Intro:I hope ya'll got out of the trades as i posted/said in my previous post. I knew this cycle was weird.
The play:
With the dump of BBBY, GME being in the same short basket has moved down 10% which is expected. What is not expected is the intra-day unfilled gap it's left. If you're unfamiliar with gap trading, just google "Trading Gap". The TLDR is that all gaps must be filled (except a few).
GME has NEVER opened this far away from last day's closing price before in at least the past 2 years now. The fact that a super massive gap like this has formed at this kind of price as well is insane. The effects of this gap is that due to the sudden and unexpected drop, on opening tomorrow algos are going to buy this up just based on technicals like RSI oversold, or MACD oversold cross and whatnot.
The reason why i say this with so much confidence is that if you just look at GME's chart on the 1YR (Caily Candles) chart, you will only find 3 unfilled gaps, 2 of which were formed in the last 2 days. There was one at $76 ish formed in May's run last year that was never filled and the 2 more due to the drops of the last 2 days. Most stocks will almost never let a gap unfilled whether it takes days or years to fill it. GME being the stock it is with large spreads and it's supposed illiquidity does not have any gaps beyond these 3 as everything gets filled within a day or a few days at most.
The play TLDR:
The idea here is super easy basic and simple. You buy the bottom, wait for the gap to fill and sell. That's it. Tomorrow may have a bit more downside due to dealer dumping hedges or buying more due to what might happen tomorrow, not sure. Unless this gap is corrected overnight/morning, they have a big problem on their hands either tomorrow or by Monday when tomorrow's buy volume settles.
Positions: Here are my positions for this trade. imgur.com/7Dz7uH4
In fact i got these 20 minutes before the market closed for the first gap and never even expected the second one. I'm legitimately excited because that second large gap in my experience typicall gets bought up real quick just based on it's oversold technicals. I've thrown my entire portfolio on this trade because that's how much i believe the gaps will be filled now that the BBBY saga is over. At most we have 1 more dumping day before this fills in my opinion due to clearing and settlement.
Downside:
-The downside of this could be that we see a slow and sustained drop over the next 3-4 months for GME down to like $24 from the current price. Losses on this shouldn't be too bad if you're betting just on the gap fill unless it somehow takes 4 months for it to decide to fill this gap which i highly doubt. The gap is close and fresh and can't be ignored.
The Upside:
-The upside of this is that the gap is fresh and close. Stocks close gaps like these either the next day or within a few days. With GME being the way it is, you can expect the gap to not only be simply filled, but to be OVER-Filled. We could see a PT of $44 before it normalizes again. In the best case, BBBY gains and losses get rolled into GME tomorrow because what else are people gonna do?
The play:
With the dump of BBBY, GME being in the same short basket has moved down 10% which is expected. What is not expected is the intra-day unfilled gap it's left. If you're unfamiliar with gap trading, just google "Trading Gap". The TLDR is that all gaps must be filled (except a few).
GME has NEVER opened this far away from last day's closing price before in at least the past 2 years now. The fact that a super massive gap like this has formed at this kind of price as well is insane. The effects of this gap is that due to the sudden and unexpected drop, on opening tomorrow algos are going to buy this up just based on technicals like RSI oversold, or MACD oversold cross and whatnot.
The reason why i say this with so much confidence is that if you just look at GME's chart on the 1YR (Caily Candles) chart, you will only find 3 unfilled gaps, 2 of which were formed in the last 2 days. There was one at $76 ish formed in May's run last year that was never filled and the 2 more due to the drops of the last 2 days. Most stocks will almost never let a gap unfilled whether it takes days or years to fill it. GME being the stock it is with large spreads and it's supposed illiquidity does not have any gaps beyond these 3 as everything gets filled within a day or a few days at most.
The play TLDR:
The idea here is super easy basic and simple. You buy the bottom, wait for the gap to fill and sell. That's it. Tomorrow may have a bit more downside due to dealer dumping hedges or buying more due to what might happen tomorrow, not sure. Unless this gap is corrected overnight/morning, they have a big problem on their hands either tomorrow or by Monday when tomorrow's buy volume settles.
Positions: Here are my positions for this trade. imgur.com/7Dz7uH4
In fact i got these 20 minutes before the market closed for the first gap and never even expected the second one. I'm legitimately excited because that second large gap in my experience typicall gets bought up real quick just based on it's oversold technicals. I've thrown my entire portfolio on this trade because that's how much i believe the gaps will be filled now that the BBBY saga is over. At most we have 1 more dumping day before this fills in my opinion due to clearing and settlement.
Downside:
-The downside of this could be that we see a slow and sustained drop over the next 3-4 months for GME down to like $24 from the current price. Losses on this shouldn't be too bad if you're betting just on the gap fill unless it somehow takes 4 months for it to decide to fill this gap which i highly doubt. The gap is close and fresh and can't be ignored.
The Upside:
-The upside of this is that the gap is fresh and close. Stocks close gaps like these either the next day or within a few days. With GME being the way it is, you can expect the gap to not only be simply filled, but to be OVER-Filled. We could see a PT of $44 before it normalizes again. In the best case, BBBY gains and losses get rolled into GME tomorrow because what else are people gonna do?
Note
Waiting on Tuesday.Current port: imgur.com/hRLQftu
Trade closed manually
Yeah fuck this i'm out. This is completely looking like November 2021. AMC/BBBY are the hedges and we're being dragged down by this trash even during SLD day.I'm out, screw this shit stock. Gonna go back to normal trading.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.