A word of caution.
Hey all. Long time since I've posted one of these but with all the hype for next week, I wanted to present another possible option to look out for. I hate to see apes get burned on options or let down because of high expectations. You know what they say, "Hope for the best, plan for the worst".
It's clear that the market as a whole, not just GME, trades on algos. You can see the same pattern across multiple basket stocks. The problem with following the pattern is that you can see the same pattern across multiple time frames.
So you may think its a fake out, but if you zoomed out you'd see a similar pattern and GME being at a different position within it. So while you thought we were "here", we're actually "there".
GME December 2020 vs GME November 2024
If you zoom out, you can see an uncanny resemblance to 2020. Throughout Q4 of 2020 you see GameStop making higher highs and higher lows. This is called a "Channel Up" pattern, or what some refer to as a "melt up".
You can see how prior resistances become future support levels. In 2020 you can see how GME loved the .786 retracement zone.
So far during this cycle, GME seems to love the .618 retracement zone.
To find these levels of support you use the Fib Retracement tool in TradingView. You take the most recent low and the most recent high to find areas where it may bottom out.
You do the opposite when looking for potential ceilings. You take the most recent high and the most recent low (once it's found support) to see where it can rise to.
You usually want to do this on larger time frames where you can see the primary trend over the past couple months. Above is the 30 minute chart.
Another important thing to mention is you don't want to buy on the way down in anticipation of it finding support at a specific level. Don't try to catch a falling knife. Wait for it to find the support first, get confirmation, and then you enter.
Now let me show you a picture that proves that this isn't as easy as it seems:
You would think based on this photo that MOASS is imminent. But what about the previous pictures showing the melt up in Q4 2020? Don't those look similar to our price action today also?
This is the problem with pattern matching. You can see similar patterns across multiple time frames. In fact the larger pattern repeats in smaller time frames, so it's repeating on a macro and micro scale.
Could we have been repeating the fractal pattern in May 2024 again but it was cut short because of our favorite cat's tweet? I don't know.
Remember, they're reading this too and they know that we know. So it's best to have the proper risk management in place. This is specifically for the options players. Since they know that we know, they can do fake outs, they can speed it up or slow it down, any number of tools to get us off track.
We've seen the pattern diverge on days like August 5 and September 10. Heck we saw a massive red candle just yesterday down to $27.20 meant to eat up everyone's stop-losses before bouncing back up to $28. If you had a stop-loss at $27.25 well then you're out of luck.
Say you had 1000 shares and your stop-loss triggered during a sudden "stop-loss hunting" red candle. Then within 10 minutes it's back at $27.75. Well, if you buy back in at $27.75 then you just lost 20 shares. Algo's feed on fear, panic, and euphoria. Psychology has always been their secret sauce until they met GME ape gamers.
Now, back to this photo. Could MOASS be next week? It's certainly possible. But like I said earlier, I rather be safe than sorry. You can't track these patterns candle for candle, or day for day. You need to watch the overall pattern/trend, as if it was a moving average, and check multiple time frames.
I personally believe we're more towards the middle or right yellow circle. This is because I'm comparing the pattern to today's price action.
I know I just said you can't track it bar for bar, but only to avoid hopium and buying short-term calls. Always plan for the worst case scenario. Don't give these market makers and hedge funds your hard earned money.
WARNING: TINFOIL AHEAD
This next part is just for fun and pure speculation. We've all speculated on the meaning of RK's frequent use of "35" and "110". There were 110 tweets in his montage and his Dune post was 1 minute and 10 seconds. What if "110" is a date. January 10th. To add to this tinfoil, check out this photo from RC's book.
This date also lines up with the middle yellow circle in the GME 2020 timeline.
TINFOIL END
As we near the end of the post let me tell you what I'm doing. Keep in mind that none of this is financial advice and you should do your own research and make your own decisions.
I like to buy options. But they're risky. Remember, the highest prices can occur during premarket when options aren't tradeable.
To manage my risk with options I buy far out expiry's that are near the money, so that they don't lose a ton of value like during that sudden red candle down to $27.20 yesterday. This is how you avoid the psychological game that market makers and hedge funds feed off of.
I'm personally looking at the $30 strike price and the earliest expiry's I'm looking at are 12/20 and 01/17. I always look at least a month out. An example of how I would play this is the following:
Since next week is a big hype date, then I'll buy the 1220C30 to get more exposure. If nothing happens by Tuesday then I'll roll them out to 0117C30. I'll have less contracts due to the additional time value, but i can sleep soundly at night and not be struck with panic during sudden swings. If you're going to roll your options then the sooner the better.
With options, only spend what you're willing to 100% lose. Warren Buffet famously said:
""You've got to be prepared, when you buy a stock, to have it go down 50% — or more — and be comfortable with it, as long as you're comfortable with the holding"
While this may be true with shares, I like to say that you need to be prepared to lose 100% when it comes to options. So I don't invest a big chunk of my portfolio into speculative option plays.
TLDR: Hope for MOASS next week, Prepare for MOASS the week of 01/17.