Does this week’s exaggerated fearful and cheerful trading conditions make you wonder if the market is simply one big game to be played? That may be up for debate. But video game stocks Electronic Arts (NASDAQ:EA), Zynga (NASDAQ:ZNGA) and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) are offering solid evidence for bulls to play the game in today’s unhinged market environment. Let me explain.
Amid fearful headlines of trade tariffs, currency manipulation accusations, and quick fixes, the net score for bulls and bears in the S&P 500 this week is shaping up as a draw. But that’s not the case for video game stocks EA, ZNGA, and GOOGL.
Following recent earnings reports, Electronic Arts, Zynga, and Alphabet are clear winners for investors to buy. The good news is due to all the day-to-day twists and turns within the broader market. These video game stocks look ready for investors to play today.
Video Game Stocks to Buy: Electronic Arts (EA)
Electronic Arts is the first of our three video game stocks to buy. EA stock is a straight-up industry giant with hugely popular franchises such as The Sims and Star Wars, has lucrative sport licensing deals with FIFA and the NFL, and is a powerhouse within the growing world of e-sports.
Technically, right now is a great spot for bullish investors to begin playing a long position in EA stock. Following the company’s recent earnings beat and bullish reaction, an out-of-favor, but far from out EA stock is looking destined for a big comeback on the price chart.
After holding a key band of longer-term support last December, shares rebounded quickly only to fall back into a downtrend. But with EA stock successfully testing the 62% retracement level this past month and shares now sporting a bullish oversold stochastics crossover, conditions are ripe to play Electronic Arts long today.
Buy EA stock today on sympathy weakness from peer Activision Blizzard (NASDAQ:ATVI). ATVI stock announced an earnings beat last night, but a modestly disappointing outlook got the better of investors.
For targets on the price chart, I’d suggest using EA stock’s 2019 high near $110 for partial profit-taking opportunities. To protect the position from any bearish repeats, a blended stop-loss below $88.50 to minimize casualties off and on the price chart makes sense.
Zynga is the next of our video gaming stocks to buy. The company has successfully pivoted from offering browser and PC-focused games into a much more defensible mobile-first platform. The transition has boosted sales growth, earnings, and the company’s operating cash flow.
Last week’s better-than-expected Q2 confessional is the most recent evidence of ZNGA’s friendly business and price trends that are building favorably for bullish investors.
Regarding ZNGA stock’s price chart, the report was ultimately met with some profit-taking after narrowly making new relative highs. More importantly, with a test and hold of Zynga’s former five-year high and prior trend resistance in place, it’s time to play this video gaming stock long.
The strategy here is simple. With ZNGA stock forming a bullish hammer pattern on the weekly price chart, wait for price confirmation next week to go long shares. Respect the candlestick low to limit exposure and look to take partial profits in-between $7.00 – $7.50 in the weeks ahead.
I’ll give InvestorPlace’s Josh Enomoto credit for turning my attention to GOOGL stock as the last of our video game stocks to buy. Alphabet is an unusual choice when one thinks about the gaming arena. But there’s no denying the company’s YouTube business is a hugely popular platform for watching top gamers exploits and tutorials on how to better your own play. It’s a winning combination for profits.
Following a recent earnings beat and out-of-this world reaction from Wall Street, it’s game-on in GOOGL stock.
Technically, the earnings reaction toppled a very bearish-looking environment. The gain of nearly 10% put to rest the possibility of a flag pattern and reinstates a more bullish outlook for this video game stock. Currently, with shares pulling back in a weekly hammer pattern that’s testing the 50% retracement level from GOOGL’s June low to July’s earnings reaction high, Alphabet is setting up nicely for a purchase.
My recommendation in GOOGL stock is to buy shares on a move through $1207. This entry confirms the bullish hammer pattern, as well as puts shares back above the early 2018 high of $1198 and the psychological $1200 barrier. I’d advise taking partial profits on a challenge of $1300 and if required, abort the long if the hammer fails to hold.
Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits