- GameStop stock closes down 5% on Monday as meme stocks fall.
- GME stock is also suffering the Ryan Cohen effect after he sold BBBY.
- GameStop shares close right on the 200-day moving average.
GameStop (GME) stock has suffered a hangover from the Ryan Cohen effect after the GME chairman exited his Bed Bath & Beyond (BBBY) position. This has likely caused many retail traders to incur significant losses as BBBY collapsed nearly 50% soon after the disclosure. Cohen has a long line of followers and is seen as the savior of the gaming retailer.
Also read: Bed Bath & Beyond Stock Forecast: BBBY loses 12.5% after Ryan Cohen files to sell stake
GameStop stock news
Outside of the Cohen story there were growing headwinds for this rally anyway. Meme stocks had surged to start August as the so-called Fed pivot led to a massive risk-on rally that had seemed to stretch too far. BBBY was the poster child for this rally, but many other retail names had seen huge gains.
GME stock itself had rallied nearly 50% from late July until last week, so the move was unsustainable. Once markets began to price in the mere possibility of more rate hikes, risk assets stalled. GameStop has also seen video game sales data continuing to stall. Cohen then put the nail in the coffin for this meme stock rally as retail traders bailed out of BBBY, AMC Entertainment (AMC) and GME.
GameStop stock forecast
Gamestop closed on Monday right on the 200-day moving average. The double bottom on March 18 and May 12 started the rally, and now we have a double top on August 8 and 16. Adding to this bearish sentiment is the break of the trend line and the imminent break of the 200-day moving average. The series of higher highs and lower lows will be broken if support at $32.18 breaks.
That would see a GME stock target of $28 and then $19 as the next lows in that series. Risk assets, especially higher-risk ones such as crypto and meme stocks, are likely to remain under pressure in the short term as the rally unwinds and more retail investors exit positions. A strong dollar, weak Bitcoin and weak Nasdaq are the signals for high-risk assets suffering.
GME daily chart
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