This post is going to be a deep dive into the On-balance volume indicator for GME. Before I start, this is not financial advice, I am not a financial advisor, I am but a simple, smooth-brained ape with StimmyYOLO dreams.
What is OBV: On-balance volume is a technical indicator, which was founded on the idea that volume precedes price. OBV is calculated as a running total where the volume of a candle is either added or subtracted to the OBV total depending on if it’s negative or positive (this is an oversimplification but just know that it’s a running total). For example (these are arbitrary numbers), let’s say a given stock’s OBV is 1,000. Then, there is a negative candle with a volume of 2. The OBV would now be 998. Then, there is a positive candle with a volume of 100. The OBV would now be 1098. This is why OBV is shown as a line rather than candles like volume. It’s also important to note that if a candle stays the same, it is not added to OBV (this doesn’t really matter for GME because its price RARELY stays the same). OBV is a trend indicator, so the actual value of OBV doesn’t matter, the trend of OBV is what matters. Generally, OBV allows you to predict where a stock will go because if OBV is increasing, it means that there is a lot of volume in green candles and less volume in red candles. I usually use OBV when a stock is consolidating. If a stock is consolidating and OBV is increasing, that is an indication that when it breaks the trend, it will be high. The opposite would be true if OBV was decreasing. Generally, if a stock is increasing in price and OBV is increasing, you can expect it to continue that trend. If the price is increasing but OBV is decreasing, you can expect it to go negative in the future. This all goes back to the idea that volume precedes price.
GME OBV Charts: Here is GME’s 1 year, 90 day, 30 day, and 10 day charts with volume and OBV. Volume is the graph with green and red candles below the chart and OBV is the tan line in the volume graph:
1 year:
90 day:
30 day:
10 day:
Analysis: The commonality between all of these graphs is that OBV continues to increase. If you look at the 1-year and 90-day charts, you can see that OBV took a very small hit when GME collapsed after the January squeeze. However, OBV has continually increased in value since then and is currently higher than it was in January. This means that the green candles (the uptrends) have higher volume than the red candles (the downtrends). This is extremely bullish. We can also see that although volume may be decreasing in the 30-day and 10-day charts, OBV is still increasing, which means that there is much more volume on the buy-side than the sell-side. Even with all of these monster short attacks (like the one we saw last week), there is still a net positive uptrend in OBV, which further adds to the bullish sentiment. Personally, I think that this is partially because of continued retail interest, but, more importantly, I think that this adds credence to the theory that we have an institutional ally or allies that continually buy GME and are trying to initiate the squeeze. This takes away credence from the idea that HFs are just manipulating the price up and down for their own benefit. Furthermore, many people also believe that GME and AMC are correlated. Though this may be true to an extent (they move similarly but not identically), OBV is much more bullish for GME. AMC’s OBV is increasing similar to GME’s but is not higher than it was in January like GME currently is. AMC’s OBV dropped significantly after January and has not returned to those January levels yet. As stated above, GME is and has been above its January OBV levels for a while now. This is not to bash AMC, I am very bullish and AMC and have a position in it. All that this is showing is that GME seems to have greater bullish momentum than AMC and that the stocks are not perfectly correlated like many people think. The massive OBV of GME also suggests that it will be relatively easy for it to have a rapid, parabolic upward move.
Now what: I made a previous technical analysis on GME a few days ago (this one didn’t have OBV because my smooth brain forgot to. Trust me, my wife’s boyfriend was PISSED that I forgot, so I made this so he would let me sleep in the garage instead of under the deck tonight). In that post, I said “Plain and simple, volume is king. Volume is your wife’s boyfriend’s wife’s boyfriend’s boss’s wife’s boyfriend. We cannot have another squeeze without volume.” I’d just like to reiterate that. For another squeeze to happen, we need MASSIVE volume. OBV continually increasing is a good thing because it shows that volume is on the side of the buyer, so when volume increases, it will be easier for the price to skyrocket. In that post, I also said that in order for volume to increase, especially in the case of GME, there has to be a catalyst. Previous volume increases coincided with Ryan Cohen being added to the board, celebrities tweeting about GME, Shitron’s short position, and the ousting of the CFO. I believe that we have a few upcoming catalysts that could help push up volume: Earnings, quadruple witching day (not a catalyst in and of itself but it is a day that always has significant volume), and any kind of announcement relating to getting a new CFO or Cohen doing something. The stimmys that so many of us have is just kerosine being added to that fire.
A note on predictions: What I want to emphasize, especially for the new apes, is that while I believe this (the squeeze) will happen, do not get discouraged if it takes a while. WSB is a glorious hub of information. Much of this information is comparable to what actual analysts do (many people on CNBC have talked about the sophistication of WSB research). There are many DDs in this sub that explain why HFs are trying to delay the squeeze but that it’s still inevitable. The catalysts that I mentioned are just that, catalysts – they are not predictions. So when you are up at 3am ripping your juul after having jacked off for the 5th time that day while and scrolling through the DD section on WSB, don’t get tied down to dates and predictions. You should have conviction in your positions and if you are confident that it will rise based on technicals, fundamentals, and theories, the conviction of your play should not be affected by a date. Think of dates simply as “oh something could happen on this day, but if not, IDGAF because I have conviction in my play.”
Again, this is not financial advice and I am not a financial advisor, I am a simple ape-cuck who seeks to please his wife’s boyfriend. Stay strong APES.