MACD on GME is showing bullish signs…

Hello fellow apes!

Obligatory, this is not financial advice, I have looked into this on my own accord and with any TA around GME it’s not by any means fullproof. GME does what it does when it does, no TA on GME will ever 100% predict it’s trajectory so take this post with the tiniest of grains of salt.

I wanted to share some data around MACD in relation to GME. For anyone that’s unfamiliar with MACD it’s a TA indicator that can be used to find good times to buy/sell a stock. Here’s a brief summary from Investopedia which explains it better:

Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. The MACD is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA.

The result of that calculation is the MACD line. A nine-day EMA of the MACD called the “signal line,” is then plotted on top of the MACD line, which can function as a trigger for buy and sell signals. Traders may buy the security when the MACD crosses above its signal line and sell—or short—the security when the MACD crosses below the signal line. Moving average convergence divergence (MACD) indicators can be interpreted in several ways, but the more common methods are crossovers, divergences, and rapid rises/falls.

Now onto the juicy part. MACD has been a pretty good indicator showing the rise and fall of GME, from all the way back in January you can see whenever the two signal lines intersect we see upward/downward trend of the stock. More importantly when the blue signal line overlaps the yellow.

MACD for January squeeze

As you can see, at the beginning of January the two signal lines intersected which then caused the gradual increase of the stock price to the 300/400 range it ended up at before intersecting again at the beginning of February where it began it’s decline to the 40s.

The lines began converging again at the end of February shown in the below image.

MACD throughout February into March

As we had our second build up to 300 the lines crossed again with the stock moving upwards only to come back down around the 3rd week of March where the lines intersected once again causing the downard push of the stock price.

Okay, you’ve thrown some images at me with some pretty colours and lines but what does this mean for the near future? Well fellow ape, this means good things. Here is the current situation of the MACD for this month.

MACD from March till now

As you can see the 2 signal lines are converging once again. We’ve had downward pressure of the price since the end of March and once that blue line overlaps we should see a push upwards and from how close those lines look, it could be soon. In reference to MACD this is what is called a Reversal, I want to preface this by saying one of the downsides to MACD as an indicator is that although it shows bullish signs, sometimes it draws false poisitives as explained again here on Investopedia:

One of the main problems with divergence is that it can often signal a possible reversal but then no
actual reversal actually happens—it produces a false positive.

“False positive” divergence often occurs when the price of an asset moves sideways, such as in a range or triangle pattern following a trend. A slowdown in the momentum—sideways movement or slow trending movement—of the price will cause the MACD to pull away from its prior extremes and gravitate toward the zero lines even in the absence of a true reversal.

So with any TA, take this with a pinch of salt and GME is a wild stock to apply TA to but historically the MACD for GME has followed the pattern pretty closely. This also nicely fuels my confirmation bias which is always welcome.

TL;DR - MACD for GME is converging on the daily chart which in the past has been a bullish sign which has pushed the stock price upwards, both in January and February when we had the squeezes the MACD crossed over and we had upwards momentum of the stock for several days.

Thanks for reading this has been my TED talk.