GameStop Corporation (NYSE: GME) gapped up 7.82% Tuesday after a regulatory filing showed Ryan Cohen, who was recently elected as the company's executive chairman, increased his stake in the video-game retailer.
Cohen purchased 443,842 shares of GameStop. A second filing shows his RC Ventures increased its stake in the company to 12.1%.
The reaction on social media was mixed. Some retail investors believe the executive is "putting his money where his mouth is." Others, perhaps those who held shares of Bed Bath & Beyond - which Cohen held a large stake in before exiting the stock in Aug. 22 - called him a "pump and dumper."
Shortly after opening the trading session, GameStop bumped into heavy resistance at $26.55 and started to sell off. On June 7, GameStop also rejected that level, which may have caused a bearish double top pattern to form.
The GameStop Chart: GameStop was falling over 4% off its high-of-day, which had the stock looking to print a bearish Marubozu candlestick, which could suggest lower prices will come again on Wednesday. If that happens, bullish traders want to see the stock reverse course off the lower range of the gap below.
- If GameStop completely fills the lower gap and reverses course, a new uptrend could be on the horizon. If that happens, it will occur above the 200-day simple moving average (SMA), which is bullish. Should GameStop remain above the 200-day SMA for a period of time, the 50-day SMA will eventually cross above the 200-day. That will cause a bullish golden cross to form.
- Bearish traders want to see big bearish volume come in and drive GameStop back under the 200-day SMA, which could accelerate the selling pressure.
- GameStop has resistance above at $27.69 and $28.34 and support below at $24.03 and $21.89.