GME Stock Forecast: GameStop Corp has a good day in a bad market but fails to hold above resistance

• Gamestop rose 7% on Tuesday in a down market.
• GME shares closed well below their intraday high.
• GME is close to breaking a key resistance level at $200.

GameStop just won't go quietly into the night, like I am sure many investors would want it to. While the price is too high by traditional valuation standards, that old chestnut "the market can stay irrational for longer than you can stay solvent" is definitely at play here.

GameStop rallied 7% on Tuesday to close at $194.46.

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Ok, here comes the quick recap for those very few of you who have not been following the story so far! 

GameStop is (or was) a struggling online video game retailer with shops located all around the world selling – yes, you guessed it – video games. As we all know, retail is a struggling space as online continues to take over, and this has been a trend for GameStop too. As a result, GameStop was heavily shorted by hedge funds as they bet that the price would decline further. That is when the fun began with retail traders on Reddit's r/WallStreetBets forum. They mobbed the stock and moved the shares to nearly $500 in January, before sliding back to sub-$50 by mid-February. They are now currently trying to hold the price near $200. 

GME stock dividend

No, GameStop does not pay a dividend and is unlikely to deliver it any time soon. GME will need any spare cash to invest in building its digital strategy and may actually need to raise cash to do so. GameStop has hinted at a capital raise in a filing with the SEC before Christmas and again post Q4 results. 

The digital strategy is a serious project which Ryan Cohen is spearheading. Ryan Cohen has done the same for Chewy, turning it from a retail struggler into an e-commerce giant in the pet food space. Now that Cohen has got more influence over GameStop, with more seats on the board and being officially tasked with leading the digital strategy, he is not wasting time.

Several senior executives have left or are due to leave shortly in a management shakeup. GameStop hired a new Chief Operating Officer and on Tuesday made further executive appointments. Coming from Amazon, Elliot Wilke will join as Chief Growth Officer and two further hires from senior positions at Chewy.

GME technical analysis

Gamestop technical picture has not really been clarified despite Tuesday's strong performance. Resistance at $200 and $218.93 need to be broken to give a renewed push to the bullish trend. Until then, GME is still in a holding pattern, with a slight bearish possibility due to the moving averages crossing.

 

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