Shares of GameStop (NYSE: GME) closed at $26.70 +0.40 (1.52%) on November 23, posting a slight gain after reports Emerging billionaire investor Carl Icahn is still selling shares short, leaving investors to wonder if another potential short squeeze will occur before the end of the year.
Analyst at S3 Partners Igor Dushanovsky noted short interest in GameStop is now around $1.3 billion, roughly 20.5% of the total.
However, data from S3 Partners shows that 95% of available share borrowings have already been used to cover short positions, leaving just 3 million shares available for short sales.
“The vast majority of short sales on GME have already taken place, existing short sellers will be able to add a little more to their positions and new short sellers can enter the trade – but there aren’t enough shares left to borrow to complete large share trades,” said the note by Igor Dushanovskiy from S3.
Graph and analysis of GME
In particular, GME has been trading in a range of $21.89 to $34.99 over the last month, which is quite wide, and it is currently trading in that range, where prices have stabilized recently, which could provide a decent entry opportunity. However, some resistance may be present above.
Resistance is seen at $26.89 from the trend line on the daily chart, while the resistance zone from $27.60 to $27.64 is formed by the combination of several trend lines and important moving averages over different time frames. At the same time, from $26.18 to $26.53 is the first support zone.
At press time, GME was trading above (5.04%) its 20-day Simple Moving Average (SMA), although still below its 50-day and 200-day SMA.
Technical analysis of GME shares
Interestingly, the short-term technical analysis (TA) for GameStop shows that the one-day indicators are mostly bullish. The summary indicator indicates a “buy” mood at level 10; Meanwhile, the moving averages (MA) suggest buying at the 8 level.
The oscillators are also pointing to “buy” sentiment at two levels, while the majority (9) are in the “neutral” zone, according to data obtained from the market analysis platform TradingView on Nov. 25.
On Wall Street, the two analysts who give GME a price target for the year put the average price at $16.00which is 40.07% less than the current share price of GameStop.
Based on the opinions of two analysts, GameStop’s consensus rating is “sell”, with one analyst advocating “hold” and the other suggesting “strong sell”.
GameStop Short Squeeze Potential
Investors looking to make new bets against the stock favorite, memes, seem to have missed the mark. Short-lived interest in the video game store has declined sharply over the past two years, a direct result of one of the largest and most high-profile layoffs in the industry.
Short sellers do not have enough GameStop shares to put significant negative pressure on the company in the near term without a significant increase in borrowing costs, Dusanivsky said.
Ultimately, GameStop’s price action in the final weeks of 2022 will be driven mostly by buying demand rather than short selling, according to Dusanivsky, who said that would be the case as there isn’t a large amount of stock available to borrow.
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