by Kevin Stankiewicz
Technical indicators show that three video game stocks – Roblox, Take-Two Interactive and Activision Blizzard – are well placed to run higher even if the economy reopens from the pandemic, CNBC’s Jim Cramer said Tuesday.
The Mad Money host’s analysis is based on graphs from Technician Bob Lang, founder of ExplosiveOptions.net and a contributor to Cramer’s financial news website TheStreet.com.
Roblox, which went public in March, has two bullish technical metrics on its side, Cramer said. The first is that the stock has made higher lows and higher highs, he said, which means you are on a healthy uptrend.
The momentum indicator known as the Relative Strength Index also shows that Roblox stocks are not yet overbought.
“Roblox is currently trading at $ 89. Lang believes this thing could go smoothly to $ 100 and then to $ 120 by the end of the year, “Cramer said. “It’s easily his favorite name in the group. I agree with him.”
“To Lang it looks like Take-Two just created a W-pattern … and that means there could be significant upward movement as long as the right side of this base is cut out, and that’s what is going to happen here. Said Cramer.
While it’s not clear whether institutional money managers are jumping into Take-Two’s stocks, according to Lang’s analysis, Cramer shows bullish volume in the stock overall.
“All in all, Lang wouldn’t be surprised if Take-Two was hit first … retreating to $ 170, but over the longer term, he looks to see this stock higher, perhaps back to its old highs of $ 215.” Said Cramer. “If we get a pullback, you have to buy this stock.
After losing momentum in February along with a number of other stay-at-home winners, Activision appears to be gaining momentum based on Lang’s analysis. For example, Cramer said a trading indicator called the convergence / divergence of the moving average triggered a buy signal earlier this month.
“If the stock can cross its $ 98 resistance line, less than $ 2 from here, then Lang believes a breakout can take this thing to a new 52-week high of $ 110,” said Cramer.