GME Analysis (Fun while it lasted!)

1:10 p.m. New York time

GME has continued its decline from a high of 470 on January 29 and has hit a low of 74.22 so far today. If the price continues to decline, without a significant upward bump, then GME is on a new downtrend. If the price reverses, then either the correction has ended and GME will move to new highs, or the correction is taking a compound form and the net trend will be sideways.

I think the new downtrend scenario is the most likely, given the power of the decline. But there’s nothing in the Elliott wave analysis so far that would make it a certainty.

The Elliott wave analysis shows that GME is in the 3rd wave of its downward movement from its January 28 peak of 513.12. That peak was wave 5 (of indeterminate degree; I haven’t done the degree analysis). The decline that followed is in its 3rd wave, which is either wave 3 of a new decline or wave C of a correction.

The price remains above the previous low, which was 17.05 on January 11.

[GME at 1:06 p.m., 15-minute bars, with volume]

Learning and other resources. Elliott Wave International has long been the leading analytical house based on Elliott wave theory. They make available a number of free educational materials and other resources, in addition to their for-pay subscriptions.

I recommend two books, both by people associated with EWI.

First, Elliott Wave Principle by Robert Prechter and A.J. Frost is the book that, along with Prechter’s analyses, that created the revival of Elliott wave theory. I first read it in 1984, and it has had a profound influenced on my thinking about markets ever since.

Second, I’ve found Visual Guide to Elliott Wave Trading by Wayne Gorman and Jeffrey Kennedy, both of EWI, to be a useful book that relates Elliott wave theory to practical trading. The authors are hands-on Elliotticians, and for an active trader, that’s exactly what’s needed — less theory and more how-to. The first chapter of the book gives a very nice thumbnail run down of what Elliott wave theory is all about.

Terminology. Here are some links to information about some of the technical jargon I use.

By Tim Bovee, Portland, Oregon, February 2, 2021


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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