Is Game Stop due for a bounce?
Technically Speaking
Currently, price is trading near the 2015 low prints around 25ish.
For now, the main levels to watch are the 25 level on the downside and the pivot area noted on the chart.
As noted on the chart, if I were long or looking to get long, my get out price would be under 20.00
Fundamentals
Summary of GameStop's business.
Here is a good write up at Seeking Alpha. The main point I took away was that digital gaming is disrupting GameStop's business model. Will they go the way of Blockbuster? However, I think it is constructive to think about, especially if you are planning to hold a stock for the long term.
My checklist for evaluating stocks
Should I buy?
* Is it trading at an important technical level that is obvious?
* Is the R/R in your favor?
* What is the likelihood this company will either go bankrupt or it's products or services become obsolete?
* How much debt do they have?
* If heavily indebted, how much is coming due in the next 3-5 years? Can they cover their debt payments based on reasonable analysis?
* Will their product or service become obsolete? This really is too hard to say, too many things looked obvious in hindsight, think Blackberry -0.34% .
Risk
* For individual securities, risk no more than 3% as a starting position. You can always add later.
* Write down a price level that you will consider liquidating all or part of the position.
* What is a reasonable price target?
Execution
* Write down the answers to the questions above and if you can answer yes to all of them, take the trade.
OVER THE LONG TERM, THE WAY TO WIN IS TO HOLD ONTO YOUR WINNERS, AND CUT YOUR LOSERS. IT IS AS SIMPLE AND AS HARD AS THAT.
As always, please leave any comments or questions.
Currently, price is trading near the 2015 low prints around 25ish.
For now, the main levels to watch are the 25 level on the downside and the pivot area noted on the chart.
As noted on the chart, if I were long or looking to get long, my get out price would be under 20.00
Fundamentals
Summary of GameStop's business.
Here is a good write up at Seeking Alpha. The main point I took away was that digital gaming is disrupting GameStop's business model. Will they go the way of Blockbuster? However, I think it is constructive to think about, especially if you are planning to hold a stock for the long term.
My checklist for evaluating stocks
Should I buy?
* Is it trading at an important technical level that is obvious?
* Is the R/R in your favor?
* What is the likelihood this company will either go bankrupt or it's products or services become obsolete?
* How much debt do they have?
* If heavily indebted, how much is coming due in the next 3-5 years? Can they cover their debt payments based on reasonable analysis?
* Will their product or service become obsolete? This really is too hard to say, too many things looked obvious in hindsight, think Blackberry -0.34% .
Risk
* For individual securities, risk no more than 3% as a starting position. You can always add later.
* Write down a price level that you will consider liquidating all or part of the position.
* What is a reasonable price target?
Execution
* Write down the answers to the questions above and if you can answer yes to all of them, take the trade.
OVER THE LONG TERM, THE WAY TO WIN IS TO HOLD ONTO YOUR WINNERS, AND CUT YOUR LOSERS. IT IS AS SIMPLE AND AS HARD AS THAT.
As always, please leave any comments or questions.
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