GameStop shares fall by 60% on Tuesday, as the price hit $90. "I think the GameStop move is pretty much done," says Chris Vermeulen, chief market strategist at The Technical Traders.
GameStop is plunging 57% right now on Tuesday as we speak it's down 84% from its highest from just a few days ago, Christopher Newlin, chief market strategist@thetechnicaltraders.com is here to break down market action. If you're watching this on YouTube comment down below whether or not you've been trading GME and whether or not you've sold your positions at what point you sold and why we like to learn directly from the audience, you're the best source of data.
Chris, welcome back to the show. Tell us what's happening. Is it done? Are the diamond hands now holding onto it to the GME anymore? I think the game stop move is pretty much done. I think the, uh, the bubbles deflating and everyone who chased price up and who was looking to hold their positions have now all flipped their, uh, changed their tune and they're all selling and they're trying to get out and it's falling in a, in a fast mode, which means there's panic and they don't care what they get.
They just want to get out of it. They don't care the price. And that's the typical. The type of price action. We see when there's a bubble, a news-based bubble in a, in a stock or commodity. Did you see any indication of the sell-off prior to what we saw today and after the yesterday as well? Yeah. Well, typically when you see it, it's tough to almost see it on this chart because the price is, is so condensed.
But when you get a price gap in the chart that moves up 148% from the closing price, the previous day to the high, the next day, pretty much almost where it opened. That is a pretty extreme move. And, uh, this chart doesn't actually fully show it, but GameStop actually went all the way up to 520 in pre-market at one point or 518.
Uh, so when you get these giant gaps on the chart followed by huge volume and everyone is interested in it, it's in the media and people who don't normally trade this stuff, who aren't even traders want to trade it. You you've got to like look back and go, wow, this, this is like a total mania. And at anytime it's going to burst.
Usually within a few days and that's exactly what we've seen. Yeah. Well, it is interesting because even before it hit the, uh, near $400 level, you would, you would assume that even if, even at the two 40 or $200 level, you would assume that this is already overstretched, but it just kept going up. So my argument to what you just said, Chris, is that at the $400 level, if, if you're just looking, if you're just looking at what was going on on Reddit and wall street bets, people were still holding the line.
People were still pushing it up. So it already be resistant at 200, at 300. Why couldn't have gone further up? It could have, you know, I always actually hoping is going to hit about seven 50 or a thousand. And at that point I was actually going to be excited to short it because thousands are solid whole number.
I think a lot of people were kind of thinking the same thing, which is probably why I'd never made it. But, um, when you have these massive movements of just crowd psychology piling in. Uh, you never really know how far something is going to go. And this is where you really need to understand risk management position management, because it's really easy to get in hot water trading these because if it gaps down 48% on a day or gaps higher, 150% against you, uh, that's going to do a lot of damage, right?
So these are very dangerous, um, stocks to, to be playing. Uh, really that's the grand scheme of things here. So Chris, what's your reaction to today's price action. Would you be jumping in at these levels or are you going to stay on the sidelines? Yeah, I, I wouldn't touch it. Um, it's, it's just a, it's a full-on gamble here.
I think, I think the excitement, the moves more or less done, uh, it's going to be very random. I, I'm not a fan of trading things that jump around randomly. Um, it's hard to make money and it's just a high risk trade. So I steer clear of it. I haven't traded it. I'd like to, but. Uh, it didn't hit the levels that I was looking for.
So at this point I would just let it fizzle out, move on. Don't let it, don't let the excitement like suck you into trading. This is how the market pulls money out of your pockets. Is it gets your attention with something like this and then it'll end up taking it if you're not a very sharp trade. Yeah.
And, uh, there are no fundamentals to back up this trade. Do you think, would you, I mean, do you like this company? Um, I don't really know a lot about his fundamentals, to be honest, I'm a pure technical analyst. So, um, I don't know where that, uh, where that stands the ideology behind the whole short squeeze is that look, we've got to, we've got to, we, we, as a little retail traders, we've got to hold the line, we've got to stick it up to the wall street wall street firms.
We've got to, we're going to show the hedge funds who's boss. And so a lot of people, a lot of people were kind of just long with that kind of. No one really cared about the fundamentals, the technical, they were going in with the pure cardiology. And so, um, you know, it was interesting for me to observe how far that could have taken the stock.
Did you, did it, did it beat your expectation? Yeah, it did meet my expectations. I remember watching it at 200. Or H 151 night or 250. I watched an overnight trading. It ran up 150% in, in the evening. And then from midnight, till like four in the morning, the same session, more or less overnight trading, it felt like, uh, 50%.
And then it rallied 97% just before the opening bell. All this happened while everyone was well, most people were sleeping. Uh, it was, it was amazing to watch, but, uh, it's amazing also to watch, uh, the small people take, not take advantage, but give a taste of manipulation to some of the bigger players.
We've done a lot of trades from big funds, moving money in and out with trading systems and things like that. So to watch the herd mentality pile in and just, you know, give wall street a taste of what it's like to be manipulated for once, this is kind of a, I think that's what people are really enjoying about it right now.
If you're just looking at the technicals of the chart again, let's just take a look at the chart. Do you think it's hitting some sort of a bottom right now? It could be, um, let's take a look at the, uh, 30 minute charts. So it's definitely coming into, uh, some type of support zone. It's. Such a huge movement.
It's hard to see much on the chart, but it's right into this first initial wave where we saw initial pop in a big run-up and then a sell off. So it's definitely coming into support. It's also at this green line here, which is a 20 day moving average. Now this chart is a 30 minute chart only. So we're seeing the.
The last, you know, five, 10 trading sessions chopping around. And the 20 days, usually a very strong support level, uh, coupled with the fact that it's, it's at its first level where it popped up and, uh, and then kind of gapped and pulled back. So definitely a support zone, but I'm not a fan of this type of price action in terms of trying to get into this, because you could have a very big gap, uh, going forward.
Um, so it's just a high risk trade, right? It's. I'm just wondering if you were to observe this, uh, you know, lift from a completely neutral perspective. Let's say, I like to use this analogy. Let's say if you were an alien, you didn't read anything on the internet yet. And you're just looking at this chart to give you this chart with no name, no nothing, no background information.
And you're just looking at the price levels right now. Would you be thinking to yourself from now it's probably a good time to get in based on what you just said. Yeah, it is. And when you look at any type of bubble or stock market, top, it usually rallies up and then has some significant collapse. And then it has this kind of, it's like a false belief, like people buying into it and then eventually it falls and goes much lower later.
So I would not be surprised that there's a lot of bottom hunters fishing in here going, wow, I can finally buy this thing at a hundred. It was $500. It's like two and a half days ago. Right? So I could see a technical bounce, an oversold bounce, but I just don't see legs behind it. I think it'll fade out and fizzle out after.
Yeah. Even at a hundred dollars. It's still up a lot from us. Can you go back to like mid January? Where was that? Before this whole thing started like 14 bucks. If we. If we just get rid of that spike, you can see where it traded back in March. It was at $2 and 60 cents. Okay. Forgetting March quiz, test us co-pack three weeks.
Oh yeah. Well, if we go back three weeks, it was $22. Okay. So even at a hundred dollars, if you got in three weeks ago, you're still up, assuming you assuming you held onto the diamond hands and you didn't do nothing yet. Yeah, for sure. But the majority of people, when you, when you look at this price actions, try and get, you can see it was very light volume.
There's the majority of people piled in when it went from 20 to 38. So you're still in the money for sure. But the majority of people piled in at, at these highs, right. That's where all the volume is. So most people who have who've jumped in to try and take advantage of this are now deeply underwater, but.
The early birds are still in the prophet and they're still laughing right now. You're looking at volume. Do you have, do you, as an trader, do you have indication as to whether or not the volume is long or short? No. You don't. You don't really know that. No. Sorry. Yeah. Yeah. Okay. Now let's take a look at AMC.
Are we seeing similar price movements in the, uh, in the AMC, a stock? Yeah, it's, it's, it's the exact same type of thing where you get this huge, like, look at, look at the gap on this. I mean, these charts are almost hard to look at just because they dwarf the previous price action, but AMC jumped 291% in one trading session from the closed one day.
To the open the next day. I mean, all you, all you can say is, man, there's going to be people taking profits. Whoever was in is going to be locking in gains. That's what happened. But then you get the rest of the crowd piling and kind of pushing the price up and down. Uh, so it's the exact same type of scenario you can see.
It is down, you know, 61%. It was the low this morning down almost 70%. So it's a, it's a wild ride, exact same scenario. It's just everyone piling in. See this time, it was a bigger gap right off the hop. Cause a lot of people learn their lesson on G a game stop. They all go, wow. The next one that's like listed on the Reddit.
I mean, I'm piling into it. And so the market makers saw that and of course they got the price higher, uh, in pre-market to two. Try and wait out the buyers and the sellers. And so all the opportunity was gone at the opening bell the next day. And everyone paid the ultimate high price and got absolutely slaughtered.
This is what wall street does the best. If they see huge demand, they're going to make sure you pay a premium and, and they're going to be selling any shares or balanced that they have, and it's going to completely claps. Uh, and you're the one holding the bag at the top, and now we're seeing it kind of overlay.
You know, now we're going to see more of these stocks happen, but these big gaps are probably going to be the major issue. You'd be better to actually short these massive gaps, but, uh, that is a dangerous bet on its own. Yeah. And, uh, to those viewers watching right now, if you sold either of those stocks at any point in the last 48 hours, let us know in the comments down below.
Why. And at what point you exited out of those trades, we'd like to know you're the first source of information. The data points come from the viewers. Now let's talk about silver. I wonder if there was a sector rotation out of GME into silver in the last 48 hours. So we definitely saw a big push. They, the red a group started to talk about silver, you know, four days ago, right over here, we saw a big push and silver and they started to gap up and it started to run.
Um, definitely I think money is now. I mean, I've even seen it on posts in, from emails as well. People are like, how do we get in that Reddit group? How do we. How do we get involved in this? And, um, you gotta be really cautious just because this it's like gambling, this type of trading, but we're definitely seeing the market move.
Now this time Reddit group was talking about getting into silver, to run the shorts out of the market. Silver is a little bit different than a stock. It's a commodity. There's going to be a massive lag and delay and trying to really run the shorts out of the market. I think if people were to just keep buying silver stockpiling, silver, become silver stackers and hold onto the silver and keep doing this month after month after month, I think it could drive the price up and actually truly run the shorts.
But because this is paper money, this is like futures. It's not real silver. I mean, it's going to be a little tougher to run those shorts out of the market. Um, but, uh, we're definitely saw the big pop and now we're seeing it fizzle right back out where people just go for the quick gain and then they cash out.
So that move is kind of done at this point, too. Chris, there's a debate going on on the internet as to whether or not the wall street betters were even evolved into silver tray. Yes. They started talking about it. But if you looked at the forum, most people are now denying allegations or. Uh, denying the suspicion that they were involved.
And so I had a, I had a discussion with the guest about this yesterday. Uh, the wall street betters don't seem, I don't here's a pinning was that it's not all the wall street betters is the exact same crowd going into GME that went into silver. What do you think. Um, I definitely know a good chunk of them moved into silver, but, um, it's definitely not the same herd.
I think, I think a stock trader and a futures trader somebody trading silver, they're a bit different group of people and the futures traders. There's a lot fewer of them compared to people who can trade stocks. Um, so it definitely, I know a lot of people, even I was thinking I'm like, Whoa, this could be a really good play.
If this really goes parabolic, silver could like go to 80 or a hundred, like in a heartbeat. Um, but I don't think it had the same kind of oomph behind it because it's not an equity. It's, it's not quite as easy to just. Do what they did in GameStop and AMC, in my opinion. Right. Okay. Yeah. Silver miners also took a hit a bit today.
Um, now I, I wonder Chris, you're not, you're what you want to stay in the sidelines for some of these more volatile securities. What are you looking at right now? What are the trades you're looking forward to making. Um, I mean, some of the traits we're looking at in this market, precious metals, I've kind of ruled out.
First of all, they've been in a downtrend for awhile. If we, if we just look at the, uh, the silver sector, uh, the silver miners, they have this huge gap to the upside and then came back down. Uh, it's really been trading sideways, trying to find momentum. If you look at the, uh, the gold sector or the gold stocks, they've been trending down.
So precious metals aren't top of the list right now, ones that are actually gaining traction or like the, uh, the MJ, the harvest marijuana ETF. Um, we're looking at, um, electrical vehicles, still clean energy. Um, we're starting to see the biotech, the biotech sector could really start to pick up speed and expand.
We're seeing a lot of money flow into small cap stocks and into tech heavy, uh, tech-related small caps. So that's where the money's going. It actually feels a lot like what happened last March, April, where everyone started to pile into these, uh, the tech and the small caps and really take things off. So, yeah.
We're kind of back into this, this sweet spot where some of the fastest moving stocks are the ones that are getting bought up here, I'm going across the board. So I think we're going to have another big tech run. The NASDAQ's up really nice. I think you just need to be kind of tech weighted. Um, that's kind of the, the area right now to be in Chris.
I want to thank you so much for giving us a price update. I know you're a busy trader, crazy, crazy times for the markets. Thanks for coming in. Yeah. Thanks for having me, David, anytime. And thanks for watching Kitco news. Stay tuned for more updates.