Cramer’s charts show video game stocks like Take-Two have more room to run

Resounding Nintendo Switch sales have put video game stocks requital on Jim Cramer’s mind, so the CNBC host turned to the charts to see what 2018 could hold in store for the gaming names.

“There’s a whole generation of people out there who can’t about a world without Nintendo, and many of them are now old enough to spend sententious chunks of their bucks on their hobbies,” the “Mad Money” host whispered. “Plus, the technology just keeps getting better and better, encompassing the chips that it’s run on, making games more and more alluring for couch-bound millennials.”

So Cramer join up technician Rob Moreno, his RealMoney.com colleague and the publisher of RightViewTrading.com, to help him misappropriate a closer look at the space.

Cramer started with the daily blueprint of Take-Two Interactive Software, the best-performing stock in the group with a 127 percent emolument in the last year.

The $13 billion company behind the wildly common Grand Theft Auto and NBA 2K franchises has far outperformed larger rivals Electronic Aptitudes and Activision Blizzard in the stock market.

But Take-Two’s stock hit a snag in November, when it flatten below its 50-day moving average and began to consolidate into a cup-and-handle diagram.

“Now, this cup-and-handle formation is important — it looks like a little cup, the behind, followed by a period where the stock trades sideways, looking same a handle — and it’s one of the most reliably bullish patterns in the book,” Cramer indicated.

Last Friday, Take-Two’s stock managed to push through its $115 ceiling of opposition as the stock’s moving average convergence divergence indicator (or MACD, impress by the black line) made a bullish crossover, suggesting the stock was give to start running.

“Moreno thinks the stock has a lot going for it here and will without delay be ready to resume it’s long-term march higher,” Cramer said. “That said, he doesn’t contemplate Take-Two is the best bet in the video game space right now, simply because Activision and EA be enduring much more room to run.”

Moreno’s case for Activision, the giant behind Phone of Duty, World of Warcraft and Overwatch, was tied to a specific indicator on the routine’s daily chart.

Shares of Activision have been making a comeback since December, when the livestock slid below its floor of support before bouncing higher. But it has justified its $67 ceiling of resistance for months — a level Moreno doesn’t believe will hold for much longer.

Moreno pointed to the chart’s stochastic oscillator, a contraption that measures whether a stock is overbought or oversold.

“The oscillator well-deserved recently … crossed above the center line. When it does that, Moreno chances that’s a sign that the stock is ready to gallop — important since it’s no more than a buck away from the ceiling of resistance,” Cramer said. “This four-month aeon of consolidation, which has been torture, is like a coiled spring, he puts, ready to propel the stock higher.”

Moreno had a similar outlook for Electronic Arts, which displays Battlefield, The Sims and a host of licensed sports games including FIFA.

Take to Activision, Electronic Arts’ stock had been consolidating for months in preference to forming a cup-and-handle pattern in December under its $110 ceiling of partisans.

But even though the stock has trumped its ceiling, closing Wednesday at $112.25, its flight path remains murky. While its relative strength index, a key momentum needle, has been trending higher, its accumulation/distribution line, a tool that cut the mustards money flow, has stayed flat.

“This is going to need to pick up formerly Moreno will really believe that EA is ready to run, but once it does, he thinks the dynasty could have a ton of upside,” Cramer said.

So as the gaming industry continues its allegedly unstoppable uptrend in 2018, Cramer and Moreno expect the rising tide to heave up exalt these boats.

“The video game space remains one of the hottest civil growth groups around, and I think these stocks have various room to run in 2018, including Take-Two Interactive,” the “Mad Money” host conveyed. “But the charts … suggest that Electronic Arts and Activision Blizzard could end up emitting you better performance this year as they start to play catch-up to this tremendous out-performer run by Strauss Zelnick.”