measure that’s acting as resistance for Friday’s rally.
That leaves us with a focus on two zones: $190 (the 61.8% retracement) on the upside and $160 on the downside.
If shares can push through the $190 resistance area, it puts this week’s high in play near $200. Above $200 opens the door to the $217.50 level, followed by $250 resistance.
Bears would be astounded by that move, but it’s what the technicals say when you move from level to level.
On the downside, it’s fairly obvious why the $160 area is key. There we have recent support, as well as the 10-day, 10-month and 200-day moving averages.
To lose this area puts the $130 area back in play.
Source: https://www.thestreet.com/investing/trading-gamestop-gme-stock-split?puc=yahoo&cm_ven=YAHOO&yptr=yahoo