GME: Why the explosive move?

a) Charts

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Click picture to view in full size

b) No news on briefing
Reasons:

1) All time high (Brad little mike)

2) New game momentum 5/11 (little mike)
3) Cramer chirp momentum ()
4) Big buyer/big order (mike)
5) Intraday momentum
6) Momentum stock (Zi)
7) News we don’t know (Tim)
8) Futures got a lot better (little mike)
9) Short interest?
10) Breaking news?
11) Ton of volume at 36.20 causing theresistance level?
12) “I have no freaking idea!”?
13) “The Specialist is a crook!”? (GMAN and he wasn’t even in the room)
14) “The stock is nuts!”?

New traders often remark with frustration, “I sold that stock too early.” Have you ever said this?
Those who do not admit that they have said this are the same people who claim that they have
never watched “American Idol”. Of course you have, on both counts. And by the way, I am predicting
the beat boxer, Blake, for this year’s winner. How do you know an explosive move is coming?
Knowing the answer to this question, will help you make more chops.

The explosiveness of a recent upmove move in GME surprised some of our new traders and me.
(See intraday chart above). So our new class and little mike worked on some reasons as to why the
stock exploded. Exactly why the stock exploded is not most important. Considering all of the
potential reasons as to why the stock exploded is most important. You must learn how to think like a
good trader. And if you were trading GME you would want to know the answers for all of the
potential catalysts listed above prior to it moving above 36.20. This information will help you foresee
an explosive upmove. If you are unable to detect a potential explosive upmove you will leave a lot of
money on the table. How do we detect an explosive upmove?

Look at the charts above and the reasons offered by the new class and little mike for the explosive
upmove. Take a few minutes and write down the reason(s) that you conclude caused GME to
explode.

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Let’s go through the reasons that the new class and little mike offered for why GME exploded.
1) All time high

This makes a lot of sense to me. When a stock is at an all time high, the shorts do not know how
much higher this stock can go, those interested in buying are fearful that they may not be able to get
the stock cheaper, and the momentum buyers instinctively buy new highs. The confluence of these
factors can cause sharp upmoves.

2) News momentum

Apparently, there is a hot new game coming out soon. And GME will make some money to help sell
it. And the stock has been strong lately as a result. Is this the reason though why people would buy
above 36.20? Not likely. The news was reported five days ago. Sorry little mike, but good thinking.

3) Cramer chirp momentum

Cramer chirped up GME a few days ago. Again good to know, but not sure a Cramer chirp will still
affect a stock a few days after the fact.

4) Big Order/Big Buyer

This makes sense to me. It might just have been that someone had a big order that they needed
filled and just filled it. Sometimes orders enter the marketplace and stocks just pop.

5) Intraday Momentum

Maybe partly. A stock that is trading higher will trade higher. Intraday traders will buy when a stock
makes a new high. As long as it is going up these momentum intraday traders will buy.

6) Momentum Stock

This is a little different than Intraday momentum. This means that over the last few months or weeks
that this stock has traded higher. The momentum in the stock is up. Traders bought at 60 because
traders bought at 59 and traders will buy at 61 because traders bought at 60. And the stock will
continue upwards until it stops trading higher. Then the stock may fall like a house of cards.

7) News we don’t know

I like your thinking Tim, another conspiracy theorist like me. Just don’t let Mr. Spencer find out you
said this. You know the truth is that over time you will learn that we really do have all the information
almost always. Sometimes we won’t. Consider that you might not have all the information but do not
get paralyzed by this thought. When Steve and I first started trading, we had no charts. And there
was no Trade the News. There was no CNBC. There was no a/c in the office either. In fact, Steve
asked our boss one day if we could get TVs with CNBC, and he was told, “No, you don’t need it.”
That was followed with, “Just trade the momentum”. We have evolved quite a bit from those days.
But you know what, just trade the momentum.
8) Futures got a little better

The futures getting a little better will not be the impetus for the stock to trade 80 cents higher. It may
propel the stock a little higher, but not 80 cents in a $36 stock.

9) High Short Interest?

If there is a high short interest in a stock you may see explosive moves. These explosive moves can
be some of the shorts covering. With GME the short interest was not very high.

10) Breaking News?

Positive breaking news in a stock can propel the stock much higher and quickly. With GME, there
was no breaking news. We checked. And there was none.

11) Ton of volume at the resistance level

36.20 was the resistance level. If there is a ton of volume done near or at a resistance level and the
stock finally clears this resistance level, you should expect an explosive upmove. The more volume
done at or just before the resistance level the greater you should expect the upmove. With GME,
there was not a ton of volume done at or right before 36.20.

12) ?

Sometimes you have no idea why stocks do what they do. Stocks can be irrational. Always protect
yourself against an irrational move.

13) “The Specialist is a crook!”?

I heard GMAN offer this explanation. And he wasn’t even in our meeting. “Monkeys.” But I heard
him. That can explain a crazy move. The Specialist takes in some stock before the breakout and
sells it much higher for a quick profit. I don’t know the Specialist in this stock so I am not sure if this
was a reason.

14) The Stock is nuts

Some stocks are just volatile. This isn’t one of those stocks. I wouldn’t say it was nuts. Ok. I am
going with the ideas in bold: A New All-Time High (I hate to say it….offered by Brad); and a big
buyer/order offered by Mike; and intraday momentum. These reasons make the most sense to me.

1 The problem here is that Mr. Spencer edits all of the written lectures. So he is going to find out.
Ripper for you Tim.

Most Specialists are not crooks.